Chinese investment in Spain topped 600 million euros in 2014, according to an ESADE study

Chinese investment in Spain is a relatively recent phenomenon, but it is growing at a rapid pace, especially in higher value-added sectors. That is one of the main conclusions of the report ‘China Investment in Europe 2015’, written by Ivana Casaburi, an associate professor at ESADE Business & Law School, in collaboration with KPMG and Cuatrecasas, Gonçalves Pereira. According to the report, 93.8% of Chinese direct investment in Spain since 2000, some €1.662 billion, occurred in the 2012-2014 period. Of that amount, €610 million was invested in 2014, 49% more than in 2013. Moreover, by the end of the year, total investment in 2015 could be even higher, as a result of various major transactions recorded over the last six months in the real estate/hotel and agribusiness industries.

Chinese investment in the EU, from energy to software

Due to growing interest, Spain now ranks as one of the top countries for Chinese investment in Europe, a group that includes the United Kingdom (which has received 46.7% of all funds over the last four years), Italy (21%), Portugal (10.6%), and France (9.5%). In all, and according to the ESADEgeo study, Europe received $58.3 billion over the 2010-2014 period, of which $20.17 billion were invested over the last fiscal year, 117% more than in 2013.

Specifically, around 95% of Chinese investment in Europe over the 2010-2014 period was concentrated in the following seven sectors: energy ($18.17 billion, or 31.2% of the total), real estate ($13.35 billion, 22.9%), manufacturing ($7.85 billion, 13.5%), agribusiness ($4.88 billion, 8.4%), finance ($4.25 billion, 7.3%), logistics, transport and infrastructure ($4.06 million, 7%), and telecommunications and software ($2.65 billion, 4.5%).

As noted, according to the ESADE China Europe database, Chinese investment in Europe reached a record-high $20.17 billion in 2014, an increase of 117% over 2013. Some of the largest operations carried out included the acquisition by State Grid of a 35% stake in the Italian energy grid holding company Cassa Depositi e Prestiti (CDP) Reti; the acquisition by the Fosun Group of 80% of the Portuguese bank Caixa Xeral; the acquisition by the food group COFCO of the Netherlands-based agricultural conglomerate Nidera; and the acquisition by the automotive company Dongfeng of the French company Peugeot.

In the coming years, several factors will significantly help to increase Chinese direct investment in Europe, including the ongoing negotiations for a new bilateral investment agreement, Chinese citizens’ increased disposable income, the Juncker Plan, new co-investment vehicles between the Chinese government and several of its European counterparts, megaprojects such as the New Silk Road, and new multilateral institutions such as the Asian Infrastructure Investment Bank (AIIB) or the New Development Bank (NDB).

Soaring investment in Spain

At present, around 75 major Chinese companies operate in Spain. The last two years have seen the arrival of new investor groups and companies, such as the China Construction Bank, Dalian Wanda, Fosun, Bright Food, and HNA. They join other Chinese companies with a long history in the country, which continue to grow in terms of both market share and new hires. Clear examples in this regard include companies such as Huawei, ZTE, Lenovo, Haier, Cosco, ICBC, Air China and KeewayMotors, among others. 
Professor Ivana Casaburi, the author of the study, expects these investments in Spain, which, at just a few months from the end of 2015, total nearly €2 billion since 2010, to continue to grow apace, through both public and private companies. According to interviews conducted with executives from Chinese member companies of the ESADE Europe Club and the survey answered by 24 Chinese companies with investments in Spain, this is due both to the appeal of the Spanish market itself and its role as a potential gateway to the European and Latin American markets.

The study found that, overall, the Spanish business climate receives a positive assessment, particularly due to the training of the country’s human resources and the quality of its infrastructure, especially its ports and airports. On the other side of the scale are the red tape and tax burden. Finally, brand recognition and the competitiveness of local companies were identified as the greatest future challenges; however, 90% of the companies surveyed believed they had responded to these challenges satisfactorily or very satisfactorily.