Philippa Kaur

The defining deal of the mining industry’s last merger wave never happened. bhp Billiton’s audacious $150bn bid in 2008 for a rival, Rio Tinto, which would have created a commodities super-group, captured the debt-fuelled spirit of the commodities “supercycle” of the 2000s. As China’s growth slowed and the miners’ capital spending peaked, things fell back to earth. The industry has atoned for its sins by cleaning up its balance-sheets and returning record sums to shareholders. Years of discipline, a surge in commodity prices and the prospect of an explosion in demand for “green” metals have mining bosses again dreaming up fantasy deals. For growth-hungry firms, the high costs and risks of developing new projects and relatively cheap valuations for companies in the sector mean that buying looks more attractive than digging. Last year, as dealmaking slumped in other sectors, mining bosses shook hands at a rate not seen in a decade.Listen to this story. Enjoy more audio and podcasts on More

ANNALENA BAERBOCK kicked off her first trip to China as Germany’s foreign minister in April with a visit to a production site of Flender. The Mittelstand firm makes parts for wind turbines in Tianjin, a coastal city around 130km south-east of Beijing. Ms Baerbock toured the facility for about an hour, all the while bombarding her hosts with questions, such as whether its suppliers are local. It is unusual for a foreign minister to tour a factory, but it shows the importance of business ties between Germany and China. The country is Germany’s biggest trade partner and an important destination for foreign investments in several industries that are the backbone of the Mittelstand. Yet as the value of trade increased for the seventh consecutive year in 2022, the bilateral deficit widened. German imports from China rose by a third compared with 2021 to €192bn ($202bn), whereas exports of German wares to China increased by only 3% to around €107bn.Ms Baerbock’s ministry is spearheading efforts to write a new China strategy. Its much-awaited publication has been repeatedly postponed because of the need to strike a balance between boosting German business while at the same time encouraging some firms to diversify and make Germany less dependent on imports of critical raw materials from China. As Germany’s government recalibrates its China strategy two trends are emerging. One is that the companies already heavily invested in China are doubling down. Some of the country’s largest companies greatly rely on Chinese customers and suppliers. That includes its three big carmakers (Volkswagen, Mercedes-Benz and BMW); BASF, a chemicals giant; and Bosch, a car-components supplier. BASF is charging ahead with its €10bn investment in a new production site in southern China. In October vw announced a €2.4bn investment in a joint venture with a Chinese firm for self-driving cars and will spend €1bn on a new centre for developing electric cars. The other is that German companies are increasingly producing in China for China. Flender’s factory in Tianjin serves only the Chinese market. This reinforces an uncomfortable position for policymakers. Overall Germany may be less dependent on China than generally assumed. A recent study published by the Bertelsmann foundation, the German Economic Institute in Cologne (iw), merics, a think-tank, and the bdi, an association of German industry, scrutinised investment in China. It showed that between 2017 and 2021 China accounted for, on average, 7% of German foreign-direct investment and 12-16% of annual corporate profits, much the same as America, but far less than the eu, which provided, on average, 56% of corporate profits in the same period. And only around 3% of German jobs either directly or indirectly depend on exports to China, says Jürgen Matthes of iw. Yet that is not a reason to be less concerned about China, warns Max Zenglein of merics. In the past the assumption was that business in Germany would automatically benefit from investment in China, he says. With German companies increasingly spending on local production and research and development, the bulk of local profits is now often being reinvested there. And in the longer term the “local to local” trend could hurt both German jobs and exports to China. Another cause for concern is the cluster of huge German firms and industries that continue to rely heavily on China. The survival of its large carmakers and chemicals firms could hinge on access to the country. And China supplies 95% of the solar cells installed in Germany as well as 80% of laptops, and 58% of the circuit boards that are integral to other electronic goods. Germany also depends on China for the rare-earth metals needed to make semiconductors and lithium-ion batteries as well as antibiotics and other important medicines. Mr Matthes warns that companies will continue to pour billions into China unless the new policy provides incentives to do otherwise. If China’s threats to Taiwan turn nastier the consequences could be devastating for firms doing an ever-bigger slice of their business there. The latest tentative date for the publication of the new strategy is just after a meeting on June 20th between Olaf Scholz, the German chancellor, and Li Qiang, China’s prime minister. It is high time for a rethink. ■To stay on top of the biggest stories in business and technology, sign up to the Bottom Line, our weekly subscriber-only newsletter. More

