Strong works councils preserved jobs and conditions after two Chinese takeovers in Germany

European companies are increasingly targeted for acquisition by Chinese organizations. This causes unease: what does it mean for the company's employees, and the knowledge and experience around them? A strong works council, as we often see in Germany, for example, can ensure that a takeover still goes well. So write researchers from Radboud University and King's College London in a publication that appears today in the British Journal of Industrial Relations.

There are now about 1,000 Chinese-owned companies in the Netherlands, with more being added every year. This sometimes causes raised eyebrows: "The narrative about China is quite negative," explains Tina Miedtank, management researcher at Radboud University and lead author of the publication. "We increasingly see it as a threat when they take over our companies. Will employees be out on the street, and will we soon lose all knowledge to China? Fortunately, in Western Europe we have strong institutions that can protect workers well, our research shows."

Miedtank and colleagues examined two comparable German companies that were taken over by Chinese state-owned enterprises. Both companies managed, thanks to a strong works council (OR), to ensure that employees were able to keep their positions and working conditions almost completely. "However, the way this was done differed considerably between the two companies. However, there was one clear constant: the important role of the works council," Miedtank explains.

Standing up for your colleagues

At the first company, the German management team and the works council were diametrically opposed. The two did not work well together, but the Works Council did have a good relationship with the employees and was aware of all their rights. For instance, they had a strong story to the German and Chinese management, to make sure employees landed well after the takeover.

In this company, the works council took a protective role, Miedtank says. "'The other employees, that's my family, I don't want to let them down," the leader of the OR told us. Even after taunting and swearing from the German management team, he stood up for his colleagues."

Building protective layer with management

Things were different at company number two. Miedtank says, "There, the works council and the management team worked well together, even before the takeover was a thing. Then they pulled together to structure the company so that employees would be strong against the new Chinese owner.

"This organization had a Works Council made up mainly of external professionals, who had less visibility of the support they received from the shop floor. That made it more complicated, but in the end it soon became clear that they too had a lot of support."

Not old-fashioned

According to Miedtank and her colleagues, the study shows that a works council can play an important role in an increasingly internationalized economy. "Trade unions and works councils are still sometimes seen as corny institutions from previous generations, but they are incredibly valuable anchors for protecting workers. This applies not only to German organizations, which we looked at in this study, but also in countries like France and the Netherlands, where employee representation often has enough power and expertise to play an important role in difficult situations. With such strong institutions, employees can count on getting through an acquisition process well."

More information:
Tina Miedtank et al, Taking Different Roads to Rome: Protective and Proactive Orientations Towards Institutional Power Resources, British Journal of Industrial Relations (2026). DOI: 10.1111/bjir.70056

Provided by Radboud University