The Rise Of Chinese Acquisitions In Cash-Starved Europe

A CEIBS UK Alumni Chinese New Year Roundtable discussed the closing tech gap in China, investment in to Europe and differences between Chinese and Western attitudes to innovation

The UK Alumni chapter of the China Europe International Business School (CEIBS) gathered students, alumni and business professors for a lively February evening discussion in London.

Representatives from the London Business School, the London School of Economics, Stanford Business School and INSEAD joined CEIBS, Cambridge University's Professor Peter Williamson and sponsors ArcelorMittal for a roundtable about the closing technology gap for Chinese firms.

Leading the discussion, Professor Williamson an honorary president of the CEIBS UK alumni association, summarised the recent history of Chinese corporate acquisitions abroad, notably in Europe.

In 2012 Chinese company acquisitions overseas amounted to a sizeable USD $60 billion, more than double the size of Chinese international M&A activity between 2009 and 2011.

Professor Williamson pointed to continential markets such as Germany and France, which have become prominent deal destinations for Chinese corporates. The purchases of Germany's industrial firm Putzmeister in 2012 and France's famous vineyard Chenu Lafitte in 2010, are two well known examples.

European niche players and early stage ventures starved of cash from the Eurozone crisis are welcoming partnerships and acquisitions from Chinese buyers, who have adopted a 'lighter-touch' to their investment attitute and an accelerated time to market. That said, the big company bureaucracy (on both the Chinese and European sides) and opaque decision-making still remain frustrating elements of these corporate finance deals.

Turning to the European players, Professor Williams offered some thoughts on how Western companies can use China as a 'test-bed' to speed up their home innovation cycles, beta-test products (common practice in the software industry) and use subsididiaries in China as a market for reverse-innovation on products.

The roundtable closed with discussion on the sustainability of Chinese companies to maintain their cost advantage, Western attitudes towards the new norm of successful collaboration between Western and Chinese companies and the closing gap in teaching innovation between Western and Chinese schools and universities.

 

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