By Carsten Hoefer, dpa I Wednesday, Feb. 28, 2024
BERLIN – The number of Chinese company takeovers in Europe has fallen to its lowest level since 2012, management consultancy EY said on Tuesday.
Last year, investors from China bought a total of 119 companies in Europe, according to a new analysis by EY. This was 20 fewer than the year before and, in a longer-term trend, almost 200 fewer takeovers than in the record year of 2016.
According to EY estimates, the money invested has also shrunk considerably. In 2023, it was $2 billion, less than half as much as in 2022.
However, EY stressed that the purchase prices for the majority of Chinese company acquisitions and investments in Europe are unknown.
At the height of the short-lived Chinese investment boom in 2016, EY estimated that Chinese investors spent almost $86 billion on company acquisitions in Europe. Since the turnaround in 2017, both the number of company takeovers and the sums invested have been falling continuously.
Experts see several reasons for this. Beijing’s leadership has been slowing down capital outflows from China abroad for several years, in addition to the political tensions between China and the West. More recently, the weak Chinese economy compared to past record growth has slowed things down.
Germany, Switzerland and Austria were exceptions, as the number of Chinese takeovers and investments actually increased in these countries in 2023.
In Germany, EY counted 28 acquisitions by Chinese companies, two more than in the previous year. According to the consulting firm, the investment volume was at $202 million, the lowest level since 2010.
This figure does not include venture capital investments in German start-ups in which Chinese companies participated.
In Switzerland, Chinese companies bought six companies last year, twice as many as in 2022. In Austria, two companies were taken over by Chinese ones, in 2022 there was only one.
In Germany, China is not one of the major players in corporate investment activities by foreign companies. Chinese buyers took ninth place in the international investor rankings with 28 takeovers and investments.
Even Swiss, Austrian and Luxembourg-based companies bought more German companies than investors from the world’s second largest economy. US companies took first place with 225 takeovers in Germany.
EY expert Sun Yi, the company’s head of China Business Services for Western Europe, sees one reason for this development in the political mistrust that Chinese companies face in Europe.
“Potential Chinese investors check very carefully whether the choice of certain takeover candidates could lead to resistance from governments and public debate,” Sun said.
Over the next few years, the EY expert expects Chinese companies to invest heavily in building their own factories in Europe rather than making major takeovers.
For Chinese car and battery manufacturers, Hungary, Spain, France and northern European countries are particularly attractive investment locations due to low energy costs, higher subsidies and fast approval processes.
