Cross border Asian foreign direct investments in Europe
Chinese foreign direct investments in Europe are part of a secular trend of shift of purchasing power and capital, which offers tremendous opportunities to the Chinese buyers, target companies, and partners who facilitate the transactions and ensure smooth follow up operations and growth of common business. We are positioned the core of this flow and intend to cooperate with both Asian and European players in leveraging on this opportunity.
Even before the unfolding of the credit crisis, a number of small to mid-cap companies in Europe were suffering from shirking revenues, stable labour costs and restricted access to capital. Some of these companies had solid business, unique technology, valuable brands with heritage and prestige. Some of our cash-rich Asian-based members, especially those with operating and marketing capabilities in China realised that accessing the capital and co-operating with leading European players could contribute a specific competitive advantage to their business in their own domestic market. This is especially valid in sectors that are often highly competitive if not commoditised especially in the garment, luxury goods, technology industries and more recently automotive. The same rationale applies to the hospitality industry and more strategic sectors such as defence and information technology. Chinese players are now highly motivated towards outbound acquisitions by the desire to acquire successful distribution platforms in mature markets such as Europe and the US for their own domestic products, hence cutting out intermediaries and increasing profit margins.
We are now also exploring capturing opportunities in Indian outbound foreign investments into Europe and emerging markets, with one of our director currently being resident in Mumbai.
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