China looks to Europe as US checks car deals
STOCKHOLM: Chinese car investors are increasingly pouring money into Europe rather than the US because of intense US scrutiny of their deals under the Trump administration, according to industry sources and M&A data.
More than a dozen leading M&A bankers, lawyers and consultants said the number of mandates from Chinese clients to make investments in the European car sector were increasing, while those for the US sector were declining.
The trend, which comes as Washington is locked in a trade battle with Beijing, is supported by an analysis of data of car sector investment in the US and European markets.
The US accounted for 26 percent of the total number of Chinese deals in either of the markets in the first five months of this year, according to the figures from Thomson Reuters and research group Dealroom. That is down from 31 percent in the same periods of 2017 and 2016.
There have been 19 deals in total across both markets so far this year, worth more than $10 billion (R131bn), according to the data.
At the centre of the trade dispute are US allegations that China has stolen American intellectual property. There has been increased scrutiny of investments in sectors, including cars, where companies are developing technologies such as electric and autonomous vehicles, artificial intelligence and robotics.
Washington says it is looking to broaden the reach of the Committee on Foreign Investment in the US (CFIUS), which examines deals for national security risks, to further limit Chinese efforts to acquire US technology.
Thirteen of the 17 bankers, lawyers and consultants interviewed by Reuters, based in Europe, the US or China, said their Chinese clients were increasingly choosing Europe over the US because of growing difficulties with CFIUS.
This means a large group of investors are hunting assets in Europe, mainly Chinese state-owned car firms, listed carmakers and private equity funds, the sources said.
These include state-owned SAIC Motor Corp, BAIC Group and FAW Group Corp; and listed players Guangzhou Automobile Group and Ningbo Joyson Electronic Corp, the people said.
Samson Lo, head of Asia M&A at UBS, said all big Chinese carmakers who wanted to do overseas deals were steering clear of the US.
FAW Group Corp and Ningbo Joyson Electronic Corp could not be reached for comments, while SAIC Motor Corp, BAIC Group and Guangzhou Automobile Group did not respond to emailed requests for comments. – Reuters