Daily Management Review

Bloomberg: China is buying up Europe


Chinese companies have been buying up everything that represents at least some interest for more than a decade, using huge financial resources and state support. Beijing is interested in all continents, including, of course, Europe.

Bloomberg conducted a research on the Chinese presence in the Old World in the last ten years. In total, China's investment in Europe amounted to at least $ 318 billion in 2008-18. Is this too much? Well, here are some figures: the activity of Chinese business in this same period of time, for example, in the US, was 45% lower.

Beijing's activity causes concern of Brussels and the EU countries. European leaders, including the German Chancellor Angela Merkel and French President Emmanuel Macron, are calling for a unified strategy to reflect the ever-increasing offensive of the Eastern country. All Europeans are wary of Chinese expansion, although appeals of Berlin, Paris and Brussels are met with a rather cool reception.

Bloomberg analyzed data on 678 already completed or still in progress transactions in 30 European countries in 2008-18. The agency concluded that, despite Berlin's calls for careful verification of each transaction, the number of real estate deals concluded by Chinese in Germany over the past decade is inferior only to the UK, which in a year should finally leave the European Union. In 2008-2018, German companies concluded 225 deals with the Chinese partners for a total of $ 20.33 billion, and the British - 227. However, the British business has a much larger volume of transactions - $ 70.6 billion. 
Chinese businessmen were the most active in Europe in 2016. The largest deal was announced then: ChemChina reported an acquisition of a Swiss fertilizer producer Syngenta AG for $ 46.3 billion. In total, over 10 years, Chinese companies spent $ 255 billion on acquiring European companies. At the same time, the Chinese acquired about 360 European firms, including such large ones as Italian Pirelli or Irish Avolon. In addition, the Chinese business in Europe partly or wholly owns at least 4 airports, 6 seaports, wind farms in at least 9 countries and 13 football clubs.

Most of China's assets in London are located in London’s main financial area, the City.

As for the sectors of the economy that are particularly attractive for Chinese businessmen, the chemical industry is leading by a large margin, with 48.8 billion dollars invested in 2008-18. $ 25.9 billion went to traditional energy and $ 23.9 billion - in real estate. The European financial system looks less attractive and is only in seventh place. 

There were more than 670 Chinese companies investing money in Europe in 2008-2018, including Hong Kong. Of these, about a hundred are wholly or partly owned by the state. They accounted for 162 billion dollars (63%). 8 of the 10 most active buyers in the Old World are state-owned (China Investment Corp. - $ 24.2 billion, Aluminum Corp. of China - 14.1 and Silk Road Fund Co. - 10.5). At least 30 Chinese companies that bought assets in Europe belong to provincial or county governments.

In conclusion, the authors of the study say that Chinese companies continue to be actively interested in European assets. There are many transactions, which have not yet been officially announced. This includes construction of nuclear reactors in Romania and Bulgaria, purchase of a container terminal in Croatia, construction of a port in Sweden and railway between Belgrade and Budapest, absorption of the Czech automaker Skoda, and much more.

source: bloomberg.com