China has just acquired Krauss-Maffei a major German machinery maker. Krauss-Maffei is one of many multi-national industrial firms now owned by China which has been quietly acquiring a variety of assets around the world.
Some experts are concerned.
Michel Juneau-Katsuya is the CEO of the Northgate Group, a security and intelligence consulting firm. He is also a former senior intelligence manager, Chief of the Asia-Pacific sector in the Canadian Security Intelligence Service (CSIS).
Listen
In recent years, Chinese state-controlled companies have been buying major domestic and international companies at a steady rate.
China recently bought Germany’s Krauss Maffei at a cost of about a billion dollars.
China owns the Swedish automaker Volvo (1.5 Billion dollars), IBM computers (1.25 billion), Pirelli tires (7.7 billion), the US-Smithfield Pork producers (4.7 billion), Canadian oil and gas companies-Nexen- (15 billion), and Canadian companies operating abroad-Petrokazakstan- Encana in Ecuador, PetroCanada in Syria; all for about 5 billion dollars, Legendary films-in the US-(3.5 billion), A123- lithium ion batteries, and the list goes on.
Indeed recently US president Obama had to forego the traditional Presidential stay at the iconic Waldorf Astoria over security concerns at the now Chinese-owned hotel.
Then there is the huge new naval centre being built in Djibouti which many would classify as a military base, and which could control one of the worlds biggest shipping routes through the Red Sea. Many other joint ventures to develop port facilities with countries around the world are theoretically for economic advantage for China and the host country, but security experts also note the potential for international political influence and the military overtones.
Michel Juneau-Katsuya says it’s a well thought out long-term strategic goal based on simple concepts.
- buy established and well branded western companies
- let the companies operate but bring profits back to China
- get the intellectual property and market share without a fight
- get huge influence in the country where you got the company (influence is stronger than control. Sun Tzu “Art of War”)
- Buy abroad but do not let foreign companies buy in China.
- Get a greater grip on national and foreign policy of foreign countries by the influence you gain as an “important corporate” players in that country (you employ a lot of people in that country)
In his CSIS report on Chinese influence, Mr Juneau-Katsuya said Chinese policy was like that of Sun Tzu (c 509 B.C) in his treatise- The Art of War: “Be so subtle that you are invisible. Be so mysterious that you are intangible. Then you will control your rival’s fate.”
Chinese influence now extends deep into world resource industries, land and food control, financial institutions, manufacturing, technology, genetic research , cultural businesses, and much more. In addition to the instant acquisition of technological information and industrial secrets, he says all of these can be translated into political influence, both domestically and to the international foreign policies of those countries.
Indeed almost all of Chinese major acquisitions are barely noted by politicians or the media.
He notes that China’s policy also seems to be based on the ancient Chinese game of GO where the object is to control the most territory on the board. It is a game described on one website as “rewarding patience and balance ….. a strong player must be prepared to be flexible but resolute.”
Juneau-Katsuya says one problem is that western democracies and policies operate on short time-scales and are focussed on the “next election”, whereas Chinese strategy is long-term. He also says the majority of western politicians simply can’t understand that China doesn’t play by “western rules” and that many politicians and those in other influential positions often don’t even realize they are being manipulated.
Juneau-Katsuya emphasizes that a western takeover of another western company and a state-controlled Chinese company takeover of a western company, have completely different ramifications, and he would like people to realize this.
Additional information-sources
- Financial Post- Purchase of Krauss-maffei
- Alberta Oil mag
- Forbes- China buys Smithfield
- Reuters- China- Legendary films
- BBC- China buys Pirelli
- CNN- Chinese ownership of major US business
- the Independent- China buys Volvo
- 2005 analysis of Chinese expansion
- Wall street journal -Chinese Island building
- NY Times – China Djibouti base
- Postmedia- 2008- Canada being fooled (ex-diplomat)
- the Diplomat- Chinese strategic projects abroad
- CSIS- Sidewinder report (NB- original was in French, this is a poor translation)
- Road and Track- ChinaChem buys Pirelli
- CSIS: Government officials influenced by China (Toronto Star)
For reasons beyond our control, and for an undetermined period of time, our comment section is now closed. However, our social networks remain open to your contributions.