In 2004, there were hardly any Chinese investments, abbreviated to Foreign Direct Investment (FDI) in professional terms, when the counter stopped below one billion dollars. In 2009, the FDI trebled to nearly 3 billion dollars, and a year later the amount had trebled again, with China investing 10 billion dollars in Europe.
Biggest investment in UK
A Baker & McKenzie study shows that the largest part of the investments last year, 5.1 billion dollars, ended up in the United Kingdom. Second and third are Italy, accounting for 3.5 billion dollars, and the Netherlands at 2.3 billion dollars. On the eve of Pirelli falling into Chinese hands, former Italian prime minister Prodi spoke the words: “the industrial policy of the Italian industry is now being made in Beijing.” The tyre manufacturer cost the Chinese 7 billion Euro.
In the Chinese government’s five-year plan, companies are called on to invest in technology and high-quality labels from abroad. Previously, mainly state companies went across the border to sate the hunger for resources, but now private enterprises are also joining in, and the focus has shifted to companies with an added value. In 2014, 41 percent of Chinese investments were made by private companies.More investments trend
“Chinese investments in Europe have become a lot more diverse in recent years, and have expanded to all parts of Europe,” said Thomas Gilles, chairman of the EMEA-China Group at Baker & McKenzie. “What we see now is the maturing and normalization of the Chinese investment processes, in line with the international economy.”
According to the researchers, the Chinese interest in Europe is structural. While in the past years Europe was ‘cheap shopping’ for the Chinese due to the crisis, the interest remains now that the economy is picking up. In spite of real estate increasing in value in parts of Europe, China remains interested. Incidentally, migration also influences this: Chinese students and emigrants stimulate the investments in real estate.
Cosco and the Greek port
Early this year, Chinese shipping company Cosco showed an interest in the Greek port of Piraeus. The company has had two of the three container terminals in hands for five years now. Cosco then paid 500 million Euro for the port components. The privatization plans through which the Chinese were able to take possession of the entire port, were discarded after the victory of the leftist government. Cosco had big plans for the port, and wanting to invest in dry-docks and infrastructure. The Chinese terminals are also more effective compared to the Greek terminal. On the other hand, workers in the Greek part claim that the wages at Cosco are much lower.
Trojan horse?
Divided into sectors, China invested 4.1 billion dollars in agriculture and the food industry, while the energy sector is second in line with 3.7 billion dollars in FDI. The top 5 is completed by real estate (3 billion dollars), automotive (2.2 billion dollars) and financial services (1.7 billion dollars).
FDI flows go across the entire world. What makes the Chinese investments in Europe interesting is, apart from the record achieved last year, the political consequences of the takeovers. Not everyone is convinced of the good intentions of the Chinese. The fear exists that with the big European companies falling into Chinese hands, Chinese politics will get more influence. “At the moment, the Chinese investments are like money that comes falling out of the sky, but that could change into a Trojan horse through which Chinese politics and values are brought into Europe,” Sophie Meunier of Princeton University wrote in 2014. (RM)