China in Europe: Chinese investment in Europe and the impact on labor relations

10th Annual International ADI Conference
Asian Dynamics Initiative, University of Copenhagen
18-20 June 2018    

Convener: Sarah Swider, Dept. of Sociology, University of Copenhagen

China is a source of direct foreign investment that has increased in the past decade, reaching over 600 billion by 2013, with an increasing share headed for Europe. After 2008, Europe became the fastest growing destination for Chinese outward investment. In 2016 alone, Chinese investments rose 77 percent and reached over 35 billion euros, a third of which goes into Germany. This increasing direct foreign investment influences industrial relations practices as Chinese companies, owners and managers learn how to navigate in new waters. Alternatively, it is likely that this influx of Chinese companies, owners and managers are also influencing and shaping local practices.

The goal of this panel is to bring together scholars have worked to identify the Chinese management model, and to gain a better understanding of business strategies and employment and labor relations in these new contexts, and how they deal with labor disputes and conflict. This could include Chinese companies that use imported or “posted” workers from China, the adoption of local practices, or hybrid approaches. Also of interest is research that examines when, and under what conditions, Chinese managers and owners adhere to local labor standards and practices, even strengthen or add new dimensions, and under what conditions, they evade or challenge them. If they bring in their own workers, does this form of labor exportation create a kind of extraterritoriality that allows multinationals to evade national and international level laws and regulations that protect workers, internationalizing the practice of posting, or have nations found a way to embed these practices? In sum, as China enters the European market how is it (re)shaping or influencing employment and labor relations?

Abstracts

1.
Tianze Zhang, Researcher, University College London, London, United Kingdom
One Belt-One Road Infrastructure Investment: Motivations, and Economic Impact

The development of the One Belt-One Road (hereafter OBOR) initiative was swift and efficient, especially in terms of infrastructure investment. This article discusses the motivations behind the countries participating in infrastructure investment and the current developments in OBOR projects. Considering the regional imbalance and disparities, China will still be a leading country in infrastructure investment and it is unlikely that a central governance body in charge of making universal binding decisions between the OBOR countries will be established in the near future. Further, China promotes adopting the Public-Private Partnership (PPP) investment models, which cooperation in the One Belt-One Road initiative will become more practical through the spreading of responsibilities, revenues, and risk between Chinese investors and local governments. This article will address following questions on OBOR infrastructure investment: 1) What are the rationales of the countries participating in the OBOR initiative in the field of infrastructure investment?; 2) How can different countries with different rationales be coordinated, while considering the development imbalance of the different countries, in order to achieve the sustainable development?; 3) How are the PPP (Public Private Partnership) models adopted in the promotion of the infrastructure development in the countries? And 4) How the China-lead investment model will influence Sino-European relationship?

2.
Lau Blaxekjær, Researcher, NIAS – Nordic Institute of Asian Studies
Marc Lanteigne, Senior Lecturer (China, East Asia, Polar Regions), Centre for Defence and Security Studies, Massey University, Auckland NZ
Mingming Shi, Project manager, Icelandic Times, Iceland; Master student (West Nordic Studies), University of Iceland
China’s Belt and Road Initiative: Economic Challenges for the West Nordic Region.

In June 2017, China’s National Development and Reform Commission (NDRC), announced that the Arctic Ocean would be added to the list of ‘blue economic corridors’ comprising a major part of ‘Belt and Road’ trade and infrastructure initiatives. This policy was further codified in China’s first governmental White Paper on the Arctic published in January 2018. Although China has greatly enhanced its Arctic diplomacy over the past five years, there are still many questions as to how the West Nordic region would be specifically affected by greater Chinese economic engagement. By analysing the major governments in the West Nordics, namely the Faroe Islands, Greenland, Iceland and Norway (all non-EU members), specific patterns of Chinese economic diplomacy can be identified including bilateral economic policies like the free trade agreement with Iceland and the resumption of the FTA talks between Beijing and Oslo. Other examples include the close collaboration in telecommunications infrastructure between Faroese Telecom and Huawei. There is also much potential for resource diplomacy, and the question of whether emerging Chinese shipping in the Arctic will be extended to the West Nordic area, as well as the development of other sectors such as tourism. This paper will ask whether the West Nordic region can be seen as a distinct case study of Beijing’s economic diplomacy in the Arctic, and if so, how the West Nordic governments, singly and jointly, can benefit from Beijing’s deepening economic interests in the sub-region. As well, where does the West Nordic region fit within the expanding Belt and Road framework, what are potential obstacles, and what are the current and potential forms of economic cooperation?

