China and European Innovation: Corporate Takeovers and their Consequences

Jeffrey Henderson and Mike Hooper

Development and Change, 2021, vol. 52, issue 5, 1090-1121

Abstract: While Europe has become the principal venue for new Chinese foreign direct investment, little of it has resulted in new (greenfield) production or research and development facilities. The bulk of this investment has been used to take over European companies, outstripping Chinese acquisitions in North America by 800 per cent. While some takeovers have been of insurance, sports, luxury goods and similar non‐strategic companies, many have been of innovation‐driven firms. This article explores the reasons for the preference — by Chinese state‐ and privately owned companies — for takeovers of this type of European company. Its working hypothesis is that there are correspondences between the continuing weaknesses in China's innovation system and the fact that Chinese companies have been partially shut out of the US and Japan, leading to the focus on cutting‐edge technological acquisitions in Europe. While these correspondences cannot be proven empirically, the article suggests that, given the available evidence and the context in which it arises (particularly the Chinese government's ‘Made in China 2025’ industrial agenda), the balance of presumption must be that these are key dynamics driving China's European acquisitions programme. Amongst its conclusions, the article suggests that Chinese corporate takeovers arguably problematize the future of European innovation and competitiveness and thus the technological robustness of Europe's economic development.

Date: 2021
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