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Toh Han Shih

The United States and Britain have emerged as the bright spots for overseas Chinese investments lately, while China's investment in the rest of Europe has waned.
Chinese firms spent US$7.5 billion on 10 acquisitions and eight greenfield projects in the US in the third quarter, according to Rhodium Group, a US consultancy - the highest quarterly investment in the country by Chinese investors.
Investment in the second quarter totalled US$2.5 billion and for the whole of last year amounted to US$6.7 billion.

In the first nine months, Chinese firms spent US$12.2 billion on 55 greenfield projects and acquisitions in the US, well on the way to a record for Chinese foreign direct investment in the US, Rhodium said.
The lion's share of Chinese investment in the US during the third quarter was the takeover by pork company Shuanghui International of Smithfield Foods for US$7.1 billion, the biggest single transaction by a Chinese firm in the US.
"The successful Smithfield takeover doubles the number of US workers receiving pay cheques from Chinese-owned companies from 33,000 to more than 70,000, highlighting the growing significance of Chinese capital for local economies," Rhodium said.
The biggest pending transactions included a US$1 billion luxury hotel project in New York by Dalian Wanda, a private Chinese firm, Rhodium added.
Paul Hastings, a US law firm, represented Shuanghui in its acquisition of Smithfield and helped the Chinese firm avoid potential political obstacles to clinch the deal.
"We had to manage this charged political climate, and we worked closely with Smithfield's advisers to reach out to constituents on Capitol Hill, the US administration, state and local governments, unions, employees, shareholders, and commentators," the firm said.
"Our proactive approach ensured the deal was evaluated as a merger driven by economic fundamentals, including pork demand in China, and not depicted as a strategy to export pork to the US or otherwise permit a Chinese takeover of US food supply."
After two years of being ranked the top destination for Chinese outbound mergers and acquisitions, investments in Europe declined to US$2.7 billion in the first half from US$6.9 billion a year earlier, said Andre Loesekrug-Pietri, president of A Capital, an investment firm focusing on China-Europe investments.
According to the United Nations Conference on Trade and Development, foreign direct investment in Britain rose 22 per cent to US$62 billion last year, but that in the European Union, including Britain, dropped 42 per cent.
Chinese buyers invested more than £6 billion (HK$74.4 billion) in Britain last year, said Graham Robinson, a global business consultant of Pinsent Masons, a British law firm.
"Britain is a more attractive place to do business in Europe than it was a year ago. With Britain positioning itself as one of the top destinations for investment in Europe, this will mean a significant increase in investment from China into Britain's infrastructure and real estate markets," Robinson said.
Chinese investors were eyeing a growing list of infrastructure projects, including Thames Tideway, a £4.2 billion project to improve London's sewer network, he said.
Simon Weller, partner at law firm Freshfields Bruckhaus Deringer, said interest in the country from Chinese investors was growing. "We are often asked by clients in China to assess potential transactions in the UK."
British Chancellor of the Exchequer George Osborne and London mayor Boris Johnson visited China last month, with several measures to attract investment announced. These included a relaxation of visa rules for Chinese nationals and allowing Chinese firms to take majority stakes in nuclear power plants.
Both officials flattered their Chinese hosts, saying their children were learning Putonghua. They barely raised human rights concerns, and Johnson told reporters: "We're determined to show how much we love China."
Weller said Britain had long-term plans for greater investment in infrastructure. "It will require significant amounts of capital, so it makes sense to encourage international investment and it offers Chinese investors opportunities."
Over the next decade, Britain needed to invest up to US$650 billion in upgrading its infrastructure, including electricity, roads, rail and airports, Robinson said.
In July, Ping An Insurance agreed to buy the Lloyd's Building in London for US$388 million. "The deal marks the first major high-profile foreign real estate acquisition by a Chinese insurance company, but it is unlikely to be the last," said Joel Rothstein, a partner at Paul Hastings.
Chinese property developers were completing deals in developed markets now, because they wanted to learn how real estate projects were developed, operated and marketed in developed markets, Rothstein said.
"In the next phase of China's outbound real estate investment, we will likely see Chinese contractors increasingly bidding for and winning major projects in developed real estate markets," he said.
But not everyone welcomes Chinese investments.
"The UK public remains sceptical and concerned by the rise and dominance of China," said a report by MSL Group, a strategic communications subsidiary of Publicis Groupe, a French media conglomerate.
MSL polled 1,732 people in the US, Britain and France earlier this year, and found 58 per cent see the prospect of their company being acquired by a Chinese company as a threat.
A similar number said they would be concerned if someone from China headed the company for which they worked.
Because transport infrastructure in the US is largely a local matter, Chinese investors should be prepared to address local concerns, a US Chamber of Commerce report said.
"By one estimate, more than 80 per cent of US voters oppose the use of foreign capital in domestic infrastructure projects," it said.
The headline and introduction to a commentary on October 18 in The Telegraph, a right-wing British newspaper, read: "Boris and George, a pair of Chinese characters: Watching George Osborne and Boris Johnson suck up to their Chinese hosts and fight for our attention at home made for excruciating viewing."
Referring to Wanda's £320 million purchase of British yacht maker Sunseeker, another British newspaper, the Evening Standard, commented: "Are we wise to be selling so many of our firms to foreigners?"


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Shuanghui's takeover of Smithfield helps push FDI for quarter to record US$7.5b in America, while Britain stars as key EU funds destination


The United States and Britain have emerged as the bright spots for overseas Chinese investments lately, while China's investment in the rest of Europe has waned.


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