Chinese Firms Acquire German Automotive Parts Manufacturer Amidst Tightened Regulatory Reviews of Foreign Investment

On August 4, Chinese conglomerate Fosun International and its joint venture firm Nanjing Nangang Iron & Steel United Co. Ltd. (a 60–40 JV firm between Fosun and state-owned Nanjing Iron and Steel Group) acquired German lightweight automotive parts supplier, Koller Beteiligungs GmbH.  Koller supplies parts to major European car makers, such as Volkswagen, BMW, Mercedes.  The German company reportedly sees its newest (and largest) shareholder as an opportunity to strengthen its position in the European market and expand into China.  The financial details of the acquisition, however, remain undisclosed.

The transaction comes a month following the German Cabinet’s move to tighten reviews and regulation of foreign investment in domestic companies.  The reforms were triggered specifically by the aggressive M&A activity by Chinese firms in Germany, particularly in the technology and manufacturing industries.  Regulators were concerned about the outflow of proprietary information, including potentially dual-use technology, that was critical to the domestic economy and important to national security.  Some reports indicate that approximately 37 German companies were overtaken by Chinese entities in 2016 alone.

Although the acquisition of this automotive parts supplier may not fall under the “threat to public order” stipulation that typically triggers a government review process, the opacity of this deal affirms Berlin’s concerns about investment inflows from Chinese companies that are often affiliated with government (i.e., Nanjing Nangang Group).