China and the CEE region

Chinese investments in Europe have reached record values. In 2017, when President Si Ťin-pching promised the One Belt One Road initiative another USD 124 billion to expand global business routes, the investments grew by 78%. Europe is one of the objectives of what was first described in 2013 as the New Silk Road with the aim to support investment into ports, roads and railways and other infrastructure worldwide.

It is assumed that many projects will be defined as the “Belt and Road”, regardless of whether or not they are actually associated with the initiative. After all, China has seen the CEE region as a significant market long before the emergence of the New Silk Road.

In 2017, China attributed a historical leadership when it became the largest international investor within the CEE region. Chinese investment grew for the third year in a row and reached a new peak of EUR 7.7 billion, when the level of investment doubled compared to the previous year. The largest acquisition within the CEE region was the acquisition of a stake in the Russian oil and gas company Rosneft by CEFC. The interest of investors in the acquisition of companies remained high. Although the number of acquisitions was slightly lower than in 2016, it does not mean a loss of investor interest but rather China’s attempt to control and manage the outflow of capital and make sure that capital is invested in a logical and reasonable way. Investments into entertainment and real estate are not perceived as a matter of priority. Whether or not investment from the “Belt and Road“ initiative is concerned, the main focus of Chinese investment will be in the areas with a high degree of innovation, investment in infrastructure, energy, technologies and consumption goods.

Outside Russia, almost half of all deals were made in Poland. China does not only expand its activities geographically but also in segments of industry. A construction machinery manufacturer LiuGong has moved its headquarters to Warsaw. In Slovakia, the CNIC has bought a Prologis Logistics Park in Galanta-Gan. Smaller acquisitions include a Bulgarian company MM Solutions acquired by Thunder Software Technology, the acquisition of a stake in the Croatian energy company Energija Projekt by Norinco International, and an increase of a stake of the Camel Group battery manufacturer in Rimac, an automotive company manufacturing electric supersport vehicles. In the Czech Republic, the technology giant Huawei plans to invest up to USD 360 million.

While China was interested in acquiring technologies, brands and talents few years ago to help the competitiveness of its companies, it is now able to innovate by itself and develop its own business models. For example, in technologies, Chinese research and development is as impressive as that in many leading multinational companies.

Looking at the future, it is obvious that the Chinese will become more innovative and will focus on
innovation and infrastructure.

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