In recent years as Chinese investment abroad has increased, investors have turned their eyes to Europe. In fact, China has been on a buying spree in Europe, investing in whatever Chinese investors can get their hands on. From German electronics companies to football clubs, Chinese business abroad is booming.
Since 2010, there has been a major upswing in Chinese investment in Europe. In 2014 alone, Chinese investment in the European continent doubled to an unbelievable $18 billion. That mark set a new record for investment in Europe by Chinese businesses.
Investment in Europe is still going strong, and currently, doesn’t look like slowing. One of China’s top investors, ChemChina, is expected to takeover Swiss agri-business group Syngenta. The move would further China’s grasp on Europe through investment. The deal with Syngenta is estimated to be worth $43 billion.
But why are the Chinese investing heavily in Europe?
Many have asked why the Chinese are investing heavily in Europe. The answers are varied, but show why China has become enamoured with the European continent.
The 2008 debt crisis that brought many parts of Europe to its knees was the first significant reason China invested into Europe. As Greece suffered in austerity, China’s Cosco Holding acquired a majority stake in the Greek port authority. Cosco Holding now controls the Greek Piraeus port. The debt crisis allowed more investment from China to follow into Europe.
China has outlined several industries including automotive, food, energy and transport as areas it wants to improve on at home. Therefore, the Chinese investors have bought stakes in companies in Germany, Italy and the UK that will help develop those industries back in China. By going abroad to find the best in the business, Chinese knowhow will be improved back home.
China’s relationship with Europe is also seen as a reason for the countries heavy investment in the continent. Competition between American and Chinese investors can be frayed, yet working in Europe has been relatively relaxed. In addition, China’s investors look at Europe as an area where the countries businesses can expand brands. Whether buying or selling these brands, China’s investment abroad doesn’t see European investment as they do Africa or Asia. Those continents are reserved for investment in natural resources. The banks have backed Chinese investment in Europe, seeing it as a must for China to continue its growth in the world.
Finally, China has been able to work with individual European countries, and has been able to play each off the other. China has its own relationship with each European country, and the way Chinese investors deal with Germany is not the same as they deal with France.
There are numerous problems that face investment in Europe from China. However, the future looks bright for the continent and China to continue their cooperation. If the European Union is shaken up in 2016, the relationship between the two could be affected. The UK will vote on whether or not it will stay in the EU in the summer. However, with China’s negotiations with individual European nations, it looks like investment could continue to grow without a problem.