German economy minister faces battle in Beijing over takeovers

Fri Oct 28, 2016 6:48am EDT
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By Caroline Copley

BERLIN (Reuters) - Germany's outspoken economy minister, Sigmar Gabriel, heads to China next week having ratcheted up tensions with Beijing by putting the brakes on the latest Chinese takeovers of German technology companies.

The five-day trip with 60 business executives comes a week after his ministry withdrew approval for Fujian Grand Chip Investment Fund (FGC) to buy chip equipment maker Aixtron (AIXGn.DE: Quote), citing new security concerns.

The government is also scrutinizing the sale of Osram's (OSRn.DE: Quote) general lighting lamps business Ledvance to a consortium of Chinese buyers.

Gabriel has been making protectionist noises since Chinese home appliance maker Midea (000333.SZ: Quote) made overtures back in May for robot-maker Kuka (KU2G.DE: Quote) - a national champion in Germany's push to hook up machinery to the internet.

Despite his efforts to conjure up an alternative buyer, that deal went ahead. But the latest moves to stall Chinese acquisitions have unsettled some in business who regard it as a setback for Germany's image as an open economy.

"For many German companies, China is now the single most important market," said Thomas Heck, head of the China business group at PwC in Germany

"It may not be wise to pick a battle and tell China 'If you don't open up your markets like we have, then we will shut down our economy for you'."

The decision to put the Aixtron deal on hold followed a U.S. warning that the takeover could give Beijing access to technology that could be used for military purposes, Handelsblatt newspaper reported.   Continued...

German Vice Chancellor Sigmar Gabriel and China's Vice Premier Ma Kai (R) address the media prior to touring the CeBIT trade fair in Hanover March 16, 2015. REUTERS/Morris Mac Matzen/Files