What are the mainstream trends of European manufacturing industry increasing investment in China?


2022-09-23: [Chinese Article Link]  With the effects of the Russian-Ukraine conflict and the European energy crisis, reports of “big migration” in European manufacturing have been reported in recent weeks, and China, as a “world factory”, is certainly expected to “take a piece of it” from it. According to a survey published by the German Institute for Economic Research (IW) earlier this month, Germany's direct investment in China in the first half of this year amounted to 10 billion euros, which is expected to reach an all-time high. Earlier this month, the German Chemical Group Basv launched a huge complex production project in Chamjiang; and earlier, Merk announced that China's first OED material production base had officially been inaugurated and put into operation at Dongjin Bridge in Shanghai. The configuration of these large manufacturing enterprises across the Eurasian continent shows that a growing number of European companies are attempting to increase the localization of China's supply chains, as a result of the global supply chain shocks caused by the epidemic and geophysical situations. A recent report released last week by Rhodium, a research institution, shows that European investment is now becoming more concentrated, both in terms of the enterprises involved, the industries in which they operate and the sources of investment. Big man up the chips. Rhodium reviews the core trends in European direct investment in China over the past 10 years, and a marked change in trends: a small number of large European firms are taking up an increasing share of their investment in China, especially the German giants... Note: Blue represents Europe's share of the top ten giants that invested in China in the year. For example, in the last four years, the top ten European giants have invested in China each year, accounting for nearly 80% of all European direct investment in China. Germany’s three major car manufacturers – the general public, BMW, and Mercedes Benz, as well as the Chemical Group Basque Group – have led the way in China, accounting for 34% of Europe’s direct investment in China from 2018 to 2021 alone. This trend is likely to become even more evident this year. The Basff Group recently launched a huge complex production project at a cost of 10 billion euros in Guangdong, China, with the goal of building a world-class chemical integration base. This is the largest investment to date in China by Basif and the country's first portfolio of 60,000 tons of plastic-grade compounds. Focus on five major industries European investment is also beginning to become more concentrated in a few major industries, particularly high-end technology manufacturing industries. Five major industries, including automobiles, food processing, pharmaceuticals/biotechnology, chemicals and consumer manufacturing, now account for nearly 70 per cent of all European direct investment in China, a further increase from 65 per cent in previous years. This is particularly true in the automotive sector, which for almost two years has accounted for about one third of all European direct investment in China. This percentage was even higher in the first half of the year, as the German car manufacturer BMW had increased its share of the Chinese joint venture, BMW, from 50 per cent to 75 per cent, and other European car manufacturers had invested in new facilities in China to catch up with the transition of electric cars. The Four Kingdoms took the cake. Finally, Europe’s direct investment to China has become more concentrated in terms of the country of origin of the investment. In the last four years, Germany, the Netherlands, the United Kingdom and France accounted for an average of 87 per cent of Europe’s total investment to China, compared with 69 per cent in the last 10 years. Among them, Germany is the most growing investor, accounting for 43 per cent of Europe’s total investment to China in the last four years, compared with 34 per cent in the last 10 years. In 2018, the share of German enterprises in Europe’s investment to China was once more than 50 per cent. This trend is driven by multiple factors: the early entry of German firms into the Chinese market, whose presence in China has been actively encouraged and facilitated by the Chinese government sector for decades; the fact that German firms are usually located in capital-intensive manufacturing and engineering industries, which means that it is easier to generate large fixed investments; and the fact that in the last 10 years they have often been active in the most dynamic industries in China, near the water towers having taken place for months. What is the attraction of investment in China? Rhodium pointed out that Europe had been steadily growing in the size of its investments in China, largely due to three considerations. First, their investment in China has generated huge profits and is convinced that, despite possible economic and geopolitical resistance, the Chinese market will be profitable. Secondly, these companies believe that they must continue to maintain their investment and product development in China in order to safeguard the value of past investments and to remain competitive when they compete with increasingly innovative domestic counterparts, such as electric cars. Thirdly, these companies are trying to protect their operations in China from rising global risks by increasing Chinese localization inputs, a practice that has also been actively encouraged by the Chinese authorities. Of course, Rhodium also refers to a few of the current bad events in Europe’s investment in China. For example, while some of Europe’s giants still benefit from China’s growing demand, investment in services is clearly missing in Europe’s investment in China. According to data released earlier by the Ministry of Commerce of China, between January and July of this year, foreign investment in the country in the amount of RMB 79,833 million was actually used, an increase of 17.3 per cent over the same period, with investment from Germany increasing by 23.5 per cent over the same seven-month period. In addition, in January-July of this year, the real use of foreign direct investment in high-technology industries grew by 32.1 per cent, with a 33 per cent increase in high-technology manufacturing and a 1.9 per cent increase in the average rate of foreign investment in the country's absorption of high-technology industries, which is a clear indication of the optimal structure of China's foreign direct investment sector and the improvement in the quality of foreign investment. Max Zenglein, chief economist at the Mercator China Institute (MERICS) in Germany, stated: “Despite the risks of growth, the significant opportunities that the Chinese market still offers should not be underestimated. The former Vice-President of the German Bundestag and former Federal Minister of the Interior, Hans-Peter Friedrich, in a recent interview with the Global Times, also stated that German enterprises were “comfortful” to operate in China and wished to participate in a flourishing Chinese market. “If Germany and China are decoupled, there can be no economic loss to both sides, nor can they be decoupled for any reason.” At the same time, he said that the biggest misperception of the current German politics and society about China was “the attempt to include China in a European perspective.” There is no doubt that China’s entire industrial chain, large market size, and relatively low-cost manufacturing cost advantages are in themselves enormous advantages for global and European enterprises in particular, especially in the context of Europe’s current European energy crisis, and who can really ignore such an attractive collection of treasures? It's from the FSB.


