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| E.U. Blocks Siemens-Alstom Plan to Create European Train Giant | E.U. Blocks Siemens-Alstom Plan to Create European Train Giant |
| (about 3 hours later) | |
| FRANKFURT — European antitrust authorities on Wednesday blocked a plan by Alstom of France and Siemens of Germany to combine their train-making units, killing a deal the companies said they needed to combat increasing competition from China. | FRANKFURT — European antitrust authorities on Wednesday blocked a plan by Alstom of France and Siemens of Germany to combine their train-making units, killing a deal the companies said they needed to combat increasing competition from China. |
| The decision by the European Commission to prohibit Siemens from acquiring the Alstom business was expected and intensifies a debate about whether Europe is vulnerable to Chinese competitors that often have close government ties and have been acquiring prominent assets, including a big stake in the German carmaker Daimler last year. | The decision by the European Commission to prohibit Siemens from acquiring the Alstom business was expected and intensifies a debate about whether Europe is vulnerable to Chinese competitors that often have close government ties and have been acquiring prominent assets, including a big stake in the German carmaker Daimler last year. |
| CRRC, China’s state-owned train maker, has become a formidable competitor in Asia and Africa, where demand for mass transit is growing. Proponents saw Siemens’s acquisition of Alstom as a way to maintain European supremacy in high-speed trains during a time of growing anxiety about China’s international ambitions. | CRRC, China’s state-owned train maker, has become a formidable competitor in Asia and Africa, where demand for mass transit is growing. Proponents saw Siemens’s acquisition of Alstom as a way to maintain European supremacy in high-speed trains during a time of growing anxiety about China’s international ambitions. |
| “It’s obvious that the times are over when we can afford to underestimate Chinese capacity in providing high-speed railway and other services internationally at a cost and quality that is very competitive,” said Mikko Huotari, deputy director of the Mercator Institute for China Studies in Berlin. | “It’s obvious that the times are over when we can afford to underestimate Chinese capacity in providing high-speed railway and other services internationally at a cost and quality that is very competitive,” said Mikko Huotari, deputy director of the Mercator Institute for China Studies in Berlin. |
| Political leaders in Germany and France responded that the commission’s decision was wrong and that they would push for changes in antitrust rules. | Political leaders in Germany and France responded that the commission’s decision was wrong and that they would push for changes in antitrust rules. |
| “We consider it proper for the two biggest European companies in train and signal technology to cooperate,” Peter Altmaier, the German economics minister, told reporters Wednesday. “Only then are they big enough and strong enough that they can keep pace with international competitors.” | “We consider it proper for the two biggest European companies in train and signal technology to cooperate,” Peter Altmaier, the German economics minister, told reporters Wednesday. “Only then are they big enough and strong enough that they can keep pace with international competitors.” |
| But European Commission officials portrayed fears about Chinese competition in the train business as overblown, and said the merger would have led to higher prices for European travelers. | But European Commission officials portrayed fears about Chinese competition in the train business as overblown, and said the merger would have led to higher prices for European travelers. |
| China Railway Rolling Stock Corporation, the state-owned train maker, has not sold a single high-speed train outside China, Margrethe Vestager, the European competition commissioner, said at a news conference in Brussels. Her definition of high-speed rail, however, was restricted to the fastest trains, and excluded major projects built by Chinese enterprises in countries like Turkey and Kenya. | China Railway Rolling Stock Corporation, the state-owned train maker, has not sold a single high-speed train outside China, Margrethe Vestager, the European competition commissioner, said at a news conference in Brussels. Her definition of high-speed rail, however, was restricted to the fastest trains, and excluded major projects built by Chinese enterprises in countries like Turkey and Kenya. |
| “There is no prospect of Chinese entry in the European market in the foreseeable future,” Ms. Vestager said. | “There is no prospect of Chinese entry in the European market in the foreseeable future,” Ms. Vestager said. |
| Her benign view of Chinese competition is at odds with the prevailing mood in Europe, where there is a growing opposition toward China’s push into world markets and its investment in key industries in Europe, such as industrial robots, batteries for electric cars and construction machinery. | Her benign view of Chinese competition is at odds with the prevailing mood in Europe, where there is a growing opposition toward China’s push into world markets and its investment in key industries in Europe, such as industrial robots, batteries for electric cars and construction machinery. |
