Upgrade thoughtful and transparent investment

For European Union authorities and Member State governments 9.2.1 Upgrade thoughtful and transparent investment review mechanisms The∙European∙Union∙welcomes∙most∙foreign∙investment∙for∙the∙jobs∙and∙prosperity∙that∙it∙contributes∙to.∙However,∙ while liberal open economies are part of Member States’ identities, this does not mean that they should naïvely view all potential investments in the same light. As stated in the European Commission’s Elements for a New EU Strategy… Continue reading Upgrade thoughtful and transparent investment

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New international investment guidelines

Contribute to the establishment of new international investment guidelines Like their Chinese counterparts, the authorities in EU Member States have an opportunity to play a leadership role in developing new international guidelines on investment that will ensure that the legitimate interests of all countries are given due consideration. Doing so would fit well with the… Continue reading New international investment guidelines

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Align long term plans with industrial upgrade

For European business 9.3.1 Align long-term plans with China’s industrial upgrade Though there are many challenges associated with CM2025, the move to upgrade China’s industrial base remains highly∙significant.∙Its∙emphasis∙on∙changing∙the∙mindset∙of∙Chinese∙companies∙toward∙a∙stronger∙focus∙on∙quality∙ is commendable, if somewhat overdue. European business needs to understand the initiative from this perspective and to look for ways to align their own value∙propositions∙in∙the∙market∙with∙the∙opportunities∙that∙this∙creates.∙The∙focus∙should∙chiefly∙be∙on∙where∙the∙ long-term opportunities… Continue reading Align long term plans with industrial upgrade

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Monitor international M&As and emerging competition

9.3.3 Monitor international M&As to identify emerging competition For the reasons outlined in section 9.2.1 on page 54, it is important that European business monitor the impact of international M&As on their competitive positions. A state-steered process that enables competitors to acquire high-quality assets may suddenly leave European companies at a disadvantage. This is in… Continue reading Monitor international M&As and emerging competition

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Keep innovating to stay ahead

Keep innovating to stay ahead The problems associated with China’s government-driven approach to industrial development should not be taken to imply that Chinese companies are unable to innovate. Leading Chinese companies continue to develop their technological capabilities and value propositions, both in China and in international markets. European business therefore needs to maintain and expand… Continue reading Keep innovating to stay ahead

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Not relying on one market or client

Do not rely on one market or client As the case of Aixtron (see page 31) makes clear, overreliance on one client or market may leave European companies∙open∙to∙risks∙that∙are∙difficult∙ to∙control.∙Even∙ if∙ the∙parties∙behind∙the∙attempted∙acquisition∙did∙not∙ deliberately depress Aixtron’s stock in the hopes of purchasing the company at a discount, there is a risk that unscrupulous parties could look to… Continue reading Not relying on one market or client

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Government procurement restrictions for FIEs

Market access and government procurement restrictions for FIEs Evaluation Maintaining high standards for procurement can provide government with an effective tool for driving innovation. It forces companies to improve their products in order to meet these standards and win government contracts. However,∙when∙domestic∙companies∙are∙not∙ forced∙ to∙compete∙with∙best-in-class∙products,∙ they∙have∙ less∙ incentive to improve and the government may ultimately be… Continue reading Government procurement restrictions for FIEs

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Government backed investment funds

Government-backed investment funds Beyond the provision of subsidies, the central and local governments have established a large number of well- capitalised investment funds to support priorities outlined in CM2025, the SEIs and other major initiatives highlighted∙in∙the∙13FYP.∙In∙some∙cases∙they∙focus∙on∙specific∙industries∙and∙in∙others∙on∙industrial∙upgrading∙ more broadly. By the end of 2015, there were reportedly already 780 state-investment funds established with EUR 294 billion… Continue reading Government backed investment funds

Support from local government

Support from local government Through a desire to support the development of their own local champions, local governments also provide subsidies, use government procurement strategically and establish their own investment funds or participate in sub-funds that are attached to national funds. It has been found that 24 provinces plus Beijing, Chongqing, Shanghai and Tianjin have… Continue reading Support from local government