China boosts its presence in Europe(2)

Investment rationale

However, Cucino of the EU chamber said revenue is not the only factor that is propelling Chinese companies to Europe.

"The foremost reason why Chinese companies want to invest in the EU is of course the European entry point for their products. However, they are not in Europe just for the European market, but also to bring back products to China and even export products to other countries."

In the EU chamber study, 85 percent of the respondents said their main reason for investing in the EU was to gain market access for their products in Europe and to provide goods and services within the EU market.

But "in Europe, for Europe" is not the only purpose, experts say.

Coco Ke Liu, head of business channel development at HLB International, a global network of independent professional accounting firms, said that while some Chinese businesses are investing in Europe to serve the European market, some are also investing here to acquire technologies and brands, which are important resources for success both in the Chinese market and abroad.

In recent years, a growing number of Chinese acquisitions in Europe have been across a diverse range of industries, including food, retail, manufacturing, education, clean technology, industrial technology and healthcare.

Shanghai-based Bright Food Group's purchase of a 60-percent stake in British cereal maker Weetabix Ltd in May last year helped the company gain a well-known and well-trusted British brand.

Chinese construction equipment maker Sany Heavy Industry Co and Chinese private equity company CITIC Group's joint acquisition of Germany's largest concrete pump maker Putzmeister in January last year in a landmark deal allowed China to claim a pillar of the German industry.

Bunse of Germany Trade and Invest said that for Chinese companies which are faced with industrial upgrading issues, investing in European countries such as Germany can help overcome the problems.

"It is still a difficult process for Chinese companies to set up globally recognizable brands. They need the support of both advanced management and technology, which we believe European countries such as Germany can provide."

Many Chinese companies are expanding into Europe to build globally recognizable brands because the European market has strict regulations especially for high-technology products.

Chinese medical equipment maker Mindray Medical International is one such company testing the waters.

"We are committed to international expansion, especially in the US and Europe. These two markets are like two fortresses we have to conquer to become a truly global leader," said David Yin, managing director of Mindray's European operations.

"In the process of selling our products to Europe and the US, we learn about their strict standards. These lessons have become invaluable for product development at home."

Yin said Mindray's success in Europe and the US has helped it gain trust from domestic and customers in other emerging economies which had often favored Western products in the past.

"Some Middle Eastern and Latin American markets only give medical equipment product registrations if they had already been sold in Europe or the US, which just demonstrates how important it is to have a presence in Europe and the US," Yin said.