World without frontiers
As they have been turning on their taps since 2004, Cambridge householders will not have noticed any ‘Made in Hong Kong’ stickers on their sink tops.
Cambridge Water was under Chinese ownership for over seven years before HSBC – with roots of its own in Hong Kong, of course – bought the business recently.
The water’s provenance and taste has remained largely unchanged during Chinese rule; more to the point the company providing the vital resource has remained stable, adequately staffed and well financed.
Nationalised – public or private – a battered British Steel might have been even worse off but for Tata’s ownership from India through its Corus brand. Iconic sportscar maker Lotus in Norfolk has positively thrived under Malaysian ownership.
Passengers winging all over Europe through Stansted Airport probably won’t know – or care – that for now, at least, the hub is controlled by a Spanish infrastructure company.
Given successive UK governments’ lack of investment and vision, their propensity for bowing to political expediency – allied to often crippling planning constraints – it is a wonder any foreign investors can be bothered buying any British assets. But buy they most certainly do – and buy big. And this region wouldn’t be worth a light without their presence.
More to the point they shore up jobs and growth strategies in businesses that might otherwise go to the wall. That sustenance preserves money spent in the local and national economies. It ensures food and clothes can be bought; houses, cars and gadgets purchased; children put through a decent education; charitable causes supported whenever possible.
And if it hadn’t come through foreign ownership, do you think successive UK governments would have been able to take the strain?
So enough of the protectionist piffle that has emanated from so many quarters following Autonomy’s audacity in accepting an $11 billion offer from HP. It has always happened – although not on this financial scale – and it will happen increasingly in the future as fiscal capital chases intellectual capital.
Speculation was raging once again in the City this week that Oracle – which recently acquired Datanomic in Cambridge – Intel and even Apple might be set to start an auction for ARM. Ready the hankies and the professional wailers – the business world’s banshees. ‘We’ve lost another one boys and girls: If it carries on at this rate the whole of the UK business landscape will be well financed and stable!’ Heaven forfend.
It’s comforting in some ways to know that the hysteria also exists across the other side of the Atlantic where even some of the most enlightened and intellectual Presidents have been suckered into overt protectionism to keep the barbarians from the gate in the last couple of decades.
For the record, leading Cambridge UK companies such as ARM, Abcam, CSR, Autonomy, Domino and many more have all made significant acquisitions of US companies in the last 12 months. It may surprise no-one to learn that there has been much wringing of hands from Corporates to Congress at the volume of American companies slipping into European and Asian ownership. So much for ‘land of the free.’
Bang up to date stats are thin on the ground but a trend has become patently obvious. Foreign ownership of US companies more than doubled from 1996 to 2005. In 2007, Congress took up the issue of foreign investment in US infrastructure, nearly a year after the United Arab Emirates-owned company Dubai Ports World prompted raging debate with its purchase of a company that ran US ports. Dubai World is now building the UK’s first new port in over a quarter of a century – the London Gateway. No-one else came through with the cash and the will.
In the last two years there have been some excellent articles in the New York Times and other sensible US media spelling out how foreign-owned companies, from Toyota to Tata (via Eight O'Clock Coffee) have been propping up local economies in Mississippi, Indiana, and Georgia.
In many hard-hit areas of the States, foreign companies have literally offered a lifeline and an escape hatch from misery. Micheline Maynard, a New York Times journalist and author of ‘The Selling of the American Economy: How Foreign Companies are Remaking the American Dream’ vocalised the timely reminder that foreign companies have helped revitalise forgotten towns, adding over five million jobs to the US economy and providing American workers with stable jobs that pay substantially more than the average US professional salary.
Investments in the US by big car companies like Toyota, Honda, Nissan and Mercedes-Benz have been good news for the American economy. Tens of thousands of Americans work for other foreign companies like the Tata Group of India; Haier, the Chinese appliance maker; and Nestlé, the Swiss food company, which employs hundreds in Indiana. Even Anheuser-Busch, America’s best-selling beer maker, is owned by a Belgian company, InBev.
It may not be to everyone’s philosophical liking but money continues to make the business world go round. In an age when the Internet has made the world a global virtual village; where international travel is cheaper and accessible to more people; and where common sense and sheer decency dictate that we embrace cultural diversity we should all be working to create a world without frontiers; building bridges, not burning them; forging rivers not damming them.
When a foreign company buys one of our businesses our concern should not be the origin of the new owner but their motives. We should oppose asset strippers and those who would like to grab the Intellectual Property and run, having closed down the operations and axed the workforce in their indecent haste to flee. But that was the old model. In the majority of cases that is not what we have been seeing in recent times.
WorldCom’s acquisition of UUNET in Cambridge had a sad and sorry denouement. And Motorola made a pig’s ear out of its acquisition of TTPCom. But even there Motorola’s ham-fisted handling of the opportunity had a silver lining with TTPCom people leaving to form excellent new companies such as Qasara and Cognovo.
Broadcom and Qualcomm have benefited from maintaining bases in the Cambridge Cluster, close to the brainpower of the university, following their respective acquisitions of Cambridge duo Alphamosaic and Trigenix – both in 2004. No seven-year itch there.
Robert Sansom, one of the Alphamosaic entrepreneurs who benefited from the Broadcom deal, has been a magnificent supporter of other young tech ventures locally along with Red Gate’s Neil Davidson a financial saviour of the recent inaugural Springboard Cambridge programme.
No doubt some of the new millionaires at Autonomy will help fund the growth of other local startups. The record levels of angel investment in startup hopefuls we are seeing in Cambridge at present have been made possible by the millions made from selling local businesses to mainly foreign buyers.
A Little Englander ‘trench and spikes’ mentality will not puncture the wheels of commerce and neither should it be permitted to. We are seeing increasingly multicultural workforces and managements in Cambridge with all the benefits that brings for any knowledge-based economy in terms of fresh thinking and cross-fertilisation of ideas.
We shouldn’t be wary of putting the ‘bee’ into our blossoming B2B cluster, figuratively speaking: More businesses and technology advances will be propagated and flower if we allow the metaphorical bees of foreign investment to harvest and spread the pollen. That potential should create a buzz in any hive of industry.