One of the great questions facing Europe at this moment is how to compete with Chinese companies.
Chinese exports are threatening to swamp EU markets with cheaper and increasingly sophisticated goods, particularly in mid- and high-tech sectors where European firms once dominated.
This all happened in a matter of years. Part of the explanation, many policymakers in Brussels believe, lies in scale. Chinese giants such as BYD, CATL and Huawei have poured vast sums into research and development, opening up new technological frontiers, particularly in clean tech and AI.
After years of soul-searching (and fat reports by former Italian prime ministers), the EU Commission at the end of April presented a draft of what could be the most ambitious overhaul of merger rules in more than two decades.
The aim: “[to] look more favourably on monopolies given their potential to foster innovation,” EU competition chief Theresa Ribera, presenting the plan, told ministers earlier in May. The reforms would change how Brussels judges mergers, placing greater weight on whether larger companies can boost innovation and compete globally. But some economists warn Europe risks misdiagnosing its own strengths.Bernardo Pimentel, associate professor at the University of Roehampton and co-author of the 2022 paper Davids and Goliaths: Hidden champions in an age of state capitalism, argues Europe’s industrial edge has often come not from corporate “goliaths”, but from “nimble Davids”: highly specialised smaller firms embedded in local supply chains, universities and engineering cultures.The challenge then, as he sees it, is whether Brussels can support scale without undermining Europe’s smaller firms that drive much of its technological edge. “My point is that these Davids already have the scale they need to compete in global markets,” he told EUobserver.
