Richard Bao via flickr
Germany remains the most attractive country in Europe for Chinese investors for the second year in a row. The slowdown of the Chinese economy does not diminish activity of companies from this country eager to invest in German firms. Last year, the local market saw 36 mergers and acquisitions, according to Ernst & Young. Exactly the same number of M&A transactions was observed in the previous year, according to the company’s new study.
Activity of Chinese investors in Germany is influenced by two factors, said Yi Sun, EY partner and head of Chinese business in Germany, Austria and Switzerland. First, she says, German companies are bought by fast-growing Chinese companies that want to expand through the development of new industries. Secondly, the Chinese authorities welcomes such transactions as a way of conquering the global market.
In pursuit of know-how
China has identified seven key sectors in which it plans to compete at the international level by 2020, adds Bernhard Bartsch, senior expert of "Germany and Asia" at the Bertelsmann Foundation (Bertelsmann Stiftung). Many of these industries are those in which Germany has already achieved success, for example, environmental technology and mechanical engineering: "It is therefore quite natural that Chinese enterprises examine if they can get a know-how in Germany or establish a partnership."
For Germany, China is the second non-European investor by number of mergers and acquisitions (the first is the United States), notes EY. Given investors from Europe, China won last year's fifth place, up one notch higher than the 2014 year.
Chinese investors are interested in buying those German companies, which operate in sectors considered "pillars of the German economy," says Yi Sun. This is production sector (its share accounted for 12 deals in the past year), pharmaceuticals (5 transactions) and the automotive industry (4 transactions).
In addition, Asian buyers have shown great interest to companies engaged in the production of consumer goods: there was 6 deals in this industry. Above all, investors from China are interested in the so-called "hidden champions", that is, medium-sized companies, which are little known to the general public, but managed to become leaders in their respective niches.
Cautious Germans
The largest Chinese-German M&A transaction closed last year was a $ 210 million-worth acquisition of the Frankfurt bank Hauck & Aufhäuser. EY did not disclose the transaction’s total volume, saying that the information is confidential.
Meanwhile, the German companies themselves are usually careful when it comes to taking foreign investors on board. German business’ reaction on the mergers and acquisitions involving Chinese investors is really ambiguous, say experts at Bertelsmann Foundation.
On the one hand, there is concern that such transactions will make the German cadres, technology and know-how flow away to China. However, on the other - German companies get access to the Chinese market and ability to create more jobs.
More deals
EY expect that number of M&A transactions involving investors from China will increase in Europe over next few years. "Over the past year, Chinese enterprises have become an important category of buyers in the market for cross-border transactions - said Yi Sun. - During this time, they were often getting involved in mega-deals, and paid billions of dollars for European concerns."
After Germany, second and third place in terms of popularity among Chinese investors went to the UK and France, where the number of mergers and acquisitions amounted to 34 and 20 respectively. In general, investors from China signed 179 mergers and acquisitions in 2015, this is 16 more than the year before.
source: dw.de
Activity of Chinese investors in Germany is influenced by two factors, said Yi Sun, EY partner and head of Chinese business in Germany, Austria and Switzerland. First, she says, German companies are bought by fast-growing Chinese companies that want to expand through the development of new industries. Secondly, the Chinese authorities welcomes such transactions as a way of conquering the global market.
In pursuit of know-how
China has identified seven key sectors in which it plans to compete at the international level by 2020, adds Bernhard Bartsch, senior expert of "Germany and Asia" at the Bertelsmann Foundation (Bertelsmann Stiftung). Many of these industries are those in which Germany has already achieved success, for example, environmental technology and mechanical engineering: "It is therefore quite natural that Chinese enterprises examine if they can get a know-how in Germany or establish a partnership."
For Germany, China is the second non-European investor by number of mergers and acquisitions (the first is the United States), notes EY. Given investors from Europe, China won last year's fifth place, up one notch higher than the 2014 year.
Chinese investors are interested in buying those German companies, which operate in sectors considered "pillars of the German economy," says Yi Sun. This is production sector (its share accounted for 12 deals in the past year), pharmaceuticals (5 transactions) and the automotive industry (4 transactions).
In addition, Asian buyers have shown great interest to companies engaged in the production of consumer goods: there was 6 deals in this industry. Above all, investors from China are interested in the so-called "hidden champions", that is, medium-sized companies, which are little known to the general public, but managed to become leaders in their respective niches.
Cautious Germans
The largest Chinese-German M&A transaction closed last year was a $ 210 million-worth acquisition of the Frankfurt bank Hauck & Aufhäuser. EY did not disclose the transaction’s total volume, saying that the information is confidential.
Meanwhile, the German companies themselves are usually careful when it comes to taking foreign investors on board. German business’ reaction on the mergers and acquisitions involving Chinese investors is really ambiguous, say experts at Bertelsmann Foundation.
On the one hand, there is concern that such transactions will make the German cadres, technology and know-how flow away to China. However, on the other - German companies get access to the Chinese market and ability to create more jobs.
More deals
EY expect that number of M&A transactions involving investors from China will increase in Europe over next few years. "Over the past year, Chinese enterprises have become an important category of buyers in the market for cross-border transactions - said Yi Sun. - During this time, they were often getting involved in mega-deals, and paid billions of dollars for European concerns."
After Germany, second and third place in terms of popularity among Chinese investors went to the UK and France, where the number of mergers and acquisitions amounted to 34 and 20 respectively. In general, investors from China signed 179 mergers and acquisitions in 2015, this is 16 more than the year before.
source: dw.de