The number of Chinese acquisitions and participations in Europe fell significantly last year as Chinese growth slowed. Nevertheless, Germany and Great Britain remain a popular investment destination.
Those who are suspicious of investors from China will be pleased: They are getting less and less popular in Europe, according to an analysis by the consulting firm EY. The number of takeovers and participations in 2018 fell by around one-fifth to 196. The transaction value dropped even more sharply and nearly halved at just over $ 31 billion. In Germany there were still 35 (previous year: 54) deals worth a total of 10.7 (13.7) billion dollars. Germany remains by far the most popular investment destination in Europe with Great Britain. In Germany, the largest deal is eliminated: the entry of the Chinese carmaker Geely at Daimler for $ 8.9 billion.
In second place in Europe, the acquisition of the Finnish group Amer by a consortium to the Chinese sporting goods company Anta for $ 6.3 billion, including debt follows. Among the larger transactions in Germany is the gradual entry of Ningbo Jifeng at Grammer. In defense against the Bosnian family company Hastor, the Chinese were very welcome there. The Shanghai-based fund Beautiful Mind Capital bought the specialty chemicals company Cordenka for just over $ 270 million.
EY expert Yi Sun cites several reasons for the declining transaction trend. The Chinese government wants to prevent excessive capital outflows and wishes to concentrate investments on core industries. "In addition, the Chinese economy is not growing so much anymore, which - coupled with the high levels of debt of many companies - is leading to greater caution, especially in large transactions," says Sun. On top of that, investors from China would no longer be welcomed everywhere in Europe". And the transaction process has become more complicated. According to Sun, European salespeople require, among other things, proof at the beginning of a sales process if the money is really enough.
Germany has also amended its Foreign Trade Ordinance. Sun expects only "low impact". The majority of businesses have been outside security-related areas in recent years. For them, the threshold at which Berlin can check the entry of an investor from a non-EU country, has been reduced to ten percent. And there have always been "sensitive areas where political reservations can be expected," Sun said. Investors from China now know that the situation in sectors such as energy infrastructure is critical and could adjust to it. "A general departure of the Chinese from the German market is not to be expected".
