Chinese company takeovers in Europe fall to 12-year low – more investments in Switzerland

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• Decline from 139 to 119 transactions in 2023 - lowest level since 2012
  
  
• Transaction volume also falls significantly from 4.3 to 2.0 billion US dollars
  
  
• Number of Chinese investments in Switzerland increases from three to six with a total volume of just under USD 200 million

Zurich, 27 February 2024 – Chinese buyers are becoming increasingly rare when it comes to company takeovers in Europe: the number of transactions fell from 139 to 119 in 2023 compared to the previous year. In 2016 - at the height of the boom in Chinese M&A transactions in Europe - 309 acquisitions of Chinese companies were registered. The transaction volume also fell again: the value of investments and takeovers fell from USD 4.3 billion to USD 2.0 billion - although no purchase price information is available for the majority of takeovers. In the peak year of 2016, Chinese investments in Europe reached a transaction volume of over 85 billion US dollars. These are the findings of a study by the auditing and consulting firm EY, which examines investments by Chinese companies in Switzerland and Europe.

"This decline is largely due to the current economic situation in China itself - the real estate crisis comes to mind, for example. Chinese companies are therefore less likely to expand themselves, especially abroad," says Michael Messerli, Head of Strategy & Transactions at EY in Switzerland. According to Hubert Stadler, Head of the China Desk at EY in Switzerland, there are also other paths that Chinese companies are taking in Europe: "Although we are seeing fewer takeovers, we are seeing significantly more greenfield setups, which in this case means that Chinese companies are establishing subsidiaries in Europe themselves in order to expand their own business."

Switzerland remains an attractive location

Switzerland remains an important location for Chinese investments. In 2023, six company acquisitions or participations by Chinese companies were recorded in Switzerland. That is three more investments than in the previous year. This puts Switzerland in 6th place among the most popular European locations for investors from China. The most popular country for Chinese investments last year was Germany (28 investments, previous year: 26), which relegated the UK to second place (17 investments; 2022: 27). This was followed by Italy (15 investments, 2022: 6), the Netherlands (10 investments, 2022: 8) and France (9 investments, 2022: 17).

In terms of the volume invested in the respective countries, Switzerland ranks third in Europe with USD 196 million. In the previous year, transactions in Switzerland reached a volume of USD 96 million, although purchase prices are not available for all transactions. Only the Netherlands in first place (USD 1169 million) and Germany in second place (USD 202 million) performed better in 2023. In second place behind Switzerland are the UK (USD 147 million), Italy (USD 95 million), France (USD 69 million) and Portugal (USD 59 million).

The relatively high transaction volume of Chinese investments in Switzerland can be explained primarily by two major deals that were among the five largest investments/takeovers in 2023: Chinese internet company Tencent Holding Ltd invested USD 100 million in Global Blue Group Holding, a tax-free shopping service provider, and Focuslight Technologies Inc, a leading global supplier of high-power diode lasers and materials, acquired SUSS MicroOptics SA for USD 80 million. "Chinese companies still very often invest in Switzerland. Due to its central location and language skills, Switzerland offers investors easy logistical and communication coverage of the continent. In addition, there is a low tax rate and, above all, talent and cooperation with universities and colleges in the area of research and development," says Stadler.

Chinese companies are buying fewer industrial companies, but more high-tech companies

Last year, there were once again more company takeovers and investments in the high-tech segment across Europe - which primarily includes software and semiconductor companies - than in traditional industrial sectors: However, the number of takeovers of high-tech companies fell from 32 to 26, while at the same time the number of industrial companies taken over fell from 25 to 24. In both the industrial sector and the high-tech sector, Chinese investors preferred to invest in Germany: of the 26 deals in the high-tech sector across Europe, seven involved German companies. And of the 24 transactions in which industrial companies were acquired, eight took place in Germany.

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