| As in the United States, European countries are increasingly suspicious of Chinese intentions. The Americans have moved to restrict the use of Chinese technology, particularly from the telecommunications company Huawei, because of espionage concerns. Germany is scrutinizing whether there could be any security risk from equipment Huawei is providing for a state-of-the-art network. Europe has become Huawei’s biggest market outside China | As in the United States, European countries are increasingly suspicious of Chinese intentions. The Americans have moved to restrict the use of Chinese technology, particularly from the telecommunications company Huawei, because of espionage concerns. Germany is scrutinizing whether there could be any security risk from equipment Huawei is providing for a state-of-the-art network. Europe has become Huawei’s biggest market outside China |
| On Tuesday, Mr. Altmaier, the economics minister, unveiled a so-called National Industrial Strategy intended in part as a defense against China’s growing industrial might. The proposal would allow the government to buy stakes in companies with critical technologies to protect them from foreign takeover. | On Tuesday, Mr. Altmaier, the economics minister, unveiled a so-called National Industrial Strategy intended in part as a defense against China’s growing industrial might. The proposal would allow the government to buy stakes in companies with critical technologies to protect them from foreign takeover. |
| CRRC, the Chinese train maker, alarms foreign competitors because it can produce equipment cheaply in China and receives subsidies from the government, giving it a price advantage. In addition, the government provides financing and other incentives to companies that award infrastructure contracts to CRRC. | CRRC, the Chinese train maker, alarms foreign competitors because it can produce equipment cheaply in China and receives subsidies from the government, giving it a price advantage. In addition, the government provides financing and other incentives to companies that award infrastructure contracts to CRRC. |
| In fact, Chinese investment in Europe declined last year because of the nation’s slowing economy as well as increased scrutiny by local officials. In Germany, Chinese investors spent $10.7 billion in 2018, a 22 percent decline from 2017, according to a report published Tuesday by the consulting firm EY. Li Shufu, the owner of the Chinese automaker Geely, accounted for most of that when he spent an estimated $8.9 billion to buy about 10 percent of Daimler. | |
| Europewide, Chinese investment plunged 46 percent to $31 billion, EY said. But analysts say that the decline is temporary, and that China continues to covet European expertise and access to its market. | |
| CRRC’s presence in the European train market is minuscule. It is limited to projects such as providing a small number of locomotives to Deutsche Bahn, the German rail company, to haul track equipment. CRRC has been held back by difficulty in meeting European safety and quality standards, said Agatha Kratz, an associate director at the Rhodium Group, a research firm. | CRRC’s presence in the European train market is minuscule. It is limited to projects such as providing a small number of locomotives to Deutsche Bahn, the German rail company, to haul track equipment. CRRC has been held back by difficulty in meeting European safety and quality standards, said Agatha Kratz, an associate director at the Rhodium Group, a research firm. |
| But that is a temporary obstacle, she said. “They are going to come on to the market with very competitive prices,” said Ms. Kratz, who follows Chinese investment in Europe. “For certain countries, that is going to be very attractive.” | But that is a temporary obstacle, she said. “They are going to come on to the market with very competitive prices,” said Ms. Kratz, who follows Chinese investment in Europe. “For certain countries, that is going to be very attractive.” |
| At the same time, Siemens and Alstom are being squeezed out of the Chinese market, Ms. Kratz said. | At the same time, Siemens and Alstom are being squeezed out of the Chinese market, Ms. Kratz said. |
| Within Europe, there was significant opposition to the Siemens-Alstom deal from countries like Britain, Denmark and Spain. One objection was that Siemens and Alstom would dominate the market for signaling equipment at a time when European railroads are investing heavily to make their networks compatible and allow for smoother cross-border travel. | Within Europe, there was significant opposition to the Siemens-Alstom deal from countries like Britain, Denmark and Spain. One objection was that Siemens and Alstom would dominate the market for signaling equipment at a time when European railroads are investing heavily to make their networks compatible and allow for smoother cross-border travel. |
| Because most railroads are government-owned or subsidized, taxpayers would have ultimately borne the cost, Ms. Vestager said. “In some signaling markets, there would be no competition left,” she said. | Because most railroads are government-owned or subsidized, taxpayers would have ultimately borne the cost, Ms. Vestager said. “In some signaling markets, there would be no competition left,” she said. |
| Siemens and Alstom said in a joint statement that they regretted the decision and would not pursue the merger further. | Siemens and Alstom said in a joint statement that they regretted the decision and would not pursue the merger further. |