Beijing’s bargain hunters will be blocked at every turn
The re-emergence of economies from their Covid-19 cocoons will leave winners and losers in the medium term, with China likely to approach normality again well before the West. But acquisitive Chinese companies hoping to pick up bargains in Europe will face an insurmountable heap of regulation.
The coronavirus pandemic swept from East to West across the world, with an illness that started in the Wuhan region of China now more prevalent in the US than anywhere else on the globe.
A week ago, Wuhan came out of lockdown. Manufacturing has restarted again in China, with authorities in the country reporting that employees had returned to production factories at Foxconn, the supplier of Apple’s iPhones.
Europe and the US are still some way from restarting their economies in any meaningful way. Over the Easter weekend, French president Emmanuel Macron said that the country would be in lockdown for another month. The UK has extended its lockdown indefinitely. The economic damage is startling with the unemployment mounting.
This means that Chinese companies are going to be returning to strength well before their Western rivals. More than one CEO will be thinking about what cut-price businesses are available to buy.
But political will against major acquisitions, particularly from China, has risen sharply in the last few years. In 2018, the UK government announced it would increase scrutiny of foreign takeovers, a year after Germany made similar changes to its rules. Both decisions came in response to increased worries over national security from Chinese ownership.
Strong anti-Chinese sentiment from politicians continues. Just this week, Chinese telecoms company Huawei published an open letter to try and win over regulators after coming under pressure in the UK from Conservative Party backbenchers trying to the company's involvement in the rollout of 5G networks in the UK, even on the limited basis agreed by a government already sceptical of China's intentions.
US president Donald Trump has repeatedly vocalised his opposition to Chinese firms buying US assets.
So, while Chinese company owners may be rubbing their hands with glee at the cheap prices on offer for their rivals, they will almost certainly be left window shopping for now.