The Alstom-Siemens merger does not stop competition from China - Harry Broadman

Harry Broadman

The EU competition commissioner Margrethe Vestager banned the merger of European rail giants Alstom and Siemens. They presented the merger as the way to stop competition from China. China expert Harry Broadman commends Vestager for her much-debated ban as, Broadman argues, size is not the way to fight Chinese companies. Innovation is, he writes in Gulf News.

Harry Broadman:

At first glance, the proposed merger between Germany’s Siemens and France’s Alstom to fight off the future intrusion of the giant state-owned Chinese rail industry into the European Union market might appear to be in the public interest. After all, what better way to combat size than to scale up.

The EU Competition Commissioner, Margrethe Vestager, had the wisdom — if not the courage — to make the correct call in blocking Siemen’s acquisition of Alstom.

While competing against firms from China is becoming tough going in virtually every sector across the globe — in large part because Chinese enterprises can get away by not having to play by the same rules as most businesses of other nationalities — sound public policy must be based on deftly balancing the welfare of a country’s consumers, workers, and businesses. 

The fact is that businesses and the governments of the countries in which they operate need more innovative strategies to compete effectively with the Chinese — or anyone else — than simply increasing scale. Ask any Chinese boss of a lumbering state-owned-enterprise (SOE) he or she runs if they wish they had more agility to enhance their firm’s competitiveness against rivals. 

Don’t be surprised if the answer is a resounding “yes”.

Indeed, for Siemens and Alstom the answer won’t be scale. That’s looking through the wrong end of a telescope.

More in Gulf News.

Harry Broadman is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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China's dilemma's in dealing with foreign firms - Shaun Rein

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China's central government is walking on a thin line when it defends itself against recent foreign accusations of protectionism against those foreign firms, tells Shaun Rein in Asia One. Senior executives of foreign firm, including Siemens, Google, General Electric and BASF have taken the lead in criticizing China's government, something that would be unthinkable, only a few years ago as those firm would fear - rightfully - a backlash.
In Asia One:

'I think they are emboldened because they feel now many people are coming out to complain,' said Shaun Rein, managing director of China Market Research Group in Shanghai. ...

Rein however said he does not believe the investment environment in China is any worse than it was a decade ago ' the market is just far more crucial to the foreign firms present in the world's most populous country.

'It's always been difficult to operate here,' Rein said.

'You have always had to transfer technology and have joint ventures, but it is a market that matters now.'

At last weekend's meeting with German businesses, Wen [Jiabao, China premier] rejected suggestions that the Asian giant did not provide a level playing field to foreign investors and insisted overseas businesses were not at a disadvantage.

Rein said he expected the Chinese government to ease restrictions on foreign firms in the next six to 12 months, as they try to walk a fine line between securing foreign investment and avoiding criticism at home.

'I think the government is very sensitive to be seen letting foreign companies making money off poor Chinese,' Rein said.

'They need to be protectionist for political reasons.'

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Shaun Rein is a speaker at the China Speakers Bureau. When you need him at your meeting or conference, do get in touch.

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