China Watch | China Economy: Foreign investors target Chinese market, as pandemic creates both challenges and opportunities

2020-08-24 17:58:15 source: CGTN

  

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The coronavirus has seriously hit global business, including Chinese investments overseas. A new report by international law firm Baker McKenzie shows the detrimental impact of geopolitical disputes. But as Yang Shan-shan reports, the pandemic is also bringing new and unexpected opportunities.

  

It's been a tough year for business, as economies across the world are plunged into recession because of the coronavirus pandemic.

  

With China-US ties in free fall, the tense situation in the lead up to the US elections has made it more difficult for global mergers and acquisitions to go ahead.

  

Compared to recent years, industry leaders say the value of such deals has collapsed to half of what they were. And as many governments tighten or consider tightening restrictions on foreign buyers to protect assets considered strategic, many Chinese investors are having a difficult time.

  

But it's not ALL bad news. As outbound Chinese investment drops dramatically, investment flowing into China mainly from the U-S and Europe has increased. That's according to a new report from international law firm Baker McKenzie.

  

The report says inbound merger and acquisitions totaled 9-billion-US-dollars for the first five months of 2020. This means an inbound activity for China has outperformed outbound activity for the first time in a decade.

  

PETER LU Partner, Baker McKenzie "There is a very significant phenomenon which is happening right now, which is China has really opened up the market to foreign and western companies. Just to give you an example, from this year, western financial institutions can own wholly-owned sub-institutions in China and can have their own operations in China without local joint ventures. As we all know American express just got a license to operate on the credit card market in China. All of this news really excites western companies."

  

So with the upswing in inbound investment and the challenging geopolitical climate, does this mean Chinese buyers will give up on going overseas? Not necessarily, says Lu.

  

PETER LU Partner, Baker McKenzie "This pandemic brings opportunities as well. Before the pandemic, it was a seller's market, but now it has totally shifted into a buyer's market. The buyer could buy assets that normally wouldn't be available if it weren't for the pandemic. There are risks of increasing regulation for Chinese companies coming to Europe, but there are also opportunities for Chinese companies to invest in European assets, which in the past was not possible."

  

The message from Lu is clear. Chinese companies investing overseas face extra risks, and more patience and hard work will be needed when they operate in international markets.

  

Whether Chinese companies try to take advantage of them or turn inward to consolidate the domestic market in the face of renewed foreign competition, only time will tell.

  

YANG SHANSHAN Beijing "And may also well depend on the future international investment environment. China and the EU just held negotiations on what would be a historic investment agreement. On Tuesday, Chinese Vice Premier Liu He said talks with European leaders on a deal are being accelerated and could be concluded by the end of the year. YANG SHANSHAN, CGTN."


(Edited by Ye Ke)

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12245188 China Watch | China Economy: Foreign investors target Chinese market, as pandemic creates both challenges and opportunities public html   

China Watch.jpg



The coronavirus has seriously hit global business, including Chinese investments overseas. A new report by international law firm Baker McKenzie shows the detrimental impact of geopolitical disputes. But as Yang Shan-shan reports, the pandemic is also bringing new and unexpected opportunities.

  

It's been a tough year for business, as economies across the world are plunged into recession because of the coronavirus pandemic.

  

With China-US ties in free fall, the tense situation in the lead up to the US elections has made it more difficult for global mergers and acquisitions to go ahead.

  

Compared to recent years, industry leaders say the value of such deals has collapsed to half of what they were. And as many governments tighten or consider tightening restrictions on foreign buyers to protect assets considered strategic, many Chinese investors are having a difficult time.

  

But it's not ALL bad news. As outbound Chinese investment drops dramatically, investment flowing into China mainly from the U-S and Europe has increased. That's according to a new report from international law firm Baker McKenzie.

  

The report says inbound merger and acquisitions totaled 9-billion-US-dollars for the first five months of 2020. This means an inbound activity for China has outperformed outbound activity for the first time in a decade.

  

PETER LU Partner, Baker McKenzie "There is a very significant phenomenon which is happening right now, which is China has really opened up the market to foreign and western companies. Just to give you an example, from this year, western financial institutions can own wholly-owned sub-institutions in China and can have their own operations in China without local joint ventures. As we all know American express just got a license to operate on the credit card market in China. All of this news really excites western companies."

  

So with the upswing in inbound investment and the challenging geopolitical climate, does this mean Chinese buyers will give up on going overseas? Not necessarily, says Lu.

  

PETER LU Partner, Baker McKenzie "This pandemic brings opportunities as well. Before the pandemic, it was a seller's market, but now it has totally shifted into a buyer's market. The buyer could buy assets that normally wouldn't be available if it weren't for the pandemic. There are risks of increasing regulation for Chinese companies coming to Europe, but there are also opportunities for Chinese companies to invest in European assets, which in the past was not possible."

  

The message from Lu is clear. Chinese companies investing overseas face extra risks, and more patience and hard work will be needed when they operate in international markets.

  

Whether Chinese companies try to take advantage of them or turn inward to consolidate the domestic market in the face of renewed foreign competition, only time will tell.

  

YANG SHANSHAN Beijing "And may also well depend on the future international investment environment. China and the EU just held negotiations on what would be a historic investment agreement. On Tuesday, Chinese Vice Premier Liu He said talks with European leaders on a deal are being accelerated and could be concluded by the end of the year. YANG SHANSHAN, CGTN."


(Edited by Ye Ke)

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investments;Chinese;pandemic;international;Baker