ANNALENA BAERBOCK kicked off her first trip to China as Germany’s foreign minister in April with a visit to a production site of Flender. The Mittelstand firm makes parts for wind turbines in Tianjin, a coastal city around 130km south-east of Beijing. Ms Baerbock toured the facility for about an hour, all the while bombarding her hosts with questions, such as whether its suppliers are local. It is unusual for a foreign minister to tour a factory, but it shows the importance of business ties between Germany and China. The country is Germany’s biggest trade partner and an important destination for foreign investments in several industries that are the backbone of the Mittelstand. Yet as the value of trade increased for the seventh consecutive year in 2022, the bilateral deficit widened. German imports from China rose by a third compared with 2021 to €192bn ($202bn), whereas exports of German wares to China increased by only 3% to around €107bn.Ms Baerbock’s ministry is spearheading efforts to write a new China strategy. Its much-awaited publication has been repeatedly postponed because of the need to strike a balance between boosting German business while at the same time encouraging some firms to diversify and make Germany less dependent on imports of critical raw materials from China. As Germany’s government recalibrates its China strategy two trends are emerging. One is that the companies already heavily invested in China are doubling down. Some of the country’s largest companies greatly rely on Chinese customers and suppliers. That includes its three big carmakers (Volkswagen, Mercedes-Benz and BMW); BASF, a chemicals giant; and Bosch, a car-components supplier. BASF is charging ahead with its €10bn investment in a new production site in southern China. In October vw announced a €2.4bn investment in a joint venture with a Chinese firm for self-driving cars and will spend €1bn on a new centre for developing electric cars. The other is that German companies are increasingly producing in China for China. Flender’s factory in Tianjin serves only the Chinese market. This reinforces an uncomfortable position for policymakers. Overall Germany may be less dependent on China than generally assumed. A recent study published by the Bertelsmann foundation, the German Economic Institute in Cologne (iw), merics, a think-tank, and the bdi, an association of German industry, scrutinised investment in China. It showed that between 2017 and 2021 China accounted for, on average, 7% of German foreign-direct investment and 12-16% of annual corporate profits, much the same as America, but far less than the eu, which provided, on average, 56% of corporate profits in the same period. And only around 3% of German jobs either directly or indirectly depend on exports to China, says Jürgen Matthes of iw. Yet that is not a reason to be less concerned about China, warns Max Zenglein of merics. In the past the assumption was that business in Germany would automatically benefit from investment in China, he says. With German companies increasingly spending on local production and research and development, the bulk of local profits is now often being reinvested there. And in the longer term the “local to local” trend could hurt both German jobs and exports to China. Another cause for concern is the cluster of huge German firms and industries that continue to rely heavily on China. The survival of its large carmakers and chemicals firms could hinge on access to the country. And China supplies 95% of the solar cells installed in Germany as well as 80% of laptops, and 58% of the circuit boards that are integral to other electronic goods. Germany also depends on China for the rare-earth metals needed to make semiconductors and lithium-ion batteries as well as antibiotics and other important medicines. Mr Matthes warns that companies will continue to pour billions into China unless the new policy provides incentives to do otherwise. If China’s threats to Taiwan turn nastier the consequences could be devastating for firms doing an ever-bigger slice of their business there. The latest tentative date for the publication of the new strategy is just after a meeting on June 20th between Olaf Scholz, the German chancellor, and Li Qiang, China’s prime minister. It is high time for a rethink. ■To stay on top of the biggest stories in business and technology, sign up to the Bottom Line, our weekly subscriber-only newsletter. More

Goings-on in mexican telecoms are akin to a telenovela. América Móvil, the empire owned by the country’s richest man, Carlos Slim, stars in every season. So it is with the latest instalment of the soap opera. Televisa, a heavyweight of Mexican broadcasting, at&t, an American telecoms group with big operations in the country, and Mexico’s chamber of telecommunications have asked the Federal Telecommunications Institute (ift), the industry regulator, to order that Telmex, the broadband and fixed-line subsidiary of América Móvil, be split into separate firms with two sets of shareholders. That, its rivals contend, would increase competition.Listen to this story. Enjoy more audio and podcasts on More

