Germany aims to shield tech firms from foreign takeovers

Germany's economy ministry on Thursday said it planned to tighten rules on non-EU takeovers of hi-tech firms, against a backdrop of growing alarm about Chinese firms buying up German know-how.

The ministry said it had drafted an amendment to the Foreign Trade Regulation that would allow the government to review or block foreign purchases of stakes as low as 10 per cent in "critical technology" companies.

It would affect firms working in the areas of robotics, artificial intelligence, semi-conductors, biotechnology and quantum technology.

"It's not about banning acquisitions, but about being able to look at them more closely in cases where it concerns critical technologies," the ministry said in a statement.

The move goes further than previous efforts by Berlin to protect strategic firms from foreign acquisitions.

Economy Minister Peter Altmaier will unveil the proposal at a Berlin press conference on Friday.

Concern has mounted in recent years as Chinese companies have bought up or purchased controlling stakes in high-tech firms, airports and harbours in countries across the European Union.

In Germany, the 2016 takeover of industrial robotics Kuka by Chinese household goods maker Midea sparked an outcry with critics saying vital technologies were being sold off to Beijing.

The German government responded in 2017 by announcing closer scrutiny of acquisitions by non-EU firms, doubling to four months the time for reviews, and strengthening its veto powers.

Berlin toughened its stance again last December with stricter rules to shield "critical infrastructure" sectors like energy, defence and telecoms from such takeovers.

Those regulations made it possible for the government to review purchases of stakes as low as 10 per cent in such companies, down from 25 per cent previously.

But it still did not cover companies like Kuka -- something Altmaier's latest proposal seeks to address.

During a visit to Berlin in July 2018, Chinese Prime Minister Li Keqiang sought to reassure anxious Germans.

Investments from China "do not threaten your national security", he said, stressing that Chinese firms wanted to learn from German "experiences and technologies".

That same month, the German government took a minority stake in electricity transmission firm 50Hertz, thwarting Chinese investors from buying into the company.