Wednesday, April 27, 2016

Germans Welcome Chinese Investment

Here is a German whose opinions on the European economy are highly rated.  I was interested becuase of the topic of SMEs, small and medium enterprises.  Quotes the article:
Simon, 69, believes this trend will continue thanks to Germany's many hidden champions, a term he coined to describe relatively unknown SMEs that are the backbone of a nation's economy and have for many years sustained Germany's leading position in exports.
What he calls "hidden champions" I call "under the radar." He then goes on to define these SMEs as less than Euro 5 billion in sales.  Sigh....  not my bailiwick.  But I read on, and this:
Simon acknowledges there is concern in Germany about more Chinese investment pouring into the country, but says: "When General Motors took over Opel in 1929, or Ford built a huge automobile plant in Cologne in 1930, people said we would be dominated and conquered by the Americans, and that we would be a colony of the US. But it turned out to be nonsense. The same is now true for Chinese acquisitions."
Is he kidding?  Did we, the USA not conquer and dominate his country, within less than a dozen years of those investments?  And not a metaphorical conquering, but real bombs, bullets, soldiers, rape, pillaging and all that?  Do we not still occupy their lands with our military bases, to this day?  Very odd argument for him to make.

As I teach in Silicon valley among other places, over the years I've had plenty of Apple engineers in my classes with whom I chat outside of class.  I make the point to sell in USA items made overseas must be designed in USA by USA designers to be acceptable in USA.  Of course, the factory with its expertise will always recommend changes based on their know-how, improvements in material and design, or process engineering. That is only natural. The Apple engineers trace the percent of work done by China and UsA engineers from say 90 - 10 back in the 90s to 50/50 the last time I checked a few years ago.  What happened?  The Chinese have plenty of people who graduated from the same USA schools as the USA engineers: MIT, Cal Tech, Stanford, etc...  and they are now contributing (so virtually USA design.)  Another point was made... when Apple switched state of the art composite materials, the Chinese learned that, then moved ahead on their own and now there are materials that Apple USA would be hard pressed to try to copy.

Simon says this:

He believes Chinese investment can bring advantages for both sides and refutes the notion that Chinese companies are simply trying to extract know-how from Germany to transfer to China.
"To a large degree, that's impossible because a very large part of the knowledge resides in the employees. I meet German companies all the time and they tell me their know-how is not in the patterns, not in the written or digital documentation, but it is in the skills of their employees, not only the engineers and scientists, but also the workers."

So I don't think so.  The Chinese are exquisite copiers, and they are copying USA's immigration policy of bringing in outsiders for flair.

The Chinese are using credit to buy up German companies, just as USA industry did buying up USA companies. This ends badly.  The GErmans should know better than anyone.

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