“How does a uk court block one American company from buying another American company?” asks a gamer in an online forum, where the chat is more often about high scores than competition law. “We had a war about this, and being independent, can do as we damn well please.”Sadly for gamers—and global tech firms—that is not so. On April 26th Britain’s antitrust regulator, the Competition and Markets Authority (cma), blocked Microsoft’s acquisition of Activision Blizzard, a publisher of games such as “Call of Duty”, arguing that the combined firm could gain too much clout and reduce choice for consumers. The surprise decision has probably killed the deal worldwide.The $69bn acquisition, which would have been Microsoft’s largest and one of tech’s biggest ever, had seemed on track. The European Commission was expected to give it the nod next month. America’s Federal Trade Commission (ftc) had objected, but faced a difficult battle in court to stop it. Britain had long been seen as the hardest of the big three regulators to convince. But when in March the cma dismissed concerns from Sony about Microsoft’s advantage in the console market, and after Microsoft signed ten-year deals to make Activision games available on other platforms, it looked like game on.Instead it seems to be game over. The cma ruled that in cloud gaming, an emerging technology in which games are streamed Netflix-style, Microsoft plus Activision might become excessively dominant. Microsoft is already the biggest player in cloud gaming, with some two-thirds of the worldwide business. Control of Activision’s catalogue of hits might make it unassailable, the cma said, adding that it doubted the effectiveness of ten-year deals in a new and fast-changing market.The cloud-gaming market is indeed new and fast-changing, which makes it an odd place to wield the regulatory sledgehammer. Cloud-streaming subscriptions accounted for less than 1% of games spending last year, and it is far from certain that the technology will take off. Google shut down its Stadia cloud service in January and Amazon’s similar Luna platform is unpopular. Even if Microsoft bucked the trend, it would be good for consumers. Cloud gaming is “a vector of competition” between Microsoft and rivals like Sony and Nintendo, “not a distinct market”, wrote Clay Griffin of MoffettNathanson, a firm of analysts, who accused the cma of applying “faulty logic”. Weakening the main cloud-gaming service will entrench the console industry—and its leader, Sony.Microsoft and Activision will appeal. Yet Britain’s appeals tribunal focuses narrowly on process and tends to defer to the cma. Microsoft’s only other options are to break off a smaller chunk of Activision or carve Britain out of the global deal, both things it has previously indicated it will not do. Without a deal Microsoft’s future in gaming is in question, says Ben Thompson of the Stratechery newsletter. “It’s hard to see how the [gaming] division makes sense if Microsoft has the current business model dictated to them, given just how dominant Sony is with said business model.”Microsoft is not the only big tech firm to have been ambushed by the cma, which last year forced Facebook to undo its acquisition of Giphy, an unassuming generator of internet memes. Another Silicon Valley giant says that, since Brexit, Britain has been the feistiest of the big global regulators. America’s ftc is aggressive but reined in by the courts. The European Commission offers more scope for dialogue, tech lawyers report. The cma, meanwhile, is getting stronger. On April 25th Britain published a bill giving it wide discretion to regulate the biggest tech firms, with the power to dish out fines of up to 10% of global turnover. A separate online-safety bill proposes more rules for tech companies, including restrictions on encryption.Yet Britain’s new global clout may backfire. WhatsApp and others have threatened to exit the country rather than impose its encryption rules worldwide. Activision, whose share price fell by a tenth on the ruling, says it will reassess British plans, adding: “Global innovators large and small will take note that—despite all its rhetoric—the uk is clearly closed for business.”■ More

Greater bay technology’s transformation into a mythical beast has been speedy. The startup, which specialises in super-fast lithium-battery charging, was launched in late 2020. Only 19 months later it had reached a valuation of $1bn, making it a unicorn (ie, an unlisted firm valued at or above that amount). More

