Chinese blockbuster deals worldwide are pushing up overseas direct investment

Recent figures show that Chinese overseas direct investment, which is made by Chinese companies in other countries, rose considerably last year and is projected to catch up and eventually overtake the amount of foreign direct investment, the amount foreign companies invest in Chinese companies.

With the help of quantitative easing and robust economic recovery, emerging markets have in general increased their overseas investment activities. When the real estate bubble in the United States and several other Western economies burst during the financial crisis of 2007-08, companies in emerging economies found many businesses and projects in developed economies simply too good to resist. Some investment opportunities were attractive not only in terms of value, but were also important strategically for businesses in emerging economies wanting to expand globally.

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At the same time, with the strong appreciation in the currencies of some emerging economies and the related appreciation of assets, many companies in emerging economies needed to seek investment opportunities overseas. International diversification and acquisition have thus become an important way of rebalancing the global economy.

Chinese companies have done many other blockbuster deals around the globe. China's investment in Africa, much of it related to infrastructure and natural resources, reflects Chinese companies' long-term global plans, beyond immediate need for raw materials. In addition, many Chinese companies have opted to move their operations to neighboring Asian countries with lower labor costs, defraying rising labor costs domestically.

Further, in the past two years Chinese real estate developers have snapped up prime properties and development opportunities in the US, Canada and elsewhere, further attracting global attention to Chinese overseas investment and expansion.

Among all of the important overseas investment deals in recent years, Europe has stood out as a prime destination for Chinese companies. Europe, as China's largest trade partner, has drawn considerable investment from Chinese companies. The trend seems likely to continue in the year ahead. With geographical proximity and historically close ties in trade and investment, many Chinese companies find investment in Europe a great complement to their domestic businesses. The goal of some Chinese companies' so-called China-themed investments is in fact to better develop and penetrate Chinese domestic markets with a European edge.

For example, because Chinese people have become more enamored with European luxury brands and life styles, many European companies are taking increasing market share from China. As Chinese companies have climbed the design and manufacturing ladder, many have found it difficult to establish an internationally renowned brand within a few years. To distinguish themselves from domestic competition and gain international recognition, many Chinese businesses choose to invest in sectors and companies with great exposure to the increasing wealth of Chinese.

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