Will the US allow Midea’s Chinese to suck up Electrolux?
After a failed takeover bid for Whirlpool's European operations, Chinese home appliance giant Midea has set its sights on Electrolux. The Swedish company has five factories in Italy: there are fears for employment. But the US could intervene
Electrolux, a Swedish household appliance company which owns five production plants in Italy, would be close to being bought by the Chinese group Midea.
MIDEA WANTS TO EXPAND, WHILE ELECTROLUX IS IN DIFFICULTY
The operation, wrote the Friulian newspaper FriuliSera (Electrolux has a factory in Porcia), "is taken for granted". In fact, Midea has the capital to invest to expand abroad, and had already tried to acquire Whirlpool's European and Middle Eastern assets (which, however, passed under the control of the Turkish Arçelik ). Electrolux, on the other hand, is struggling in both the North American and European markets, where competition is fierce and consumers are resisting spending due to inflation.
THE FIM-CISL ALARM
The FIM-CISL, which represents the interests of metalworkers, declared that, "given the moment of drop in sales -20% on 2022, with the consequent stop in production and intensification of layoffs throughout the household appliance sector, the concern among the workers [of Electrolux, ed ] about their employment future, even in the face of these indiscretions, is growing”.
The union has asked the Ministry of Enterprise and Made in Italy to convene "a ministerial table […] to discuss measures to support the entire household appliance sector".
The question arises whether Midea, should it actually take ownership of Electrolux and related brands and technologies, will maintain current employment levels.
NO OFFICIAL COMMUNICATIONS: POSSIBLE EXPLANATIONS
No official communications have arrived from the Swedish company regarding the acquisition by the Chinese. There are two possible explanations, Il Gazzettino pointed out: that "either the negotiations are underway in absolute silence, something, however, in which few believe and not even confirmations come from the highest floors", or that "if there is Chinese interest in buying does not exist, on the other hand on the part of Electrolux the will to sell”.
LIVA'S COMMENT (PD)
The first politician to comment on the hypothetical Electrolux-Midea deal was Renzo Liva, regional secretary of the Democratic Party for Friuli-Venezia Giulia, who invited the institutions to "verify, investigate, be on guard at all institutional levels to avoid nasty surprises and then bitter recriminations if Electrolux really ends up in Chinese hands. The property is Swedish but the most important production, the technical staff with the know-how , the investments are in Italy and this is to all intents and purposes an Italian asset. And as such we have always defended the plants and jobs”.
IS THE HOUSEHOLD APPLIANCE INDUSTRY REALLY STRATEGIC?
Liva defines the household appliance industry as a "strategic asset" for Italy, although the sector is not comparable, in terms of impact on national security and future economic competitiveness, to other truly sensitive sectors such as microchips , 5G or devices for defence.
In this regard, the expert journalist of industry and work Dario Di Vico wondered in the Foglio if "even an industry like that of household appliances, which cannot be in the slightest way compared to that of semi-conductors, [obeys] geopolitical rules current in the new international context".
FRIEND-SHORING AND (POSSIBLE) RECALLS FROM WASHINGTON
In his reflection, Di Vico refers to the Whirlpool-Arçelik deal on the control of activities in the EMEA area: Whirlpool's administration (which is American: the headquarters are in Michigan) preferred to do business with Arçelik's Turks rather than than with the Chinese of Midea, who had also shown interest. There are "reasons of friendshoring ", wrote the former deputy editor of Corriere della Sera, that is, of manufacturing relocation between friendly countries : despite the tension in bilateral relations, Turkey is in fact an ally of the United States in NATO; China, on the other hand, is its main political and economic adversary.
According to Di Vico, it is possible that Washington could put pressure on the government of Sweden (which would also like to join the Atlantic alliance) so that it, in turn, asks Electrolux to abandon the operation with Midea, in order to counter the economic-industrial presence of China in Europe.
ALL ABOUT MIDEA
Midea is a Chinese home appliance company, most famous for air conditioners. Founded in 1968, it is headquartered in Beijao, Guangdong Province (an important manufacturing and technology center) and has approximately 150,000 employees worldwide. It is listed on the Shenzhen Stock Exchange and is chaired by Hongbo Fang.
Midea's main shareholder, with about 31 percent, is He Xiangjian, a Chinese billionaire and co-founder of the company.
Midea owns several home appliance brands, such as Toshiba (originally Japanese), Comfee, Eureka (founded in the United States), and COLMO.
The group has a manufacturing presence in sixteen countries, with over thirty plants in Europe (Italy, Sweden, Germany, Belarus, Hungary, Austria, Israel), Asia (China, India, Japan, Thailand, Vietnam), Africa (Egypt), South America (Argentina, Brazil) and North America (United States).
Midea's Italian division, Midea Italia srl, is based in Milan.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/electrolux-midea-cina/ on Thu, 23 Feb 2023 07:35:11 +0000.