Chinese companies boost overseas investment in consumer products, EV supply chain
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Contemporary Amperex Technology, a Chinese battery company, was pictured here in April 2020. It opened its first German overseas plant in Germany late in 2019, and has plans to create 2,000 new jobs by 2025.
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BEIJING — Chinese companies invested more in consumer sectors and the electric vehicle supply chain worldwide, even as geopolitics restricted overall outbound capital flows, according to a report released Wednesday by Baker McKenzie and Rhodium Group.
According to data, consumer products and services accounted for $5.2 billion of all completed mergers or acquisitions in 2018, up from $1.1 million in 2020. This was still below the pre-pandemic level of $10 billion for 2019 deals.
The decline in Chinese foreign deals has been due to restrictions by the White House on Chinese inbound investment into tech, and Beijing’s attempts to maintain capital within its national borders. A release said that the sectors of high-tech, real estate and finance have been most affected.
According to Rhodium Group data, the total number of overseas acquisitions or mergers that Chinese companies have completed in 2021 was $23.7 billion. This is a decrease from $29.5 billion in 2020. It marks the fourth consecutive year of decline.
The release stated that Chinese investments rose from $134 billion to 2020 to $117 billion in 2019 to $138 billion by 2021. This is in keeping with the 71% global increase in mergers & acquisitions between 2020 and 2021.
According to data, Chinese companies invested in Europe and North America last year at $5.5 Billion, up from $4.7 Billion in 2020 and $3.6Billion in 2019.
Investing in Europe was the key to last year’s growth.
Many of the greenfield investments made by Chinese companies in Europe’s electric vehicle supply chain were part of several of the projects.
Contemporary Amperex Technology in China (CATL), for example, was the first to break ground. first overseas factoryGermany plans to create 2,000 new jobs by 2025 in Germany, as of late 2019. up to 1.8 billion euros ($2.03 billion) in investment.
Baker McKenzie released that the combined value of the deal and others in the auto supply chains could reach $14.5 billion within two years.
This expansion is Chinese electric car start-ups like Nio look to Norway, Germany and other European markets.Electric vehicle production is also a rapidly growing trend among major automakers in the United States and Europe.
An analyst from Rhodium Group Mark Witzke stated in an email that Chinese electric vehicle companies were eager to establish their supply chains to be able to leapfrog conventional car producers and stay on the cutting edge.
Witzke stated that Chinese companies are using a mix of acquisitions as well as greenfield investments to expand their supply chains. As EV material shortages continue to increase, this area will be an increasing source of investment. Although many companies in this category are coerced by the state or subsidy, most of them are private. [state-owned enterprises]This is the driving force behind this trend
Latin America turns to China for help, far away from the U.S.
Latin America has seen a significant amount of Chinese investment into the supply chain for electric vehicles.
According to Baker McKenzie, Chinese mining firms have invested more than $4B in lithium and cobalt mining operations and assets processing Africa and Latin America over the past three years.
The Chinese state-owned companies have also spent over $13 billion in energy utilities, clean energy assets, and energy infrastructures in Chile, Mexico and Brazil.
Devaluation in Latin American currencies relative to the U.S. dollar has made assets more attractive in the region, Alejandro Mesa, Latin American regional coordinator of the international commercial & trade practice group at Baker McKenzie, said in the release.
Mesa explained that second, China is being sought out by a number of nations as an alternative to traditional US partnerships. The third reason is that China seems to be more open to investing in the region long-term. It’s possible for economies in the area and long-term growth, which could create a selling opportunity. Apart from traditional commodities investments, China is expected to continue investing in telecommunications infrastructure in 2022.
The release stated that China’s completed mergers and acquisitions of Latin America totaled $3 billion by 2021. Latin America is the fourth largest region for deal-making.
China’s Ministry of Commerce reports that foreign corporations have increased their Chinese investment by 14.9% over the past year to 1.1 trillionyuan ($171.88billion).
The ministry reported Tuesday that investors from Germany and Singapore increased their investments by 29.7%, 16.4% and respectively, but did not disclose figures for other countries.
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