The Latest Chinese ‘Invasion’ Lands in Europe

By Philippe Escande

Paris - Frédéric Vincent is one unhappy CEO. The Chinese are invading us, they do not comply with our basic rules for doing business. This was the essence of the message Vincent, the chief of French cable maker Nexans, sent in a letter to European Commission President José Manuel Barroso. In question is the arrival of the Chinese group Xinmao's €1 billion bid to acquire Dutch cable maker Draka, an offer that trumps those made by Nexans and Italy's Prysmian.

Even if the French cabling giant was clearly trying to use the case to soften up Brussels in the face of a potentially heavy fine for allegedly obstructing competition, Vincent does raise an interesting question. It is not a matter of criticizing the Commission's reaction, which has little foundation on either ethical as economic grounds, but rather a question of the nature of this latest Chinese invasion: it is no longer toys or televisions, but capital.

First it was China, the world's workshop, then China, the world'smarketplace, and now it's China, global predator. The new wave of Chinese investment activity has reached Volvo, Club Med, United Biscuits, the Greek port of Piraeus, Australian mines. China is hungry for a piece of the world's know-how, trademarks, resources. And this is just the beginning! Rather than continuing to sink their surpluses into U.S. Treasury bonds, Chinese entrepreneurs are increasingly looking to sink their teeth into Western companies. The appreciation of the yuan will only strengthen this tendency. The Japanese, whose market is more closed than the Chinese, took the same approach in the 1980s.

This new wave seems inevitable, unless you decide to somehow shut down the borders. And policymakers should think twice before taking such a step. Over the past year, the Chinese have invested only 300 million euros in Europe, while European companies have spent more than 5 billion euros in China in the same period.

Moreover, when Chinese companies -- or Indian, Turkish or Mexican firms for that matter – arrive in Europe, it forces them to operate under the common business practices of the Old Continent. And while it is not perfect, the European approach to business requires transparency and respect for the law, property and open competition.

In the end, the Japanese experience, and even the American one, show the fundamental limits of a capital "invasion." You need more than a fistful of yuan or yen to buy Hollywood or Brussels.

Read the original story in French

Photo credit: Robert S. Donovan via Flickr

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Iran-Saudi Arabia Rivalry May Be Set To Ease, Or Get Much Worse

The Saudis may be awaiting the outcome of Iran's nuclear talks with the West, to see whether Tehran will moderate its regional policies, or lash out like never before.

Military parade in Tehran, Iran, on Oct. 3


LONDON — The Iranian Foreign Ministry spokesman Saeed Khatibzadeh said earlier this month that Iranian and Saudi negotiators had so far had four rounds of "continuous" talks, though both sides had agreed to keep them private. The talks are to ease fraught relations between Iran's radical Shia regime and the Saudi kingdom, a key Western ally in the Middle East.

Iran's Foreign Minister Hossein Amirabdollahian has said that the talks were going in the right direction, while an Iranian trade official was recently hopeful these might even allow trade opportunities for Iranian businessmen in Saudi Arabia. As the broadcaster France 24 observed separately, it will take more than positive signals to heal a five-year-rift and decades of mutual suspicions.

Agence France-Presse news agency, meanwhile, has cited an unnamed French diplomat as saying that Saudi Arabia wants to end its costly discord with Tehran. The sides may already have agreed to reopen consular offices. For Saudi Arabia, the costs include its war on Iran-backed Houthis rebels fighting an UN-recognized government in next-door Yemen.

The role of the nuclear pact

Bilateral relations were severed in January 2016, after regime militiamen stormed the Saudi embassy in Tehran. Amirabdollahian was then the deputy foreign minister for Arab affairs. In 2019, he told the website Iranian Diplomacy that Saudi Arabia had taken measures vis-a-vis Iran's nuclear pact with the world powers.

It's unlikely Ali Khamenei will tolerate the Saudi kingdom's rising power in the region.

He said "the Saudis' insane conduct toward [the pact] led them to conclude that they must prevent [its implementation] in a peaceful environment ... I think the Saudis are quite deluded, and their delusion consists in thinking that Trump is an opportunity for them to place themselves on the path of conflict with the Islamic Republic while relying on Trump." He meant the administration led by the U.S. President Donald J.Trump, which was hostile to Iran's regime. This, he said, "is not how we view Saudi Arabia. I think Yemen should have been a big lesson for the Saudis."

The minister was effectively admitting the Houthis were the Islamic Republic's tool for getting back at Saudi Arabia.

Yet in the past two years, both sides have taken steps to improve relations, without firm results as yet. Nor is the situation likely to change this time.

Photo of Iranian Supreme Leader Ali Khamenei in 2020

Iranian Supreme Leader Ali Khamenei in 2020

Riyadh's warming relations with Israel

Iran's former ambassador in Lebanon, Ahmad Dastmalchian, told the ILNA news agency in Tehran that Saudi Arabia is doing Israel's bidding in the region, and has "entrusted its national security, and life and death to Tel Aviv." Riyadh, he said, had been financing a good many "security and political projects in the region," or acting as a "logistical supplier."

The United States, said Dastmalchian, has "in turn tried to provide intelligence and security backing, while Israel has simply followed its own interests in all this."

Furthermore, it seems unlikely Iran's Supreme Leader Ali Khamenei will tolerate, even in this weak period of his leadership, the kingdom's rising power in the region and beyond, and especially its financial clout. He is usually disparaging when he speaks of Riyadh's princely rulers. In 2017, he compared them to "dairy cows," saying, "the idiots think that by giving money and aid, they can attract the goodwill of Islam's enemies."

Iranian regime officials are hopeful of moving toward better diplomatic ties and a reopening of embassies. Yet the balance of power between the sides began to change in Riyadh's favor years ago. For the kingdom's power has shifted from relying mostly on arms, to economic and political clout. The countries might have had peaceful relations before in considerably quieter, and more equitable, conditions than today's acute clash of interests.

If nuclear talks break down, Iran's regime may become more aggressive.

Beyond this, the Abraham Accord or reconciliation of Arab states and Israel has been possible thanks to the green light that the Saudis gave their regional partners, and it is a considerable political and ideological defeat for the Islamic Republic.

Assuming all Houthis follow Tehran's instructions — and they may not — improved ties may curb attacks on Saudi interests and aid its economy. Tehran will also benefit from no longer having to support them. Unlike Iran's regime, the Saudis are not pressed for cash or resources and could even offer the Houthis a better deal. Presently, they may consider it more convenient to keep the softer approach toward Tehran.

For if nuclear talks with the West break down, Iran's regime may become more aggressive, and as experience has shown, tensions often prompt a renewal of missile or drone attacks on the Saudis, on tankers and on foreign shipping. Riyadh must have a way of keeping the Tehran regime quiet, in a distinctly unquiet time.

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