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Taiwan should handle Chinese investment on case-by-case basis: expert

2019/05/05 17:05:36

Taipei, May 5 (CNA) Taiwan should deal with investment from China on a case-by-case basis because Chinese enterprises have adopted a wide range of approaches to doing business in other countries, an expert suggested Sunday.

Chinese businesses have ventured into many advanced countries through mergers and acquisitions, including acquiring brands, distribution channels and/or technology, said Liu Meng-chun (劉孟俊), head of the First Research Division at the Taipei-based Chung-Hua Institution for Economic Research (CIEA).

For instance, to take the advantages of branding, Zhejiang Geely Holding Group, China's leading privately-owned automotive group, acquired Volvo from American multinational automaker Ford Motor in 2010, while Haier, a global appliance manufacturer based in China's Qingdao, acquired U.S.-based GE Appliances in 2016, according to Liu.

In terms of distribution channels, Chinese Internet giant Alibaba Group acquired control of the Lazada Group, a Southeast Asian e-commerce company, in 2016 to further build the logistics necessary to expand in Southeast Asia, Liu said.

Understanding it was unable to defeat the online retailer, Alibaba decided the easier approach was to purchase the company, Liu commented.

In terms of technology, Liu said this can touch on national security and has become an area of concern in several countries.

When Chinese businesses hit a snag when seeking technical cooperation with other countries or seek technology transfers from foreign companies investing in China, they usually turn to mergers and acquisition, Liu said.

In order to prevent such developments, the U.S. government has blocked Chinese firms from acquiring American companies in deals that involve transferring technological know-how, he said.

In addition, the acquisition of Kuka, a listed German robotics manufacturer, by the Midea Group, a Chinese-listed home appliances company, in 2016 was criticized by European Union countries because they believed the deal could allow China to obtain key technology and that coupled with its low cost production model could undermine fair competition in the market, Liu said.

Moreover, some technologies have dual civilian and military use, such as machine tools, precision processes as well as automobile and aircraft materials engineering, so transferring such technologies to China could cause unease, the economist warned.

With most Chinese enterprises being owned or controlled by the state, how the technologies acquired by those companies will be used and whether the funneling of Chinese government funds will cause unfair competition are also issues of concern, he said.

As many countries have started to more strictly review Chinese investments, China's companies have resorted to low-profile takeovers of foreign firms, for example in Hong Kong and Singapore, to expand their global footprint, according to Liu.

It is not easy to block Chinese funds, he said, advising Taiwan's government handle the situation on a case-by-case basis just like the United States.

(By Liao Yu-yang and Evelyn Kao)