European investment in China concentrates more on handful of large firms -report

Individuals sporting face masks following the coronavirus illness (COVID-19) outbreak stroll previous a Chinese language flag in Shanghai, China August 2, 2022. REUTERS/Aly Tune/File Picture

BERLIN, Sept 15 (Reuters) – European funding in China is rising extra concentrated with a handful of enormous companies significantly from Germany doubling down on their bets whereas just about no new gamers search to enter the market, in line with a brand new report by analysis group Rhodium Group.

The three massive German automakers – Volkswagen (VOWG_p.DE), BMW (BMWG.DE) and Daimler (MBGn.DE), (DTGGe.DE) – in addition to chemical compounds group BASF (BASFn.DE), accounted for a 3rd of all European funding into China from 2018 to 2021, in line with the report.

Germany as an entire, the place former Chancellor Angela Merkel actively inspired and aided corporations to enter the Chinese language market, accounted for 43% of overseas direct funding (FDI) over these 4 years, in contrast with 34% within the earlier decade.

The report comes amid rising considerations in regards to the ruling Communist Get together’s tightening grip on Chinese language society and the financial system, which have contributed to the choice by Germany’s new authorities to scale back dependency on China. learn extra

Satirically, it’s partly such indicators of geopolitical tensions which are pushing some corporations to extend funding in China with a view to localize workers and provide chains and subsequently ringfence enterprise, in line with the report.

“European funding has grown far more concentrated, each when it comes to the businesses which are investing there, the international locations they arrive from, and the sectors during which they function,” the authors wrote.

Germany, the Netherlands, Britain and France made up 87% of funding over the past 4 years in contrast with 69% within the earlier decade, in line with the report.

5 sectors – autos, meals processing, pharma/biotech, chemical compounds and client merchandise manufacturing – now make up almost 70% of all FDI, in contrast with 57% in 2008-2012 and 65% in 2013-2017.

In the meantime, stakeholders on the bottom say that just about no new European buyers have made direct investments within the nation for the reason that outbreak of the pandemic, in line with the report.

“This can be a brief phenomenon, associated to the pandemic and China’s zero-COVID response,” the authors wrote. “Nonetheless, conversations with stakeholders recommend {that a} longer-term dynamic could also be at work, with smaller European corporations reluctant to simply accept the rising dangers of investing in China.”

Reporting by Sarah Marsh in Berlin
Enhancing by Matthew Lewis

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