Prague, Oct 14 (CTK) – The recent Chinese investments in the Czech Republic drew such attention as if they were to become a radical engine of the economy, but the Chinese purchases in fact open new questions rather than opportunities, economist Jan Bures writes in daily Hospodarske noviny (HN) yesterday.
The idea that the Chinese investors will markedly help the Czech economy is mistaken first of all because the Chinese do not intend to open new plants in the Czech Republic, but they want to buy functioning firms, Bures writes.
He mentions the recent purchases of the Pivovary Lobkowicz brewery and the Slavia Praha football club.
As a result, neither an increase in production nor the creation of new jobs can be expected, Bures says.
Such purchases may mean nothing more than changes of ownership of the real estate registered in the land office, he adds.
Foreign investments may nevertheless bring technological or managerial innovations to well-established companies, Bures writes, referring to the purchase of the Skoda Auto car maker by Volkswagen.
But the present invasion of Chinese investors of Europe does not bring any such innovation. On the contrary, the influx of Chinese investments does not reflect the strength of the Chinese economy, but its structural problems, Bures writes.
He says Chinese companies have a lot of cash, but they do not have enough opportunities in the slowing-down Chinese economy. This forces them to buy assets abroad: they buy raw materials in Third World countries and they are interested in the technology know-how in Europe and America, Bures writes.
The Chinese car maker Geely bought the Swedish Volvo, the Huaxin Post telecommunication company invested in the French Alcatel-Lucent and Chinese firms would like to buy German engineering companies, Bures writes.
Such investments not only fail to bring anything new, but they may lead to the move of the technologically more demanding professions and development close to the centres in China as well, he says.
Chinese state-owned and private companies often buy foreign assets thanks to a strong support of the government, while European legislation bans this, Bures writes.
Many politicians from the highly developed countries do not like the unfair global competition for strategic assets and they do not warmly welcome Chinese investors due to it. The U.S. administration introduced stricter laws limiting the investment influx and Europe may follow suit, he writes.
Unlike in the 1990s, the Czech Republic does not need huge foreign investments creating thousands of cheap jobs, Bures points out.
He says the Czech economy needs to create higher added value jobs that would mean higher wages as well. The attention should be paid to a higher-quality education system and support for ambitious small- and medium-sized businesses, Bures writes.
