7. Governmental Stakeholders
7.2 Government Intervention in FDI
7.2.4 Social Stakeholder Capacity in Chinese Foreign Direct Investment
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Given that the city has largest harbor and hosts an Airbus development site, it aims to further investments into Logistics, Media, Creative Industries, Renewable Energy, Healthcare, Aviation, Technology, Maritime Industry and Life Science. (HWF 2012) Overall, the city cooperates with stakeholders from those eight different industry clusters. To help it structure its limited resources effectively it cooperates closely with the industry clusters to make use of their respective industry- and international know-how (Matz 2009). The industry clusters are represented through a host of
organizations and companies, representing a cross-section of value-added sectors.
Furthermore, Hamburg investment promotion is among the only to have a distinct regional focus in its investment promotion activities- particularly reaching out to Chinese investors from the Beihai Bay, Pearl River Delta, Jiangtze River Delta and the region around Chongqing. (Matz 2009) For this end, the HWF established foreign representative offices in Hong Kong, Guangzhou and Shanghai.
It appears, that all state-based investment promotion activities focus on value-added activities tailored to improve the productive structure locally. The system of
investment promotion differs from state to state, as can be seen from the examples described above. The commonality between all examples is their focus on guiding Chinese investments into high-end, knowledge-intensive industries. While the
national GTI agency provides services for all German investment locations and across all industries, the states use investment promotion activities to further industrial upgrading and direct investment into selected locations and commercial sectors. Their respective means of influence are however limited financially and by accessibility. It is interesting to note, that for some states (as is the case for Hamburg), the chambers of commerce serve as representative offices for their investment promotion activities.
However this has not played a decisive role for investment promotion on state level in the promotion of Chinese investments.
7.2.4 Social Stakeholder Capacity in Chinese Foreign Direct Investment
Unions are voluntary associations of workers to represent their social and economic interests. As guaranteed under German constitutional law, unions together with the employers associations possess the right to collective bargaining regarding working
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come to play an important role in the individual enterprise, but also beyond. They remain key stakeholders in German politics, given their high number of members and influence over company policies. The most important tasks of the union include the improvement of working conditions, job security, the representation of workers
interests at labor courts and the negotiation/ conclusion of collective labor agreements.
Workers are also represented in elected work councils, often associated with the unions (but not necessarily). The largest unions of Germany are represented through the umbrella organization Confederation of German Trade Unions (Deutscher Gewerkschaftsbund).
The exchange between unions and employers plays a key role for the structure of the German economic model. The interest of the employers is represented through the employer’s federations, chambers of commerce and chambers of crafts. Both parties are ultimately forced to cooperate, leading to a balance of interests and ultimately consensus. The work of unions is integrated into the daily working environment, but also spans up to the transnational European sphere. On the individual company level, employees elect a worker’s council to represent their interest. In larger companies, these elected worker’s council members are guaranteed a seat in the board of directors. (Page 2011) Beyond the company level, unions have become a strong social force with networks on federal and European level. Unions cooperate across sectors to influence politicians through common initiatives, campaigns, and dialogs with key decision-makers. In Germany, unions are important for shaping a larger debate on values and policies, making them relevant for both micro- and macro levels.
(Huke 2010, 7)
The case studies on Chinese investment in chapters 6.4.1 and 6.4.2 underline the key role unions play for success or failure of Chinese investors. Unions can either play a supportive role in the takeover process or else restrict the ability of the investor to act independently, given their capacity to organize the workforce and exert pressure on the management. Unions have various means at their disposal to coerce investors and make the smooth undertaking of a takeover virtually impossible. The influence of unions starts in the takeover negotiations, in which it is customary that an agreement be reached between the union and the investor over issues such as jobs cuts, extended
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working hours and salary. A positive example of this can be seen from the case of Schiess, in which union and investor cooperated smoothly, agreeing on labor security and concluding an agreement to guarantee no jobs to be outsourced in years to come.
A negative example for conflict between union and investor can be seen from the example of Kelch & Links. The union used a rather aggressive strategy to hinder the investor evading his wage agreement with the workers of Kelch & Links. They not only made use of their right to go on strike, but also blocked the removal of machinery from the company headquarters. The right to strike is regulated by several conditions:
Only associations allowed to conclude collective agreements (i.e. unions and
employers’ associations) are allowed to call a strike. The strike must have the aim to conclude such a collective agreement. (Klaß/ Rölz/ Rabe/ Reitemeyer 2012, 56) The union can thus make it virtually impossible for the investor to press through on job- or wage cuts, if not agreed upon with the union as representative of the workforce.
It appears, that means of public relations make among the strongest coercive
instruments of unions vis-à-vis the investor. In the case of Kelch & Links, the union used a severe media campaign to destroy the public reputation of the Chinese investor.
The union in question issued a leaflet denouncing the investor to employ “Shanghai Methods”- alluding to the notoriously bad image of Chinese labor standards.29 The union was able to make media aware of the conflict, leading to the publication of several articles in local, regional and even national newspapers and magazines.30 Given that Kelch & Links is an SME in a traditional, rural part of Germany, such a media campaign does not only tarnish the reputation of a company, but may well infringe further business activities. The bad reputation of a company will likely destroy business relations, customer loyalty and sales. As media on national level picked up on the story, this effect goes well beyond the local framework and is seriously hampering the takeover for the investor. While no case is known to date in which a union was able to preempt a takeover, a well planned media campaign could very well coerce an investor to agree to demands by the union or refrain from the M&A procedure. With the ongoing rise of M&A activity by Chinese investors, this seems all the more likely in the future.
29 Refer to: IGM Metallnachrichten (2010). Shanghai-Methoden bei Kelch und Links? IG Metall Region Stuttgart. IGM News 03.16.2010
30 The articles were published amongst other in the regional paper Stuttgarter Nachrichten; local newspapers Rems-Murr Rundschau and Waiblinger Kreiszeitung; several online industry papers; and
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