The value of Chinese direct capital investment in Europe continued to decline from USD 13.4 billion in 2019 to USD 7.2 billion, meaning that European acquisitions of Chinese companies were virtually cut in half. As a result, the North American investments of Chinese investors surpassed their European investments for the first time in five years, according to an analysis by the Baker McKenzie international law firm.
Meanwhile, most investments made in Europe, USD 1 billion, went to Germany.
Chinese foreign direct investment peaked during 2016–2017. Back then, deals were dominated by giant agreements concentrated in a few industries. In contrast, last year in Europe, Chinese M&A transactions affected a wider range of industries, primarily real estate, hospitality, automotive and energy. China’s greenfield investment activity in Europe totaled nearly USD 1 billion.
Europe has traditionally been relatively more open to state-owned investors, mainly due to foreign capital being welcome in industries such as infrastructure, energy and raw materials.
Although the share of state-owned operators increased in 2020 compared to 2019, it was mainly due to a decline in private investment in China.
There are more and more Eastern investors in Hungary specifically due to the government’s strategy of opening to the East, Minister of Foreign Affairs and Trade Péter Szijjártó recently reported. This trend may continue in the future.
The Hungarian and Chinese ministries have recently signed a letter of intent to establish Fudan University in Hungary.
We see that many large Chinese companies are interested in Hungary and the Central and Eastern European region, Csaba Wolf, consultant and leading China expert at Baker McKenzie, pointed out.
Regulators in many countries around the world are paying close attention to the acquisition plans of Chinese companies. The EU foreign investment screening mechanism became operational in October 2020. Subsequently, several countries have introduced a 10–20 percent review threshold. Others, including Spain, Italy and Hungary, have adapted their national foreign investment screening legislation accordingly.