Study Reveals Challenges in Worker Representation Following Chinese Acquisitions in Germany

A recent analysis by the Hans-Böckler-Stiftung highlights significant challenges faced by employee representation in companies acquired by Chinese investors in Germany. The study indicates that the entry of new stakeholders from China often leads to substantial shifts in corporate culture, hindering the ability of employees to participate in decision-making processes.

According to the findings, four main factors contribute to this issue: limited access to information, language barriers, paternalistic management practices, and the influence of the Chinese Communist Party's guidelines. Since 2001, Chinese firms have acquired 294 German companies, with nearly one-third of these acquisitions resulting in unfavorable outcomes, such as the companies being resold or closed shortly after the takeover.

The study reveals that Chinese owners frequently assert direct control, employing Chinese executives who collaborate with existing local management. However, these managers are often perceived as difficult to approach for employee representatives. Although there is no evidence of intentional obstruction of worker councils by Chinese shareholders or executives, their management style tends to restrict the ability of employee representatives to communicate effectively.

In China, independent labor unions do not exist, nor is there a system of co-determination comparable to that in Germany. This creates a significant cultural gap, making it challenging for German works councils to engage with their new Chinese counterparts. A representative from a works council expressed frustration, noting the difficulty in reaching out to Chinese executives compared to previous interactions with local leadership.

Prior to the COVID-19 pandemic, a wave of Chinese investments in German firms, including notable acquisitions like the robotic manufacturer Kuka, took place. However, in recent years, there has been a noticeable decline in Chinese investment activity across Europe.