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Midea's takeover of Kuka meets German obstacle


06-08-2016 15:24 BJT

China's Midea Group's bid to takeover German robotic firm Kuka is facing obstacle, as Berlin is coordinating a counter-offer. Analysts say while China started to raise its outbound investment, the concern of losing technology to China may hinder the efforts.

This robotic arm is not just good at playing pingpong. It is the leading technology behind Germany's robust industrial manufacturing sector and the latest target of foreign ownership.

China's Midea Group offer more than five billion US dollars to buy Kuka Robotics last month. But the Chinese heavyweight is facing fierce opposition from German officials. Known for its cutting-edge technology, Kuka is the world's largest manufacturer of robotics, at the very core of Germany success.

"One of the reasons the German economy has done so well is excellence in various fields such as engineering and speciality chemicals. What Germany certainly would want to save was that knowhow being transferred to China, and then for manufacturing base, and all the employment that goes along with that to be gutted from Germany," said Mike Ingram market strategist, BGC partners.

China is the fastest growing and the largest robotic market in the world, making this contract a highly lucrative asset. Despite rumbling of German finance minister would block the bid, the government denies interference. Chancellor Angela Merkel's government is trying to coordinated a counter-offer for Kuka.

"There are some newspaper reports that the Chinese company would like to take over a particular technology-oriented firm in Germany. This raises a lot of attention, however. The overall level of Chinese foreign direct investment is still very low compared to the huge amount that German companies invest in China. And I think it is the sign of normalization that China also started to invest more abroad," said Joerg Kraemer chief economist, Commerzbank.

Investing more abroad could open the gateway for China's vast market. But that could come at a cost if Germany wants to be the first to lend a hand.

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