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2017
China needs to continue with its ‘heavy lifting’
Time is right for Chinese firms to invest in Europe
Robots to the rescue for China?
Asian Multinationals are Going Global, But to Where?
China ratchets forward with energy efforts
China’s calm necessary for globalization push
Bridging managerial gaps involves trust-building
China well-placed to power its future through green technology advances
China's new 'springtime' is here
2016
China’s moves show it’s banking on the future
Mindset for action at the G20 summit will be determined by Chinese presidency
Chinese head-hunting intensifies for rare managers that can steer overseas firms
US talk of isolation jars with growing links in Europe and Asia
Electoral rhetoric on global trade not in sync with reality
Is it time to be prudent and consider austerity policies again?
What will we do if we have no oil?
Unlock talent by finding the right fit for a person
The benefits are real and tangible
Trade along China’s ‘One Belt, One Road’ won’t succeed without the currency of trust
Reasons for optimism about the long term
2015
Can big oil go green and win?
Poorer Nations Could Sway Climate Talks
Combating Idleness and Deprivation
How China can be a model of food sustainability for the developing world
Kyoto II – Is it a Done Deal?
A meeting of the two largest economic powers
Why China will experience a 'soft' landing
Beware of superstitions
The Elephant and Dragon move ahead
G-7 target on fossil fuels raises many questions
Why Battle for Net Neutrality in the US Matters Globally
China’s resurgence – the ‘normal new’
Wanted: A managerial culture that embraces cultural differences
China's early education plan a smart investment in the future
The New Normal for China and India
2014
China's infrastructure push offers a sure track to better growth
US-China climate pact a good start, but not quite enough
Rethink the human’s place in the ‘digital revolution’
China springs a carbon surprise
Infrastructure - the invisible hand in full view
Dialogue vital for survival of Iraqi nation
China must nurture a new generation of beautiful minds
Great expectations in China and India
GM Cereals – The Pros and Corns
Time to be Honest about Our Energy Prospects
Weathering the Storm of Climate Change
Making a Big Decision? Beware of Your Biases
West Deserves Better Logistics Infrastructure
Digital Currencies do Represent the Future
From 'Printed' Houses to Wooden Skyscrapers
It’s time to bail out our schools, not our firms
Solution to India’s housing shortage – print new ones!
And the most promising green technologies of 2014 are ...
Transport infrastructure key to domestic, export growth
Oil stopgaps: Not worth risking
2013
Why the US should grant Edward Snowden amnesty
May we be more optimistic!
China headed for another massive social experiment?
A dialogue that worked
Yes, politicians deserve vacations - because we benefit
NPOs, NGOs invaluable as creators of dialogue
Look closer and ask: Is America reinventing itself?
Boston bombings case underlines need for dialogue
Millennium Development Goals or own goals?
As usual it's about balance - and timing - of course
Chinese strategists make right moves for growth
2012
Preparing for tomorrow
Austerity or growth?
Japan in danger of becoming 'just a place to fly over'
Beware of the business cycle?
An inconvenient truth
Limited offer sale: Buy a country
Where did our money go?
Leading from behind - a year of elections is almost over
Driving towards a green future
Waiting for springtime
Preserve or Perish
Startlingly similar Asia policy for Obama, Romney
Globalisation remains an irresistible trend
Google has the edge in smartphone war
U.S. Braces for China's Rise
Mankind’s General Scourge
The summer holidays are over and nothing has changed!
Put the hidden trillions to work
Making sense of India’s woes and wonders
Storm in a teacup!
Let’s give bad bankers a venue to admit their sins
News is about depth, not puff or velocity
Booming India, but too few toilets
Delayed Court decisions doesn't mean one may continue to play 'Great Game'
We need media to reflect on data and offer public a balanced view
Big polluters can lead in forging common purpose
The weighty issue of choosing a leader
EU-India Relations - Facing similar challenges
Educating with a goal
The Judicial Malaise
We are growing out, but not growing up
EU´s retrenchment enigma
Urbulence in the Eurozone and the effect on SMEs
Skolkovo May Help Russia to Diversify
Make things more effective
Tapping into the Commonwealth connection
Innovative models for public finance
Facebook revolution but Indian style
The feel-good factor
Asian investors - a private equity opportunity
India needs to be taller and stronger
China´s low sales volume...
Nations playing leapfrog
Shafts of sunlight
What webs we weave
As performers go to Davos, the circus steals the show
Can we control the politicians?
 
