Now is the best time to invest in the United Kingdom and Europe, according to Chinese entrepreneurs attending the 17th China International Fair for Investment and Trade.
Chinese companies are increasingly interested in new opportunities, particularly in infrastructure and real estate, with Hong Kong billionaire Li Ka-shing leading the way.
Cheung Kong Holdings, a company Li controls, recently announced it would sell its properties in Guangzhou for 2.6 billion yuan ($424.8 million), which insiders have said marks another step in a strategic shift of investment from China to Europe.
In the first half of 2013, Li's company sold some other domestic properties worth 3.2 billion yuan as well. Meanwhile, he has completed four mergers and acquisitions in the UK valued at 19.6 billion yuan.
Since 2010, Li has increased his investments in the UK through the acquisition of EDF Energy, Northumbrian Water, and Wales and West Utilities.
Currently, 30 percent of the power supply, 7 percent of the water supply, and 25 percent of natural gas utilities in the UK are operated by Cheung Kong Holdings.
"What Li Ka-shing did can be a model followed by other Chinese entrepreneurs," said Chen Tianzhong, president of Wiselogic Investment Group, a company focusing on international education investment.
"With the recession in the economies of Europe and the UK expected to continue in the coming year, it may be a perfect time to invest now," Chen said.
"For one thing, there is huge market potential, and Chinese capital is badly needed for those foreign markets to recover."
Chen added that advanced technologies and original designs are also needed for Chinese companies to internationalize.
Chen has more than two decades worth of experience operating in Europe, and he said that some second- or third-tier brands in Europe can be targeted by Chinese companies.
It is a mutually beneficial arrangement because some European companies lack funds, while Chinese enterprises need to diversify to protect their profitability in times of economic uncertainty, Chen said.
Li's experience in the UK demonstrates infrastructure is one area that is full of opportunities for Chinese companies.
Currently, many urban facilities in the UK are approaching the end of their useful life and require repairs or upgrades.
Chinese companies are experienced and skilled in infrastructure projects, making them more competitive in terms of production costs relative to enterprises from other countries.
According to the latest data, Chinese companies operating in the UK conducted more than $3.7 billion worth of mergers and acquisition deals in the first half of 2013.
Huawei Technologies Co Ltd lately announced it would increase investments in the UK by an additional $3.5 billion in the next five years. Zhejiang Geely Holding Group, a leading automobile company in China, has purchased the taxi company in London.
Moreover, Dalian Wanda Group has spent $1.1 billion to build a five-star hotel in downtown London, and other companies, like Ping An Insurance Group and Brightfood Group, are also raising their investments in the UK.
Compared to investing in developing economies, the well-developed systems of laws and regulations in developed countries and areas are also quite attractive for Chinese companies because they reduce risk.
And acquiring advanced technologies by mergers and acquisitions is also a suitable way for Chinese companies to develop high-end manufacturing and modern services.
Zhang Yansheng, a senior scholar with the National Development and Reform Commission, suggested that some leading companies should go abroad to compete on an international level at this stage.
However, he added that they should pay more attention to corporate social responsibility in those countries, which means companies should think about environmental compensation when using natural resources.
It is also quite important to contribute local taxes and create more jobs for the local economy, he said.
James Sasson, chairman of the China-Britain Business Council, said, "Although global investment made by Chinese companies has increased at around 41 percent annually for the last few years, with the amount approaching $77 billion in 2012, Chinese companies are still in the early stages of going abroad."
Pictured here is a real estate project at the ongoing CIFIT. Many Chinese real estate developers are now looking to expand holdings in markets overseas.
(China Daily 09/09/2013 page18)