There has been a "significant transformation" in the way Chinese enterprises invest in Europe

A report released on Tuesday by the Mercator China Institute in Germany and Rongding Consulting in the United States showed that China's direct investment in Europe fell to 7.9 billion euros (1 euro is approximately 7.6 yuan - note on this website) last year, a year-on-year decrease of 22%. In 2022, it became the first year in which China's greenfield investment in Europe (referring to the investment form of multinational corporations creating sole proprietorships or joint ventures in the host country - note on this website) exceeded the year of merger and acquisition transactions.

The report shows that nearly 90% of China's investment in Europe flows to four countries: the UK, France, Germany, and Hungary. All four countries have received significant green space investment from Chinese battery manufacturers, and it is expected that these Chinese companies will dominate the battery industry in Europe.

Agatha Kratz, a director of Rongding Consulting, stated that there has been a "significant shift" in the way Chinese companies invest in Europe.

For many years, investment has been driven by mergers and acquisitions, but now they are mainly led by green space investment, especially in battery factories. Chinese companies are investing heavily in Europe's electric vehicle supply chain. They have become the main participants in Europe's green transformation, "Kratz said

The world's largest electric vehicle battery manufacturer, China Ningde Times New Energy Technology Co., Ltd., has opened its first European factory in eastern Germany this year. It will also invest 7.3 billion euros to build a factory in Hungary, with customers including Mercedes Benz and Volkswagen.

Yuanyuan Power, a power battery technology company under China Yuanyuan Group, plans to build battery factories in Spain and France, while BMW's battery supplier, China Huizhou Yiwei Lithium Energy, has already purchased land in Hungary.

Chinese power battery manufacturer Honeycomb Energy will expand its presence in Europe to establish five battery factories, and negotiations are underway to supply automotive manufacturers in the region.

A report on the website of the South China Morning Post in Hong Kong on May 9th also noted that in 2022, China's investment in Europe decreased to 7.9 billion euros, a year-on-year decrease of 22%.

According to a joint study by Rongding Consulting in the United States and the Mercator China Institute in Germany, China's investment in Europe is mainly concentrated in specific regions and industries. In 2022, 88% of China's investment in Europe flowed to four countries - the UK, France, Germany, and Hungary.

These four countries have all received significant green space investment from Chinese electric vehicle battery manufacturers, and the industry's growth rate exceeded that of all other industries last year.

Last year, Greenfield investment accounted for 57% of China's total direct investment in Europe, with a significant portion being driven by electric vehicle battery manufacturers.

Max Cenlein, Chief Economist of Mercator China Research Institute, stated that the constantly changing investment model highlights the competitiveness of "Chinese enterprises, especially in the field of electric vehicles".