【China Daily】European tech companies are the target

Date:2016-1-25 From:China Daily

China National Chemical Corp’s booth at an exhibition in Shanghai. The company’s acquisition of Pirelli was the largest China outbound M&A deal in 2015. Provided to China Daily

Europe has become the top destination for outbound mergers and acquisitions over the past two years, as technology becomes the top target for Chinese companies, industry insiders say.

A report from Dealogic, an international information provider on investment deals, says Chinese outbound M&A volume increased for the sixth consecutive year to a record $111.9 billion in 2015, breaching the $100 billion mark for the first time.

Europe was the top region, accounting for almost a third of total outbound M&As, with $31.3 billion in 136 deals, the highest volume and activity level on record.

China National Chemical Corp’s $9 billion acquisition of Pirelli, completed in October, was the largest China outbound M&A deal in 2015 and the third-largest Chinese bid for a European company.

Technology was the top sector for outbound M&As, with a record $18.8 billion in 2015, up 87 percent from 2014, the report says.

"China’s economic transformation is about changes in its economic structure, which needs a lot of research and innovation, so Europe will be a very important partner, and they are more open compared with the United States," says Sun Yongfu, former head of the department of European affairs at the Ministry of Commerce.

Sun says China’s investment in Europe exceeded Europe’s investment in China for the first time in 2014, and the trend is likely to continue.

"Europe was the birthplace of industry. If Chinese companies want to build their own research teams and start from scratch to do research and development, it would take a very long time for them to catch up with the global level, so they use the shortcut of M&As of overseas companies."

He says about 30 to 40 percent of the technology that Chinese companies have imported is from Europe.

"Europe is very open. If companies want to seek technology to help their companies to upgrade and update, Europe will continue to be provide it."

He adds that as Europe has not fully recovered from the global recession, many companies face a fund crunch and are welcoming Chinese companies.

Stephen Phillips, chief executive of the China-Britain Business Council, says in the past five years, the United Kingdom has seen an average annual growth of about 85 percent of investment from China. He says the UK welcomes Chinese investment and has a good investment environment.

He believes there will be more M&As in the UK, and more Chinese companies will take Britain technology to China.

Harald Fuchs, China director for FrankurtRheinMain, which is in charge of international marketing for the metropolitan region, says Germans will be more used to the fact that more and more companies will be owned by Chinese enterprises.

From China Daily, 2016-01-22