Note: This is a machine translated version of the Chinese news media article. A mature and nuanced reading is suggested.




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What are the mainstream trends of European manufacturing industry increasing investment in China?


2022-09-23: [Article Link]  With the effects of the Russian-Ukraine conflict and the European energy crisis, reports of “big migration” in European manufacturing have been reported in recent weeks, and China, as a “world factory”, is certainly expected to “take a piece of it” from it. According to a survey published by the German Institute for Economic Research (IW) earlier this month, Germany's direct investment in China in the first half of this year amounted to 10 billion euros, which is expected to reach an all-time high. Earlier this month, the German Chemical Group Basv launched a huge complex production project in Chamjiang; and earlier, Merk announced that China's first OED material production base had officially been inaugurated and put into operation at Dongjin Bridge in Shanghai. The configuration of these large manufacturing enterprises across the Eurasian continent shows that a growing number of European companies are attempting to increase the localization of China's supply chains, as a result of the global supply chain shocks caused by the epidemic and geophysical situations. A recent report released last week by Rhodium, a research institution, shows that European investment is now becoming more concentrated, both in terms of the enterprises involved, the industries in which they operate and the sources of investment. Big man up the chips. Rhodium reviews the core trends in European direct investment in China over the past 10 years, and a marked change in trends: a small number of large European firms are taking up an increasing share of their investment in China, especially the German giants... Note: Blue represents Europe's share of the top ten giants that invested in China in the year. For example, in the last four years, the top ten European giants have invested in China each year, accounting for nearly 80% of all European direct investment in China. Germany’s three major car manufacturers – the general public, BMW, and Mercedes Benz, as well as the Chemical Group Basque Group – have led the way in China, accounting for 34% of Europe’s direct investment in China from 2018 to 2021 alone. This trend is likely to become even more evident this year. The Basff Group recently launched a huge complex production project at a cost of 10 billion euros in Guangdong, China, with the goal of building a world-class chemical integration base. This is the largest investment to date in China by Basif and the country's first portfolio of 60,000 tons of plastic-grade compounds. Focus on five major industries European investment is also beginning to become more concentrated in a few major industries, particularly high-end technology manufacturing industries. Five major industries, including automobiles, food processing, pharmaceuticals/biotechnology, chemicals and consumer manufacturing, now account for nearly 70 per cent of all European direct investment in China, a further increase from 65 per cent in previous years. This is particularly true in the automotive sector, which for almost two years has accounted for about one third of all European direct investment in China. This percentage was even higher in the first half of the year, as the German car manufacturer BMW had increased its share of the Chinese joint venture, BMW, from 50 per cent to 75 per cent, and other European car manufacturers had invested in new facilities in China to catch up with the transition of electric cars. The Four Kingdoms took the cake. Finally, Europe’s direct investment to China has become more concentrated in terms of the country of origin of the investment. In the last four years, Germany, the Netherlands, the United Kingdom and France accounted for an average of 87 per cent of Europe’s total investment to China, compared with 69 per cent in the last 10 years. Among them, Germany is the most