3.
Yu Zheng and Chris Smith, School of Management, Royal Holloway University of London
Impact of Chinese MNCs on Work and Employment in Europe

The arrival of Chinese firms in Europe has elicited both excitement and anxiety. As the new investors are still relatively unknown and the impact of their investment unclear, fears and protectionist rhetoric that Chinese firms present unfair competition are prevalent in the press and popular literature. Typical of these claims is the idea that Chinese investment comes with implicit strings and can act as a ‘Trojan Horse’ affecting local norms and policies, from human rights to labour laws. In Europe a widespread narrative is the challenge posed by a new authoritarian investor with deep pockets to an open market in crisis and its welfare capitalism model. On labour issues, Chinese firms are accused of breaking rules on working hours and health and safety; using coercive forms of labour control, including withholding wages to inhibit mobility and taking deposits to control migrant workers, whether irregular or regular trafficking forced labour; ignoring or suppressing trade unions; paying wages below subsistence levels and even employing prison labour on construction and civil engineering projects. Yet, despite the claims and fears, we actually know very little about “working for the Chinese” in Europe. As the scale and scope of Chinese investment increases, we need to better understand the characters of the workplace in Chinese MNCs. In this paper, we problematize the assumption of an integrated framework of Chinese model of employment relations, which we see as being built upon multiple models of development. Given that Chinese MNCs are far from a dominant force of global investment, Chinese firms’ ability to reproduce employment relations enabled by its home institutions is very much restrained. Empirically, the paper presents three case studies of Chinese MNCs in Europe to illustrate the segmentation of employment from interchangeable sources of labour. This paper offers a critique to the simplistic reading of Chinese MNCs’ impacts on work and employments in Europe.

4.
Dr rer. oec. Oliver Emons, Institute of Co-Determination and good corporate governance (IMU), Hans-Böckler-Stiftung (Hans-Böckler Foundation)
Chinese Investments in Germany: Impact on labour relations

"China is buying up Germany" (Focus magazine 2011), "China’s company purchases in Germany are hotting up" (Lange 2015). It is not just because of headlines like these that Chinese investors have been making a name for themselves in Germany of late. In 2016 alone 68 Chinese stakes in German companies were completed. On the one hand there have been record deals aplenty: right at the beginning of the year 2016 state-owned enterprise the National Chemical Corporation (ChemChina) bought the venerable specialist mechanical engineering company KraussMaffei for 925 million euros, the most expensive takeover by a Chinese company in Germany to date. In June 2016/2017 the private group Midea made a takeover for shares in the market-leading robot manufacturer Kuka. Later on just under 95 per cent of the company, the first (former^[1]) MDax firm, were in the hands of a Chinese concern. In the meantime, the pace of acquisitions has accelerated such that, on average, one German company falls into Chinese ownership each week On the other hand in the beginning of 2018 there have been job losses in firms like Ledvance GmbH (formely Osram GmbH) or Kuka. Insiders talk of a takeover frenzy among Chinese investors in Germany and expect more acquisitions. In the German economy and political realm (also European Union) the takeover wave has given rise to some concerns. As Emons shows in his study ‘Selling Off the Hidden Champions’, apart from individual headline deals Chinese takeovers mainly involve SMEs (Mittelstand firms) that are world leaders in their area (Emons 2013). This leads to the following questions: What are the reasons for takeovers in Germany? Is there a change in the behaviour of Chinese investors? Is the image of Chinese investors in Germany massively clouded by the Ledvance or Kuka case?

To answer these questions this paper firstly summarize newer analysis of chinese investments in Germany and secondly takes the experiences of work councils and experts of Co-determination in Germany who are directly affected by these takeovers.  

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[1] According to the rules of the German Börse, freely traded shares may not fall below a 10 per cent threshold. As a result of the takeover Kuka’s shares were excluded from the mid-cap index.