Investment in France growing
Trend toward closed-door policy a concern: experts
Domestic companies’ investment in France has increased dramatically in recent years, and has diversified into sectors including manufacturing, aviation, energy and automobiles, Chinese experts said on Sunday ahead of French President Emmanuel Macron’s visit to China from Monday to Wednesday. However, they warned that Chinese investment still faces restrictions when it comes to high-tech sectors.
During Macron’s visit, the two sides will review past achievements in bilateral ties and outline the direction for future cooperation in political, economic and cultural fields, the Xinhua News Agency reported on Friday.
Lu Shengyun, veteran consultant for merger and acquisition (M&A) deals between China and Europe at Roland Berger, told the Global Times on Sunday that the business ties between China and France have developed thanks to the growing consensus on various issues between the two governments, especially after the G20 Hangzhou Summit in September 2016, when President Xi Jinping met with former French president Francois Hollande.
The mutual trust between the two governments has boosted economic relations, Lu said.
The presence of Chinese companies in France has been strengthened in recent years, and the volume of foreign direct investment from China has reached 6 billion euros ($7.2 billion), according to the French government’s website.
In recent years, affiliates of some 700 Chinese firms in the country have created 45,000 local jobs.
From 2000 to 2016, the sectors that received most Chinese investment in France were real estate, hotels, energy, consumer goods and services, automobiles and infrastructure, according to a Xinhua News Agency report in December 2016.
Chinese conglomerate Fosun has made various acquisitions in France in recent years. Besides the purchase of French holiday company Club Med, it has also bought stakes in French cheese and yoghurt maker St Hubert, asset management firm PAREF Group, fashion brand IRO and drug distributor Tridem Pharma.
“During the company’s globalization process, investing in a foreign company does not necessarily mean that we’ll turn it into a Chinese firm,” Guo Guangchang, chairman of Fosun International, was quoted as saying in a note the firm sent to the Global Times on Sunday.
“The Fosun ecosystem will enable companies to become bigger and stronger, not only in China, but also in France and in the EU,” he said.
“The amount of Chinese investment in France has soared, and Chinese businessmen have invested in diversified sectors,” Lu said, adding that there is a trend toward higher-added value sectors, such as aviation, civil nuclear energy and high-speed trains.
However, in the past, some French companies have sold non-core business units to Chinese investors, and in some cases these deals have proved unsuccessful, Lu noted.
Concerns remain
Although investment from China is increasing, there are concerns that France may be moving toward a more closed-door policy.
France was behind the EU idea to screen foreign investment, mainly aimed at China, to avoid takeovers in some sensitive sectors, according to a report by euobserver.com in September 2016.
“The concerns stem partly from the EU’s weakening economic competitiveness in the face of a rising trend of Chinese investment in the high-quality segments of its economy,” Yang Chengyu, assistant research fellow at the Chinese Academy of Social Sciences, told the Global Times on Sunday.
“Chinese companies have little interest in some sectors, as they feel they are equal to their European counterparts in those areas,” Yang said.
“In the future, Chinese investment in sensitive sectors, especially taking majority stakes of over 50 percent, will face rising challenges in France,” Yang predicted.
France has a strong position in science, technology, engineering, and mathematics, and large talent pools in these areas, Lu said. “As entrepreneurship has been growing rapidly in China in recent years, the two countries can seek cooperation in emerging sectors, such as fintech.”
Lu noted that Chinese companies have to tackle issues such as restructuring management teams after buyouts of French companies, and how to maintain brand legacy.
There have been some negative results for Chinese investors arising from ignorance of local corporate culture, said media reports.
“It’s about changing the mindset of doing business in France,” Lu said, noting that some buyouts may lead to protests if investors cannot properly handle questions about layoffs and shareholding structure.
“As entrepreneurship has been growing rapidly in China in recent years, the two countries can seek cooperation in emerging sectors, such as fintech.” Lu Shengyun Veteran consultant for M&A deals between China and Europe at Roland Berger