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Germany vetoed the sale of Leifeld Metal Spinning AG to a Chinese investor

The German government formally vetoed the sale of Leifeld Metal Spinning AG, a member company of VDW, to a Chinese investor. It is an unprecedented move. Although the German investment screening law was tightened in July, 2017, it hasn’t been used to actually block an investment ever since its establishment.The Ministry of Economy invoked reasons of national security sending a signal of taking a tougher position towards Chinese acquisitions of German key technologies. After a series of Chinese takeovers of sensitive technologies in 2016 – 2017, Germany was a pioneer in promoting an EU-wide screening of FDI coming from outside the EU. US, Canada and Australia already took a stronger stance regarding Chinese takeovers of aerospace, military and other sensitive technologies.

As a sector working with key enabling technologies, this decision is and will affect us directly. By blocking the takeover of a relatively smaller company, Germany signals that it is highly concerned and willing to take a harder line on FDI. The massive buyouts of high-end technologies from the EU-based companies are part of the Chinese industrial strategy “Made in China 2025” aiming at replacing imports of advanced technologies with domestic production on a long-term through technology transfers. This means that our industry needs to find the right balance between short-term and long-term objectives and speak in one voice.

CECIMO taking advocacy steps at the EU level on the FDI dossier. In September 2017, the European Commission published a proposal for Regulation establishing a screening mechanism for FDI into the EU. It provides a non-binding framework for countries that have or have not a national screening mechanism for FDI and aims at establishing an information exchange between member states. CECIMO is finalizing its position paper towards this initiative to be used in our lobby activities towards EU institutions. Parallelly, CECIMO is planning on issuing in the upcoming days a briefing paper explaining the “Made in China 2025” industrial plan and what the risks and opportunities for EU SME’s working in the Machinery sector are. For any question or detail, please contact Ms Olga Chilat at olga.chilat@cecimo.eu.