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Everybody Loves Draka

Posted December 13, 2010 8:30 AM by Steve Melito

Is your cable supplier as popular as Draka? In recent weeks, the Dutch company has entertained takeover offers from China's Xinmao Group, Italy's Prysmian, and France's Nexans. Draka may not be the world's largest cable manufacturer or even the biggest in Europe, but the company is a market leader in specialized, high-performance cables for telecommunications and data communications applications. Draka cables can be found in aircraft, elevators, and automobiles; on wind farms, offshore rigs, and oil platforms; and at CERN's Large Hadron Collider.

Draka's success also extends to optical fibre. There, the Amsterdam-based company is No. 1 in China and Europe and No. 4 in the United States. Companies such as Xinmao, Prysmian and Nexans each have their own reasons for pursuing Draka, of course, but the European Union (EU) may have found common ground in a common enemy – China. "Europe must look to defend its companies the best way it can," exclaimed EU industry commissioner Antonio Tajani.

Would Draka's acquisition by China's Xinmao Group mean a loss of European "know how", as Tajani claims?

Sources: WSJ, Reuters, and Draka

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Anonymous Poster
#1

Re: Everybody Loves Draka

12/14/2010 4:40 AM

China is greedy and won't stop until it owns everything, in both physical assets and intellectual property. It will then hold the world to ransom (like it's done with rare earth metals). It's time the Western world woke up to this and stopped them buying companies. We should also stop manufacturing products there and making them rich at the expense of our own industries. I'm becoming a strong believer in "make the product in the country it's to be consumed in". Then everyone has a manufacturing base and it would promote great diversity in product design. Who's to know if all computers made by Foxconn don't have a back-door built in by the Chinese to steal our industrial secrets and give them remote control? John

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Participant

Join Date: Dec 2010
Location: Amsterdam, The Netherlands
Posts: 2
#2
In reply to #1

Re: Everybody Loves Draka

12/14/2010 5:46 AM

China is as greedy as the Europeans and Americans were before they were in the position to make large scale acquisitions. The west has given way for the take overs themselves by outsourcing many industries to the far east, which was driven by greed as well. The current situation is due to a lack of long term vision since those type of decisions were made by individuals who were merely going for their personal bonuses and didn't care about any consequence to arise later from their choice - any bonus driven (= greed propelled) system will have similar results eventually. Politics is not going to change that, since politics refused to intervene when the western bonus tradition was being questioned. The west would do better to focus on innovation rather than continue to mindlessly cut budgets in that department. But it would have to persuade banks in order to do that successfully. Banks don't care where they get their money from; if their profit is generated in China instead of the west, it is all the same to them. Cutting budgets of innovative development is the stupidest thing to do. Unfortunately it seems to be occurring too often in our short sighted society that still lacks imperative vision.

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Anonymous Poster
#3
In reply to #2

Re: Everybody Loves Draka

12/14/2010 6:54 AM

Hi rage_of_reason, I agree with you 100%. I wonder how many others out there do? John

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Guru

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#4

Re: Everybody Loves Draka

12/14/2010 10:08 AM

"The Americans will sell you the rope with which to hang them.." Stalin

How true.How sadly true.

The government should make it unprofitable for domestic countries to outsource anything that has a domestic source, starting with GSA.

Considering the ecological impact of transportation from abroad,there should be more emphasis on local domestic production.How much carbon does a cargo ship produce on a round trip to China?Anyone think of that?Multiply that by thousands, and you see my point.Even local grown vegetables have a lot less impact than those shipped across the continent.I realize the climate variations involved,so there are exceptions to the rule.

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#5

Re: Everybody Loves Draka

12/14/2010 12:32 PM

As long as the western states do not want to recognise that a big difference in salaries will result in a continuous shift of wealth towards these countries.

Only if we put taxes on any import that is coming from states of a very low level of payment - only then we will have a chance to survive as a wealthy community.

That is: pay for education and infrastructure and research and development - now widely in bad shape in the US and Europe.

We can discuss if and how this extra tax shall be distributed - may be 50/50 between exporter and importer or 50 for the importer and the other 50 in generalised help for the undeveloped nations or anything else.

We can discuss if the basis for this tax shall be the arithmetic or geometric mean between the two income-levels or anything else meaningful.

This would end the ridiculous situation of a T-shirt for 1 to 3$, let us pay 10$ and thus generate the support for (our own and ?) school children, (from Kindergarten to PHD).

Also for streets, railways, telecommunication, power-grids ...

And this tax would shift the ratio of home-made equipment and imported equipment somewhat, not too much as in many sectors we do not have equivalents.

Only if we introduce this tax situations as now with Chinese companies and government having more than ample $$, try to recirculate these and will own most of the western companies in not too far and distant future.

We would have to think about energy to be included into this system.

I know well that this suggestion is against the momentarily accepted dogma of free trade and globalisation without barriers is best for all.

Look to the different markets, the problems of todays system are clear and imminent.

If we don't act in this way then Europe and the US, and Canada and Australia will be among the poor and not prospering nations within 50 years.

Then everybody will moan: this is all history, after some period of flowering there has to be a period of decline. Too fat persons and habits are not able to compete with hungry wolves.

Right is this diagnosis, so let's act now.!

RHABE

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Participant

Join Date: Dec 2010
Location: Amsterdam, The Netherlands
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#6

Re: Everybody Loves Draka

12/14/2010 7:15 PM

Repressive measures such as taxing imports would probably call forth similar action by the disfavored side concerning exports of western products to China. US currency is in a difficult situation due to Chinese interest policies and the Euro is not doing quite so good since the Greek, Portuguese and Irish monetary debacles, which doesn't leave the west a lot of space to gamble on forcing trade opportunities. Protectionist measures have contributed to current somewhat hostile economic relations between east and west.

We might consider collaborating in more constructive ways while we still have things to offer that the Chinese haven't mastered yet. It would probably improve the international trade climate which could result in a more healthy foundation to do business in the long run. I am well aware of the fact that this would impose difficulty for some departments of the industry, but addressing structural problems instead of reverting to 'cosmetic' solutions while taking into account the disasterous choices of the past, would in my view be preferable.

No trade agreement has a chance of success unless the banks will participate in it. The monetary crisis is forcing them to reconsider their policies and structures which could facilitate a collaboration between banks and industry. They're not in the same boat, but perhaps they may opt to choose to sail in the same direction.

I am convinced a thoroughly conptemplated out of the box solution will work, if the intention and means are available, bearing in mind that the current situation makes it necessary to make drastic changes. William McDonaugh's Cradle to Cradle initiative has shown that an entirely different approach can work: http://www.youtube.com/watch?v=0OFI1Tx2EGU&feature=related It most certainly involves views that would offer the Chinese profitable opportunities and puts the west in a position to offer something, which is the very foundation of the act of trade.

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