A fascinating case study on the exercise of power within an organisation has just reached a conclusion in Britain. Dominic Raab resigned as the country’s deputy prime minister and justice secretary on April 21st, after an independent investigation into whether he is a workplace bully found that he had crossed a line. The civil servants who lodged complaints against him will feel justified. His supporters, and the man himself, contend that his departure sets an unhealthily low bar for being found guilty of bullying. Adam Tolley, the barrister who conducted the probe, found that Mr Raab had displayed “unreasonably and persistently aggressive conduct” while he held the job of foreign secretary. Mr Tolley also concluded that Mr Raab’s style at the ministry of justice was sometimes “intimidating” and “insulting”. Mr Raab may not have intended to upset but that is not enough to get him off the hook: the British government’s own website says that bullying is “behaviour that makes someone feel intimidated or offended”. The context of the Raab affair is unusual. Media interest is high, and the relationship between civil servants and British government ministers is a very particular one. But the question of what distinguishes someone who merely sets high standards, which is Mr Raab’s version of events, from someone who is a bully is of interest in workplaces everywhere. In a survey published in 2021 around 30% of American workers, for example, said they had direct experience of abusive conduct at work; in two-thirds of cases, the bully was someone above them in the food chain. It is hard to read the report and not feel an unexpected twinge of sympathy for Mr Raab. Unfashionable though it is to admit it, fear is a part of organisational life. Hierarchies hand managers the power and remit to weed out poor performers. Driven, demanding types are often the people who make it up the ladder. Mr Raab is definitely that. Mr Tolley describes an exacting boss: hard-working, impatient and direct. He interrupts when he is not getting a straight answer. He does not want to spend time rehearsing arguments that have already been aired. If he thinks work falls short of the required standard, he says so. Mr Raab shares many of the attributes of a desk light: he is bright, glares a lot and is not known for empathy. But he appears to be motivated principally by achieving better outcomes. The investigation found no evidence that Mr Raab shouted or swore at people, or that he targeted individual civil servants. Mr Tolley was unpersuaded by allegations from officials that he made threatening physical gestures, whether banging the table loudly or putting his hand out towards someone’s face to stop them talking. The “hand out” gesture was not as emphatic as alleged, writes the lawyer; the banging was unlikely “to cause alarm”. If Mr Raab is a bully, he is not nearly as aggressive as some media reporting had implied.Yet that twinge of sympathy passes, as twinges are wont to do. The number and consistency of complaints about Mr Raab is itself evidence that something was genuinely amiss. The civil servants who spoke out about him had worked for other ministers before; they were not greenhorns. Mr Tolley is persuaded that the complainants acted in good faith, despite protests from Mr Raab that he is the victim of “activist civil servants”. Mr Tolley’s most acute observation is to recognise that working life is not a series of discrete incidents, each bearing no relation to the other. Some of the complaints people had about Mr Raab might seem innocuous in isolation. A propensity to bang the table or interrupt people is discourteous but plenty of bosses do the same. Cutting people off in meetings would have mattered less if he was not also the sort of person to describe work he received as “utterly useless” and “woeful”. Bullying can be a one-off, but more often it is incremental: stresses accumulate, anxiety builds, atmospheres form. And even if you think Mr Raab has been unfairly labelled as a bully, it is hard to overlook another problem—his effectiveness as a manager. If enough people think you are a bad boss, you are a bad boss. If employees try to avoid you, the pool of talent available to you shrinks. Mr Tolley himself, who has done a scrupulously fair job, clearly found the deputy prime minister trying. He describes Mr Raab’s approach to the investigation as “somewhat absolutist”. That sounds suspiciously like British-lawyer-speak for “he is a complete nightmare”. ■Read more from Bartleby, our columnist on management and work:What makes a good office perk? (Apr 20th)How to be a superstar on Zoom (Apr 13th)The resistible lure of the family business (Apr 5th)Also: How the Bartleby column got its name More

Drive through any city in South-East Asia and Japan’s commercial presence is visible everywhere: vehicles made by Toyota, Honda and Nissan clog the roads, the result of decades of market dominance in the region. If Fast Retailing, the parent company behind Uniqlo, a clothing retailer, has its way, the drivers of those vehicles will soon be wearing Japanese clothes, too.Listen to this story. Enjoy more audio and podcasts on More