German Firms Are a Favoured Target of Chinese Investors

German companies are increasingly becoming the target of Chinese investors, who have been buying German companies with high-tech expertise for a good two years now. While in 2009 only two German firms were bought by Chinese companies, the number of Chinese acquisitions reached 21 in 2016 and 20 in 2017 – a tenfold increase in M&A activities. In the past two years the transaction volume also rose considerably, reaching a record level of five billion euros in 2017. These are the findings of recent studies carried out by the Centre for European Economic Research (ZEW), Mannheim, on the basis of the Zephyr database of Bureau van Dijk.

In 2017, China was ninth on the list of countries investing in German companies. The list was led by the USA, Switzerland, and France, with 83, 41, and 40 acquisitions, respectively. In the medium term, China may well come to join these front runners. “Chinese investors are becoming increasingly interested in German technologies. Investors have shown particular interest in the small to medium-sized technology firms often referred to as ‘hidden champions’,” explains Niklas Dürr, a researcher in ZEW’s Research Department “Economics of Innovation and Industrial Dynamics” and project leader of the M&A Report, which is published biannually.

It was not only the number of Chinese acquisitions that recorded considerable increases in the past two years, but also their volume, peaking at a record level of five billion euros. The 3.7 billion euro acquisition of the robot maker KUKA in January 2017, for example, garnered particular attention from the public.

China to invest in further sectors

While China was responsible for only five per cent of foreign acquisitions of German firms in 2017, it accounted for almost 21 per cent of total acquisition volume. The fact that all of the largest Chinese acquisitions were in the technology sector highlights China’s shift towards a more innovation-oriented economy.

“This trend seems to be continuing in 2018, since three German automobile parts suppliers were sold to Chinese investors in January and February alone. Rumours surrounding the acquisition of clothing firm C&A, however, indicate that China’s interest is not restricted to the technology sector,” says Niklas Dürr.

For further information please contact:

Niklas Dürr, Phone +49 (0)621/1235-386, E-mail niklas.duerr@zew.de