As discussed in class, national champions have been receiving renewed attention from virtually all corners in the context of global competition, especially in the tech sector. In just the past few months, China has tried to encourage mergers in its fragmented semiconductor chip sector as a way of challenging leading US and European firms, a Dutch private sector initiative was launched to create one ‘ASML-like company’ in each of the ten technology sectors identified by the Dutch government, Indonesia has tried to bring together smaller ride-hailing firms into a single firm via its sovereign wealth fund, the EU is revisiting its merger guidelines to enable the creation of European champions and the Trump Administration allowed Nippon Steel’s acquisition of U.S Steel to proceed but insisted upon a ‘golden share’, which some have argued effectively nationalised the steel industry. Other countries remain more tentative — the UK has identified eight sectors in its new industrial strategy where it sees the highest potential for growth (IS-8), but there is no real impetus (or resources!) for taking substantive action.
(a) Can you enunciate what governments believe they can accomplish by setting up such national champions?
(b) Why do you think the concept has been coming back into favour?
(c) Are you more optimistic or pessimistic about the potential for these national champions to be successful and accomplish what they have been set out to do? (but at what cost?)
(d) Are there certain sectors or countries where national champions might make more sense than others?