China’s growing influence in Western Europe

Chinese business interests in Western Europe have expanded rapidly in the last few years, companies have been brought, operations expanded and new partnerships forged. Every week brings news of a new Chinese related deal, below I look briefly at some of the trends and highlights in Western Europe around Chinese investment.

France

China and France have built a strong trading partnership and Chinese investors have stepped up their interest in French companies and real estate, buying iconic Bordeaux vineyards such as Bon Pasteur, Rolland-Mallet and Bertineau St.-Vincent. The purchases will help supply increasing domestic demand for quality red wine and allow the owners to learn about the most up to date viniculture techniques. France also has a plentiful supply of luxury brands and high technology firms, which Chinese firms are increasingly eying with a view to using these assets at home and abroad.

France is also a hugely attractive tourist destination and naturally the French authorities hope to lure more tourists from China into Parisian boutiques, Alpines resorts and Mediterranean beaches.

Germany

Germany has been a good hunting ground for Chinese companies; Shangdong Heavy industry acquired a major stake in Kion Group, a forklift truck maker, while Hebei Lingyun brought German parts maker Kiekert. The deals demonstrate the Chinese determination to buy quality brands and technology to help its industries at home move up the value chain. Germany of course is the natural marketplace for such firms, being a world leader in high end manufacturing.

Bilateral trade between the world’s two foremost exporters is unsurprisingly strong, with the Chinese typically sending Germany cheap goods in return for high quality wares. However there is increasing disquiet in Germany at seeing their prime engineering and manufacturing assets being taken over by a foreign power with which it has little cultural affinity or common history. Resistance to further Chinese purchases could well spill over into economic nationalism in the next few years if trends continue.

Italy

Italy has seen its traditionally strong textile industries suffer in the face of cheaper imports from China. Although unable to compete on price of production, high quality Italian brands have continued to thrive and have done particularly well in promoting themselves to fashion conscious Chinese and other emerging markets consumers.

Shangdong Heavy Industry group purchased Ferretti an Italian builder of luxury yachts, demonstrating the Chinese desire for luxury and design and of course rising demand for yachts in China and the Far East. China is not the only overseas emerging markets player active in the country, Gancia a wine and vermouth company was brought by Russian Standard Corporation, a company which unusually offers both drinks and financial services.

Spain

High net worth Chinese citizens have been courted by cash strapped Spain, looking for a boost to its property market. The Costa Del Sol, which has seen British, Russian and Arab buyers flock to its sunny shores is now poised for a new wave of Chinese investment.

Spain has seen its wine exports to China soar, a bright spot in nearly a decade of bad economic news, it is now the third biggest source of Chinese imports behind France and Australia. Spain has filled a gap at the lower end of the market, but is also seeing cava, its famous sparkling wine take off in popularity in the nightclubs and bars of Shanghai and Beijing.

Perhaps most eyecatching was entertainment giant Wanda’s purchase of a stake in Atletico Madrid. European football clubs have been snapped by buyers from the Asia, the US and Middle East, so a Chinese buyer was perhaps inevitable. As well as having a stake in a major football club Wanda has a global entertainment empire encompassing cinema, film production and theme parks.

Switzerland

Switzerland’s technology companies, particularly their expertise in watchmaking and luxury goods has attracted Chinese buyers. Haidian brought Swiss watchmaker Corum in a US$90 million deal, giving the company a foothold in the lucrative market and access to cutting edge technology.