Not on my watch. Mario Draghi’s government has exercised its “Golden Power” with regards to a prospective deal between ROBOX, an Italian company based in Novara, and Efort Intelligent Equipment, a Chinese leader in robotics with links to the Beijing government. The latter aimed to increase its shares of the former and strike a technology transfer agreement. The government greenlit the share increase, but vetoed the technology transfer agreement.
- The Golden Power is the Italian government’s special power to limit or stop foreign direct investments and corporate transactions involving national strategic assets.
- Efort’s board of directors announced the news through a note on Shanghai Securities News, China’s main financial newspaper. Here’s what it says:
- “Recently, the company was notified by an Italian lawyer that the transaction failed to pass the approval of the Italian government’s Golden Power […].The company will work with ROBOX and Italian lawyers to further communicate with the relevant Italian approval authorities and disclose the progress in a timely manner.”
The takeover bid. As we previously reported, the Chinese group offered €2 million to increase its shares from 40 to 49%. It also intended to spend an extra million on a technical licence agreement to access source codes and files.
The Beijing connection. Efort Intelligent Equipment stated on its website that it had “taken the lead in undertaking the robotics projects of the Ministry of Industry and Information Technology, the Ministry of Science and Technology, the National Development and Reform Commission and other ministries, and participated in the formulation of a number of national standards for the robot industry.”
- An analysis by Datenna, a Netherlands-based China economic intelligence agency, noted that the Chinese State’s level of influence on Efort Intelligent Equipment is “considered high”.
- Also, the production of robotic components is “aligned with the industrial development priorities defined in the Made In China 2025 project”, i.e. the strategy through which Beijing wants to achieve global dominance in high-tech production.
- However, Datenna’s experts explained, “these relationships tie the company to various government institutions rather than the Chinese Communist Party.”
The Great Wall of Draghi. The Italian Prime Minister’s government has made extensive use of the special powers (strengthening the underlying legislation and offices) to develop its own political-economic strategy and counter Beijing’s attempts to expand its presence and influence in the Eurozone’s third-largest economy. Especially with regard to strategic sectors and those at risk of technology transfer.
- Previous governments had only employed the Golden Power twice to block foreign takeovers. But during PM Draghi’s 17 months long tenure, his administration has vetoed a total of five, all related to China.
- The most recent one concerns Alpi Aviation, an Italian drone manufacturer that had failed to notify the Prime Minister’s Office about selling 75% of its shares to a Hong Kong company, which, as it turned out, was controlled by two Chinese state-owned groups.
- Other instances relate to the semiconductor (Applied Materials Italia and LPE) and agriculture (Syngenta) sectors.
It’s a paradigm shift. A mere three years since an Italian government signed a Memorandum of Understanding with Beijing to enter the Silk Road, Italy’s approach to China appears to have changed and the United States, which had expressed worry at the time, today seems reassured.
- Wendy Sherman, US Deputy Secretary of State, recently noted that Rome – under PM Draghi – “understands very well how the People’s Republic of China operates in the world.”