Nery Alaev

Chinese takeovers of German companies rising 

Nery Alaev writes about Chinese investments in Germany.

A recent takeover of a German waste management firm by a Chinese conglomerate has spurred outlets to analyse the ongoing Chinese takeover ‘spree’ which is currently affecting Europe.

I’ve decided to look further into the news and make my own conclusion.

Major takeovers

Nery Alaev

Berlin

According to Bloomberg and Deutsche Welle, state-owned Beijing EnterprisesHoldings Ltd is buying EEW Energy from Waste GmbH for €1.4 bn from a Swedish private equity group. This acquisition has arrived with a backdrop of major acquisitions by Chinese companies of German companies.

For example, in January China National Chemical Corp (ChemChina) acquired the historic German KraussMaffei Group, which has been in existence since 1838. The deal stood at €925m.

There is clearly a trend developing – why has it come to be, however?

One potential explanation is economic turbulence in China, which has been apparent since the early summer of last year – capital has been leaving the country since the troubles started and has found its place in what are apparently ‘safe’ assets such as German chemical companies, European real estate and other investments.

In my opinion, it’s hard to avoid correlation between major investments by Chinese companies in foreign assets and Beijing struggling to stabilise an economy that has stood head-and-shoulders above others for the last decade or so.

Given that China’s state is still trying to maintain its economic strength and is using several different methods of doing so, there may be a slowdown of the ‘spree’ if the situation cools. Right now however, the expansion continues.

Nery Alaev

Nery Alaev is the current Director of ESN Investments GmbH, which engages in acquisition and development of commercial and residential property in Germany and Austria.