2011
Europe’s reminiscence
China firms should go for win-win in overseas ventures
Of procrastination...
Making sense of profiteering
Truth about financial mess must be laid bare
Small is also beautiful
China can help Europe with debt crisis
Excising the cancer of global corruption
Education, a critical asset
Arab uprisings set in motion forces of creative destruction
A new era of change
We must ensure better education for all
Beijing wary of bankrolling a lost cause
Asean's re-emergence as a local and global leader
Why India's Role in the Global Economy is Still Work in Progress
Its the leadership, stupid!
Reverse globalisation: The new buzzword
Time is right for Chinese firms to invest in Europe
By Frank-Jürgen Richter
Global Times, April 17, 2017
 

Is it time to invest? If so, where? If we ask the first question of investment managers they say "… well last week was better than today. Next week might be better." And their response to the second question is even more opaque. However, IMF Managing Director Christine Lagarde speaking in Berlin in early April said the global economy was "picking up" and that 2017 into 2018 ought to be better than 2016. Furthermore, Reuters reported earlier this month that German manufacturing growth had reached a nearly six-year high in March contributing to a national expansion in the first quarter of 2017 with new export orders to the fore. It would seem that Europe might offer scope for profitable investment by Chinese investors.

Of course the choice of country in which to invest remains a general challenge. Across Europe there are many management styles that differ between East and West and most noticeably North and South, and the UK is formally pledged to leave the European Union taking away its own pragmatic management style that is inclined to be somewhat "mid-Atlantic" rather than "continental." There are many other factors to be considered such as reduced taxation regimes (often called tax holidays), or reduced land costs if investors regenerate a brown-field site. Some years ago, after the UK deregulated its financial services (called "The Big Bang") in 1986, many foreign firms invested in a London office site, others in a UK production facility, all enjoying the Schengen open borders policy throughout Europe (otherwise called the European Single Market) for goods or services once they left the UK customs space. This will change after Brexit is formalized, but we have two years to wait for this.

The European labor laws are very different from those operating in China and may be different in each nation. To many overseas managers it seems odd to first verbally warn a worker for an offence, then for the same alleged offence to write a formal warning, and then only on the occasion of the third offence be able to sack the worker. Some nations, notably the UK, have simple rules whereby managers can adjust their total workforce according to production needs, whereas in France and Spain it is almost impossible to reduce staff levels even if their wages are bankrupting the firm.

Many Chinese firms are looking to invest in inland provinces but they are also looking for overseas investments. Coastal firms operating in the special development zones are accustomed to highly efficient local logistics services providing input flows as well as outflow management of finished goods, whereas the logistics from coastal regions to inland customers are often less well developed. Logistics in China still costs too much at 14 percent - roughly twice the level in other advanced economies - so moving manufacturing activity closer to clients in Europe looks attractive.

Investing in brown-field sites will take several years to yield commercial benefits. A merger or acquisition takes less time and should generate success quickly. An example is Geely, who took over the London Black Cab Company headquartered in Coventry, a region of the UK once famous for automotive manufacturing. The black cab is synonymous with London taxi operations, and the vehicles are welcome worldwide but are deemed a little too costly when compared with less practical standard cars. Recently Geely opened a new factory to produce electric taxis that it also hopes to sell overseas to cities that are keen on the famous brand and concerned about pollution.

The IMF has noted a persistent low productivity in all economies and the excessive inequalities that exacerbate it. The former has arisen following years of sluggish growth after the 2008 global financial meltdown. Managers have tended to retain cash, not investing in more productive machinery and retaining workers using the obsolescent machinery. Now, almost one generation after the "crash" we find global demographics aging quickly and there is a greater need to adjust a firm's machinery to operate with fewer staff. This implies robotization, which is feared by all unionized labour groups as they fight, forlornly, to retain their inefficient jobs.

Firms in Europe and the US generally followed academic council and invested in research to highlight better manufacturing systems, but they have not progressed far along the robotizing route. China has tended to invest in greater automation only to speed up manufacturing, not to make it more effective. Now the time is ripe for Chinese investors - who are knowledgeable about robots and who understand the pressure to make goods to the highest quality standards - to join the ready marketplace for investment in Europe. Manufacturers in Germany, say, have long understood the need for quality management, but have been reluctant to invest in robotics. They could join with Chinese investors looking, like Geely, to increase market penetration globally using fewer staff.

I am sure that many Chinese firms will favor investing in Europe, Brexit notwithstanding. In contrast, the US with its new administration under President Donald Trump has not yet clarified its foreign and trade policies, and uncertainty spooks investors. The time is ripe for greater collaboration between firms in Europe and China, thus expanding China's modern Silk Road initiative well beyond its historical termination upon the medieval quaysides of Venice.

 

The author is founder and chairman of Horasis, a global visions community. bizopinion@globaltimes.com.cn

 


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