growing investor, accounting for 43 per cent of Europe’s total investment to China in the last four years, compared with 34 per cent in the last 10 years. In 2018, the share of German enterprises in Europe’s investment to China was once more than 50 per cent. This trend is driven by multiple factors: the early entry of German firms into the Chinese market, whose presence in China has been actively encouraged and facilitated by the Chinese government sector for decades; the fact that German firms are usually located in capital-intensive manufacturing and engineering industries, which means that it is easier to generate large fixed investments; and the fact that in the last 10 years they have often been active in the most dynamic industries in China, near the water towers having taken place for months. What is the attraction of investment in China? Rhodium pointed out that Europe had been steadily growing in the size of its investments in China, largely due to three considerations. First, their investment in China has generated huge profits and is convinced that, despite possible economic and geopolitical resistance, the Chinese market will be profitable. Secondly, these companies believe that they must continue to maintain their investment and product development in China in order to safeguard the value of past investments and to remain competitive when they compete with increasingly innovative domestic counterparts, such as electric cars. Thirdly, these companies are trying to protect their operations in China from rising global risks by increasing Chinese localization inputs, a practice that has also been actively encouraged by the Chinese authorities. Of course, Rhodium also refers to a few of the current bad events in Europe’s investment in China. For example, while some of Europe’s giants still benefit from China’s growing demand, investment in services is clearly missing in Europe’s investment in China. According to data released earlier by the Ministry of Commerce of China, between January and July of this year, foreign investment in the country in the amount of RMB 79,833 million was actually used, an increase of 17.3 per cent over the same period, with investment from Germany increasing by 23.5 per cent over the same seven-month period. In addition, in January-July of this year, the real use of foreign direct investment in high-technology industries grew by 32.1 per cent, with a 33 per cent increase in high-technology manufacturing and a 1.9 per cent increase in the average rate of foreign investment in the country's absorption of high-technology industries, which is a clear indication of the optimal structure of China's foreign direct investment sector and the improvement in the quality of foreign investment. Max Zenglein, chief economist at the Mercator China Institute (MERICS) in Germany, stated: “Despite the risks of growth, the significant opportunities that the Chinese market still offers should not be underestimated. The former Vice-President of the German Bundestag and former Federal Minister of the Interior, Hans-Peter Friedrich, in a recent interview with the Global Times, also stated that German enterprises were “comfortful” to operate in China and wished to participate in a flourishing Chinese market. “If Germany and China are decoupled, there can be no economic loss to both sides, nor can they be decoupled for any reason.” At the same time, he said that the biggest misperception of the current German politics and society about China was “the attempt to include China in a European perspective.” There is no doubt that China’s entire industrial chain, large market size, and relatively low-cost manufacturing cost advantages are in themselves enormous advantages for global and European enterprises in particular, especially in the context of Europe’s current European energy crisis, and who can really ignore such an attractive collection of treasures? It's from the FSB.

Note: This is a translated version of the Chinese news media article. A mature and nuanced reading is suggested.

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