Chinese investors focus on battery production in Europe

When investing in Europe, Chinese companies rely heavily on the production of battery cells. (Image: Adobe Stock / Nischaporn)

In the past year, Chinese investors in Europe have changed their strategy. At 4.5 billion euros, greenfield investments, mainly in new battery factories for electric cars, accounted for 57 percent of China’s total investments in Europe. To this The result is an analysis by the Mercator Institute for China Studies (MERICS) and the Rhodium Group. For the first time since 2008, spin-offs and the construction of new production facilities achieved a higher level of investment than takeovers of existing companies. Corresponding mergers & acquisitions accounted for only around 3.4 billion euros in 2022.

The Chinese focus is on the auto industry

Behind the increase in greenfield investments are a few major projects with a focus on the automotive industry. Chinese battery giants such as CATL, Envision AESC and Svolt have invested in plants in Germany, the UK, France and Hungary. These four countries together account for 88 percent of Chinese direct investment in Europe.

In general, however, the European continent seems to be slipping out of the focus of Chinese investors. A total of around 7.9 billion euros flowed from China to the EU and Great Britain in 2022 – the lowest value in the past ten years. Compared to the previous year alone, investments in 2022 fell by 22 percent. Around three quarters of the funds flowed into the consumer goods and automotive sectors. The analysts do not expect an upswing in direct investments, but investments in the field of e-mobility can still be expected.

Chinese competition in e-mobility is increasing

“The changed investment patterns clearly show how strong the Chinese competition is, especially in e-mobility. Greenfield investments are also less strictly regulated than controversial acquisitions in the critical infrastructure or technology sector.”comments Max J. Zenglein, Chief Economist at MERICS, on the results. “However, in order to become a sustained driver for investments, greenfield investments would have to continue to increase, otherwise their impact would evaporate after the completion of the current small number of projects.”