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EIBA Conference & COST IS0905 Action

EIBA Conference & COST IS0905 Action. Chinese and Indian corporate presence in Europe: what about the crisis ? Yunnan SHI, Christian Milelli , Françoise Hay Bucharest , December 8 2011. Background (1).

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EIBA Conference & COST IS0905 Action

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  1. EIBA Conference& COST IS0905 Action Chinese and Indiancorporatepresence in Europe: what about the crisis? Yunnan SHI, Christian Milelli, Françoise Hay Bucharest, December 8 2011

  2. Background (1) • Academic interest in early 2000 for large emerging economies in general and a new wave of Southern Multinationals in particular • In our case work was effective with the start of a research-study commissioned by the French Ministry of Economy in 2006 after a somehow "call-up call" due to the acquisition of Arcelor by Mittal • A report was released in 2007 giving a first overview (to our knowledge) of the presence of Chinese and Indian companies accross Europe

  3. Background (2) • Why China and India? Severalreasonscanbe put forward: • a/ main Southerninvestissors in Europe • b/ firmsfromboth countries are fromverydifferent national context and pathdevelopment. We made the hypothesisthat the historical and institutionnalcontextmattermuch more for this type of Multinationalswhencomparedwith Western Multinationals • c/ Besides, their home countries have very good perspectives of economicgrowth for the comingyears

  4. Annual GDP growth (%) – China & India vs Brazil & G7 (Source: IMF)

  5. Years 2015- 2020 Economicgrowth perspectives, China & Indiavs South America and Triad, 2010-2020 Years 2010-2015

  6. Background (3) • Innovation: due to the lack of data at the micro level (in general or on Europe in the case in point) wehad to set up ourowndataset by collecting and compiling data fromdifferent sources, i. e. Thomson Reuters for M&As, National Investment Promotion Agencies for greenfieldinvestments, and ohers sources) • In addition, several face-to-face interviews have been carriedaccross Europe (France, CzechRep., Germany, Italy, Sweden, Switzerland)

  7. Background (4) • A last report commissioned by the French Ministry of Economywasreleased in June 2010 • Topic: Chinese and Indiancorporatebehaviour in Europe during the global financialcrisis • A book waspublished by the Sussex AcademicPressin September 2011

  8. Overview 1. The investments made by Chinese and Indiancompaniesoverseas for the years 2008 and 2009 • The impacts of the crisis on Chinese and Indian national economies • M&As carried out by Chinesecompaniesworldwide • M&As made by Indiancompaniesworldwide 2. The behaviour of Chinese and Indiancompanies in Europe during the global financialcrisis • A contrasting situation for the twocategories of investors • Main characteristics of new investments made by bothinvestorsduring the crisis • The crisis as an opportunity for bothinvestors in severalsectors • The resilience of previousinvestments 3. Assessment and perspectives

  9. Empiricalapproachbased on a specificdatabase and selected interviews • Proprietary database including: 930 investments made in Europe from 530 Chinese companies (Mainland + Hong Kong) 820 investments made in Europe from 420 Indian companies • 30 selectedinterviewsconducted in France, Germany, Italy, CzechRepublic… (first-half 2010) • Plus focus on severalcase studies(Huawei, Cosco,…)

  10. Comparisonsof the behaviour of Chinese and Indianaffiliatesin Europe before and after the crisis According to variouscriteria: • number of investments • geographicaldistributtion • modes of entry • sectoraland functiondistribution • motivations

  11. Investmentsfrom China

  12. InvestmentsfromIndia

  13. Main hostEuropean countries, 2008-09

  14. Main results • In a nutshell • Indianinvestments: sizeablyaffected • Chineseinvestments: mildlyimpacted • Emergingbehaviours for bothinvestors: • Lowercommitedamounts • More M&As in absolute and relative terms • Focus on largereconomies - i.e., UK, Germany and France • Target on specificicassets (technologies, brands, sale networks)

  15. Perspectives • The story is not finished: Chinese and Indiancompanies are beingparticularlycourted by EuropeanForeignInvestmentAgencies. Whatwillbetheirbehaviour in the context of an Europeancrisistriggered by the sovereigndebtproblem? • Probably, Chinese and Indianresponseswill continue to bedifferent…

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