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Chinese investors find a good fit in Italy
By Juwai, 14 June 2012
While most investors in Italy have made a hurried exit or are on the sidelines waiting for an end to the euro-zone crisis, Chinese and Hong Kong investment in Italy has taken a great leap forward this year - and Italian firms are pinning their hopes for growth on the mainland market. Toh Han Shih reports for South China Morning Post.
Jun 13, 2012 --
Mergermarket, a consultancy that focuses on mergers and acquisitions (M&As), said Hong Kong and Chinese investment in Italy had ballooned in recent years.
"In the fashion design market, there are lots of potential and real deals in Italy involving Asian companies, Chinese companies in particular," Bianca Bonaldo, managing partner of Chance Equity Partners, told an "Asia M&A in Europe" forum hosted by mergermarket yesterday.
"I have a lot of clients in Italian fashion luxury companies. They need money to grow in the fast growing market of China. A lot of these companies have between â‚¬50 million (HK$488 million) to â‚¬100 million of annual revenue. Chinese companies propose joint ventures to sell the brand in China. Some Italian companies prefer the Chinese companies to take a minority stake, but want to grow in the China market."
The value of announced Hong Kong and Chinese investments in Italy jumped from zero in 2009 to â‚¬42 million in 2011 and â‚¬528 million between January 1 and June 11 this year, according to mergermarket.
Forum participants said the Italian region of Piedmont was a good example of the strengthening links.
"There is a good interest by Chinese investors in Piemonte [Piedmont]. There is also great interest from Piemonte companies to find Chinese partners in the China market," Federico Zardi, from the Piemonte Agency for Investments, Export and Tourism, said.
"The problem of Italian companies is undercapitalisation because of the Italian economy - Piemonte companies in particular. Piemonte companies want capital from China to grow more international. Chinese companies seek Piemonte companies for technology."
Zardi said times had changed from a decade ago when Chinese businesses were seen as "raiders" searching for "technology in Europe to bring back to China".
Now Italian small- and medium-sized enterprises (SMEs) saw Chinese capital as a chance to grow, including helping them to grow their sales on the mainland, Zardi said.
"Italy and Germany offer very good opportunities, especially in [the] technology, consumer and manufacturing areas. However, there is a clear lack of growth in Europe," China International Capital Corporation managing director Marshall Nicholson said.
"The euro is down versus the renminbi by 16 per cent year-on-year. Assets are getting cheaper but growth has slowed, making forward earnings lower, too."
Patrick Lau, managing director of China Construction Bank International, said recent loosening measures by the People's Bank of China "provides ammunition for Chinese companies to go overseas to do mergers and acquisitions".
But Fabio De Rosa, president of the Italian Chamber of Commerce in Hong Kong, warned investors against a bargain basement mentality.
"It will be difficult for Chinese SOEs [state-owned enterprises] to go to Italy with the mindset to buy cheap," De Rosa said.