Fidest – Agenzia giornalistica/press agency

Quotidiano di informazione – Anno 34 n° 349

New MERICS and Rhodium Group report on Chinese FDI in Europe

Posted by fidest press agency su giovedì, 28 aprile 2022

Berlin. The times when China invested vast amounts of capital in Europe are over for now, but Chinese investors are focusing their interest on promising start-ups in high-tech sectors. This is a trend that policymakers and business leaders in Europe should keep an eye on, as the authors of the new study “Chinese FDI in Europe – 2021 Update” by Rhodium Group and the Mercator Institute for China Studies (MERICS) note. (Please note: Embargoed until: Wednesday, April 27, 2022, 6:00 am CEST) Chinese outbound investment to the rest of the world stalled in 2021, increasing by just 3 percent to USD 114 billion (EUR 96 billion). China’s global outbound M&A activity even slipped to a 14-year low, with completed transactions totaling just EUR 20 billion. China’s FDI in Europe (EU-27 and the UK) rose but remained on a multi-year downward trajectory. Last year, completed Chinese FDI in Europe increased 33 percent to EUR 10.6 billion, bouncing back after a sharp decline caused by the Corona pandemic in 2020. Still, 2021 was the second lowest year (above only 2020) for China’s investment in Europe since 2013. The takeover of Philips’ domestic appliances business by Hong Kong based Hillhouse Capital made the Netherlands the biggest destination for Chinese investment in 2021, followed by Germany, France and the UK. Consumer products, automotive (NEV batteries), health, pharma and biotech, ICT, and energy were the top sectors.Overall, the nature of Chinese investment in Europe is changing. The share of Chinese state-owned investors fell to a 20-year low, concentrating on energy and infrastructure projects in southern Europe. After years of being dominated by M&A, Chinese investment in Europe has become more focused on greenfield projects, which reached a record value of EUR 3.3 billion in 2021.Chinese venture capital (VC) investors are pouring into European tech startups. In 2021, Chinese VC investment in Europe more than doubled to a record EUR 1.2 billion. This investment was concentrated in the UK and Germany, and focused on a handful sectors including e-commerce, fintech, gaming, AI and robotics.Two authors of the study commented on their findings:Agatha Kratz, Director at Rhodium Group: “The nature of Chinese investment in Europe has fundamentally changed in recent years. The days of multi-billion-euro acquisitions in strategic sectors may well be behind us. In their place, we are seeing Chinese companies setting up their own plants in Europe, particularly in areas where they enjoy a competitive advantage, like electric batteries. Chinese firms are also increasingly active investors in European start-ups. These are not necessarily alarming trends as such investments can contribute positively to European economic activity. But they should be closely monitored by European policymakers as they reassess the risks of economic engagement with China.” Max J. Zenglein, Chief Economist at MERICS: “Compared to the peaks around 2016, Chinese investments in Europe remain stuck at low levels. However, the fact that Chinese M&A activity in Europe increased again in 2021 while China’s global M&A fell, shows that Europe remains an attractive investment destination. But at these reduced levels any movement is vulnerable to a single large deal that can push investment up or down. In the current difficult economic and regulatory environment Chinese in Europe are unlikely to pick up significantly anytime soon.” By Claudia Wessling, Director Communications and Publications MERICS


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