Friday

20th Apr 2018

Opinion

China's innovation, not investments, should worry Europe

  • In 2016 Chinese companies invested €35 billion in the EU - but the country is now pivoting to its own innovation and invention (Photo: EUOBOR)

For several years now China has been increasingly investing in Europe.

In 2016 Chinese companies invested €35 billion in the EU.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

Often these investments are in advanced manufacturing sectors or meant to buy certain technologies. Afraid of losing some crown jewels of the European economy, the EU is preparing measures to halt this trend.

But perhaps Europe shouldn´t worry too much about this. After all, the next wave is already coming: Chinese innovation and technology which will conquer the world.

And the first signs are visible. A few week ago, Europe launched two initiatives which are symptomatic and a reaction to the Chinese threat. Europe decided to form an alliance among some top European companies in order to regain lost ground on Chinese electric car battery manufacturers.

And because Chinese high-speed trains and their technology are being sold worldwide, French Alstom and German Siemens have formed a coalition against the Chinese train manufacturing company CRRC, which has recently won several projects in Europe.

Over the past few years China has implemented a policy which focuses on mass entrepreneurship, technology and innovation.

Pivot to private sector

Now the traditional sectors which spurred its economic growth have become weaker - a trend reinforced by increasingly more expensive Chinese labour - the Chinese government hopes that the private sector and innovation will become the new drivers of the economy.

As so many trends in China, big government is the driving force behind this. And that might just work. China has a labour force of 800 million, among whom 170 million have received higher education or possess high professional skills.

Add in the massive number of Chinese students who studied abroad, and return now in increasingly bigger proportion back home, and one can understand that China possesses a critical mass of innovation and entrepreneurial spirit.

The effects of this policy are becoming increasingly clear.

In 2016 China's ZTE Corporation overtook its crosstown rival Huawei Technologies as the biggest filer of international patent applications.

Last year Chinese companies spent 14 times more money on R&D than in the year 2000.

Only US companies spend more on R&D. Additionally China is home of a thriving startup scene which plenty of venture capital and hot money pouring in. In 2016 Chinese venture capital funds tripled their budgets to €320bn. They are responsible for 25 percent of the global venture capital investments.

From 'Made in China' to 'Invented in China'?

Especially in the internet sector Chinese innovation is leaving its global mark. Chinese society is already much more digitalised than western counterparts, but nowadays it's simply impossible to live without a smartphone in China.

Last year alone, 467 million smartphones were sold in China, and there are more than 730 million active internet users. The Chinese e-commerce market is simply gigantic and is predicted in 2020 to be bigger than the Unites States, Great Britain, Japan, France and Germany combined.

WeChat, with its 900 million users, is an absolute marvel of Chinese technology.

It is one platform for communication, marketing, payments and e-commerce. All-in-one and made in China.

Chinese tech companies are also conquering the world with new products and services of superior quality. Baidu, Alibaba, Tencent and Xiaomi belong to the top ten of the biggest internet and technology companies worldwide.

But three of them only entered the rankings since 2013.

In 2014 Xiaomi was the world's most valuable tech startup. Silicon Valley is looking now more and more to China where innovation and entrepreneurship go hand-in-hand.

The focus is especially on Shenzhen with its 30,000 technology companies - and a combined value of more than €200bn.

That evolution is also starting to leave its mark internationally. In the past only big (ie state-owned companies) were expanding globally, but now the second wave of internationalisation is taking shape. Buses from BYD, the global leader in electrical cars, are already driving around in the London city centre.

One third of all 'unicorns' are now coming from China.

Ambitious Chinese startups expand internationally from the very beginning, with increasing success.

Besides famous names like Xiaomi, Mobike or DJI, is Musical.ly - with its 100 million users worldwide - one of those startups which go global form the very start, which is way they are being called micro-multinationals.

It's obvious that China is transforming itself again, and that the next wave of innovation and private entrepreneurship will be the wave of the future, with huge global consequences.

Sven Agten is an author on China, and Asia-Pacific president for a German multinational

Focus

China's 'new era' means balance with EU

Under Xi Jinping's second term as leader, China wants more equality with the US and the EU, while waiting for Europeans to show their global clout.

