Chinese companies' M&A in Germany expected to grow: report

BEIJING - Chinese companies are expected to make more acquisitions in Germany as they continue to embark on outbound investment around the globe, a report showed.

The long standing trade and investment partnership between the two countries has provided a solid foundation for Chinese companies to invest in Germany, and merger & acquisition (M&A) activities of Chinese investors in Germany have increased significantly since 2010, according to an investment guide to Germany produced by Deloitte.

Sino-German economic relations have evolved into a strong trade and investment partnership over the past 25 years. China has been Germany's second largest export market outside Europe since 2002, while Germany is China's largest European trading partner, according to the report.

"The motivation to tap into the global market will continue to drive outbound M&A activities by Chinese companies, and Germany will remain a major investment destination for Chinese companies because of the long-term trade and investment relationship between the two countries," said Rosa Yang, chair of Global Chinese Services Group, Deloitte China.

In recent years, Chinese investors have shifted their focus from acquisition of troubled assets to strategic investment in leading multinational technology companies.

China's home appliance manufacturer Midea offered to take a 95 percent holding in German robotics maker Kuka in August, and the German government said it would not block the acquisition as it would not endanger German security.

When it comes to industry sectors, automotive suppliers and industrial companies have traditionally been the focus areas for Chinese investment in Europe. Meanwhile the real estate industry in Germany has showed steady performance in recent years, both in residential and commercial property, and caught the attention of Chinese investors.

"With regard to foreign investment, there are sometimes concerns about job losses and whether the acquired companies will be dissolved with technology being taken away. In fact, foreign investment creates jobs and promotes growth and that is why they are economically important to Germany," said Dirk Hallmayr, leader of Chinese Services Group, Deloitte Germany.

Many Chinese investors have taken over financial distressed automotive suppliers in Germany, which have subsequently undergone successful restructuring and regained competiveness, Hallmayr added.