Chinese investment in Europe gained in 2021 from a low level; Doubled VC streams
China’s direct investment in Europe in 2021 increased from a year earlier, but from a low level, according to a report by Rhodium Group and MERICS released today. The two research organizations do not expect a rebound in 2022.
Chinese investment in Europe rose 33 percent to 10.6 billion euros from 7.9 billion euros in 2020, according to the report. However, the increase was explained by a big project – a 3.7 billion euro acquisition of the Philips home appliance business by Hillhouse Capital, a Chinese investment firm controlled by billionaire Zhang Lei. China’s direct investment in Europe last year was the second lowest since 2013 and less than a quarter of its annual peak of 47.4 billion euros in 2016, according to the report.
The mix of China’s investment in Europe is shifting towards greenfield ventures and away from mergers and acquisitions, amid a global decline in overseas mergers and acquisitions by Chinese companies last year. In 2021, greenfield investments reached 3.3 billion euros, the highest value ever recorded, the report notes. Venture capital investments doubled last year to a record €1.2 billion; The main beneficiaries were the UK and Germany and the main sectors where e-commerce, fintech, games, AI and robotics, the researchers said.
“Chinese investment in Europe is unlikely to rebound in 2022,” the report predicted. “The Chinese government should stick to strict capital controls, financial deleveraging and Covid-19 restrictions. The war in Ukraine and the expansion of Chinese investment screening and control regimes in (the European Union) and the United Kingdom will create additional headwinds.
Click here for the full report.
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