Focus

Hungary-Serbia railway launched at China summit

The flagship project of China's increased presence in central and eastern Europe was launched on Tuesday, following an EU probe as a summit in Budapest raises questions on Beijing's influence.

EU preparing to screen Chinese investments

The EU is to screen foreign investments to avoid takeovers in sensitive sectors. But the plan, mainly aimed at China, will raise political and technical difficulties.

Stakeholder

Openness for greater prosperity, innovation for a better future

Reform and opening-up is a great process that has seen China and the world achieve development and progress together, with more than 700 million Chinese people lifted out of poverty, China's president Jinping told the Boao Forum for Asia.

How to reset EU-Burma relations

Europe should go back to its pre-2012 policy, wipe away aid and trade benefits, and tie democratic efforts to the reinstatement of benefits.

News in Brief

  1. Audit office: Brexit 'divorce' bill could be billions higher
  2. MEPs urge better protection for journalists
  3. Dieselgate: MEPs back greater role for EU in car approvals
  4. European parliament adopts new organic farming rules
  5. EU granted protection to half million people in 2017
  6. Report: Facebook to carve 1.5bn users out of EU privacy law
  7. Greek court ruling permits migrants to travel to mainland
  8. Commonwealth summit hopes for trade boost after Brexit

Stakeholders' Highlights

  1. Nordic Council of MinistersWorld's Energy Ministers to Meet in Oresund in May to Discuss Green Energy
  2. ILGA EuropeParabéns! Portugal Votes to Respect the Rights of Trans and Intersex People
  3. Mission of China to the EUJobs, Energy, Steel: Government Work Report Sets China's Targets
  4. Martens CentreJoin Us at NET@WORK2018 Featuring Debates on Migration, Foreign Policy, Populism & Disinformation
  5. European Jewish CongressKantor Center Annual Report on Antisemitism Worldwide - The Year the Mask Came Off
  6. UNICEFCalls for the Protection of Children in the Gaza Strip
  7. Mission of China to the EUForeign Minister Wang Yi Highlights Importance of China-EU Relations
  8. Nordic Council of MinistersImmigration and Integration in the Nordic Region - Getting the Facts Straight
  9. Macedonian Human Rights MovementMacedonians in Bulgaria Demand to End the Anti-Macedonian Name Negotiations
  10. Counter BalanceThe EIB Needs to Lead by Example on Tax Justice
  11. ILGA EuropeTrans People in Sweden to be Paid Compensation for Forced Sterilisation
  12. International Partnership for Human RightsThe Danger of Standing Up for Justice and Rights in Central Asia

Latest News

  1. ECJ ruling set to end 10-year 'mouth tobacco' lobbying saga
  2. Whistleblowers, Syria and digital revolution This WEEK
  3. MEP friendship groups offer 'backdoor' for pariah regimes
  4. Macron and Merkel pledge euro reform
  5. Obscurity surrounds EU military fund's expert groups
  6. New EU party finance rules short circuit accountability
  7. Draghi to stay in secretive 'lobby' group
  8. Bulgaria offers lesson in tackling radical-right populists

Stakeholders' Highlights

  1. Mission of China to the EUChina and EU Must Work Together to Promote Global Steel Sector
  2. Swedish EnterprisesEU Tax Proposal on Digital Services Causes Concern for Small Exporting Economies
  3. Europea Jewish CongressCondemns the Horrific Murder of Holocaust Survivor Mireille Knoll in Paris
  4. Mission of China to the EUAn Open China Will Foster a World-Class Business Environment
  5. ECR GroupAn Opportunity to Help Shape a Better Future for Europe
  6. Counter BalanceControversial Turkish Azerbaijani Gas Pipeline Gets Major EU Loan
  7. World VisionSyria’s Children ‘At Risk of Never Fully Recovering', New Study Finds
  8. Macedonian Human Rights MovementMeets with US Congress Member to Denounce Anti-Macedonian Name Negotiations
  9. Martens CentreEuropean Defence Union: Time to Aim High?
  10. UNESDAWatch UNESDA’s President Toast Its 60th Anniversary Year
  11. AJC Transatlantic InstituteAJC Condemns MEP Ana Gomes’s Anti-Semitic Remark, Calls for Disciplinary Action
  12. EPSUEU Commissioners Deny 9.8 Million Workers Legal Minimum Standards on Information Rights