Mazars’ Global China Services experts, Erik Stroeve and Nikko Fu, were interviewed in the autumn edition of Board Agenda and provided incisive commentary on the Chinese appetite for European investment.
Mazars’ Global China Services experts, Erik Stroeve,Head of Global China Services at Mazars and Nikko Fu, Senior Manager of Mazars’ Global China Services in France were interviewed in the autumn edition of Board Agenda and provided incisive commentary on the Chinese appetite for European investment.
Board Agenda is a multimedia publication dedicated to provide insight & intelligence for board directors, investors and professional advisers on emerging issues that shape corporate strategy, fuel effective boards and drive business success.
Nikko Fu says: “We see more Chinese companies investing in Europe. In the past it would have been luxury brands or industries like agriculture and machinery. But Chinese companies have started to make acquisitions in high-technology industries, such as robotics.”
While a decade ago there was reticence within the European business community to sell listed or high-end industries like robotics to Chinese enterprises, business leaders in Europe are now more open to potential benefits. The trend has changed as Chinese investors have sharpened their investment approach.
Erik Stroeve says: “Chinese organisations have become more sophisticated, more mature and focused on market knowledge and where they want it.”
Nonetheless, there remain significant challenges for Chinese companies looking to expand overseas. Cultural and operational differences continue to arise, even after a takeover or merger. In previous years some Chinese companies would dispose of local workers and management on completion of a takeover, and replace them with Chinese staff. But this would regularly result in problems as a lack of local business knowledge and expertise within the acquired company became apparent.
According to Stroeve: “We used to see more M&A case studies where it wasn’t going well because Chinese owners completely changed local management. Where they retain a mix of local management and Chinese [management]—that’s the key to success long term.”
Europe has a great deal to offer Chinese enterprises: brands, profit, market knowledge and talent. Chinese enterprises are particularly interested in understanding the intricacies of successful supply chains. This is a skill set where Europeans excel and one that is highly prized among Chinese businesses.
Fu says: “There’s a lot to attract Chinese investors to Europe: brands, profits, history and talent. When a Chinese company acquires a European company they want to find synergies so they can expand in Europe and then use the brand back in China too. They want to work together to develop the market.”
Read the full interview by downloading the file below.