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29 June, 2016
Chinese investors poured a record USD40 billion into Europe and North America in 2015, spending USD29 billion, or 73% of the total, in just four industries across the two regions: real estate and hospitality; automotive; financial and business services; and information technology.
Our report, “Bird’s-Eye View: Comparing Chinese Investment into Europe and North America", is unique in revealing for the first time the similarities and differences in trends between the two regions. It also tells the real story of Chinese investment in 2015 by looking only at completed rather than announced investments, and including greenfield investments as well as acquisitions.
2015 in numbers
Chinese FDI in Europe (for the purposes of this report, Europe is defined as the EU plus Switzerland, Liechtenstein, Norway and Northern Ireland) hit a new all-time record of USD23 billion in 2015, about 35% higher than investment in North America. After a brief drop in 2013, investment in Europe doubled to more than USD18 billion in 2014. Prior to that it grew from nearly zero before 2008 to an average of USD8.6 billion from 2008 to 2012, partially driven by privatization and other opportunities arising from post-crisis restructuring. Key findings include:
Investment more than doubled in Italy and France driven by megadeals, but declined by 35 percent in the UK after an exceptional 2014.
The Netherlands is emerging as a popular location for Chinese companies and acquisitions, particularly in technology and financial services.
Chinese investment into Switzerland jumped from virtually zero in 2013 and 2014 to USD1.27 billion in 2015, a very close sixth in Europe behind Germany.
Norway and Belgium have emerged as significant destinations, with investment in Belgium quintupling from previous year to USD835 million driven by financial services and consumer goods, and jumping to USD801 million from zero over the past five years in Norway as Chinese investors seek industrial technology.
2015 was a record year for the US, with investment reaching USD15.3 billion in 2015. But FDI in energy declined
dramatically in Canada in the past two years, where investment in 2015 was down more than 90% from its 2013 peak. Chinese FDI in North America (for the purposes of this report, North America is defined as the US and Canada) averaged USD11 billion a year from 2008 to 2013, reaching a record combined total of USD29 billion in 2013. Activity in the US last year was primarily driven by real estate & hospitality and financial and business services sectors, with two thirds of total investment going into services, up from 14% in 2009. Key findings include:
New York: 274% increase to USD5.4 billion of investments in 2015, led by three major financial services and real estate deals.
California: 22% increase in investments for USD3.4 billion, led by IT and real estate sectors.
Canada: Lowest levels of Chinese FDI since 2009. 81% decrease in energy sector investments compared to 2014, although a 15-fold increase in real estate investments, particularly in Ontario, as interest in commercial real estate grows.
Where next?
Investment in advanced service sectors in both regions has grown rapidly in recent years, as Chinese companies target brands, talent, and other assets that increase their competitiveness at home and abroad. In the US software is one key sector, with USD2.5 billion of investment from 2008 to 2015. Entertainment also jumped in the past two years in both Europe and North America, reaching a record of USD2.9 billion in 2015. Investments in hospitality have grown to more than USD6 billion in 2015 as Chinese outbound tourism soars.
Chinese companies have recently also developed an appetite for financial sector assets in both Europe and North America, with USD4.6 billion invested in 2015 alone—which is more than total Chinese investment in financial services in the previous 14 years.
Request the full copy of the report here.
Milton W. M. Cheng, Managing Partner, Baker & McKenzie
milton.cheng@bakermckenzie.com
