Game changers

Number magic

Merger and acquisition deals by Chinese companies in Europe first surpassed European M&A investment in China during the first quarter of this year, with 32 investments from the Chinese mainland in Europe against 26 deals in China, according to a recent report published by global accountancy firm PriceWaterhouseCoopers.

"This marks the first time that deal flow volume has been greater to Europe than to China," the report says.

The report, named China Deals; A Fresh Perspective, shows there has been a steady rise in the value and volume of Chinese mainland investments in Europe over the last six years despite recent signs of a slowdown in China's economic growth and the continuing uncertainties of the eurozone crisis.

Chinese M&A investments in Europe increased from just 11 deals in 2006 to 61 in 2011, while those from Europe to China declined from a peak of 163 deals in 2006 to a low of 85 in 2009. "If historically European investors have been more acquisitive in China, the gap in deal flow between Europe and China is narrowing," the report says.

China's state-owned enterprises have been M&A trailblazers in Europe, the report says, adding that more Chinese companies are expanding there.

According to the PwC report, there has been a sea change in the traditional investment relationships with various European nations. The report says that Germany and France have become the prime candidates for Chinese investment overtaking the old favorite - the UK.

Rhine rhapsody

Germany has emerged as the most popular destination for Chinese investment and also as the location for the European headquarters of most Chinese companies.

Christine Stock, deputy section manager of COSCO Europe GmbH, a unit of the state-owned conglomerate COSCO, says the company has more than 170 local employees at the Hamburg head office of COSCO Container Lines Europe and at its branch offices in Bremen, Frankfurt and Dusseldorf. It also has 25 German employees at COSCO Logistics and COSCO Europe Bulk Shipping GmbH in Germany.

According to Christiane Linkenbach, head of marketing & corporate communications at heavy machinery maker Sany Heavy Industry Germany GmbH, says the Chinese company will soon come out with new structures and strategies for improving production in the future. Sany acquired Putzmeister, a German company, early this year.

According to latest estimates, the number of qualified German professionals working directly or indirectly for Chinese companies could well run into several hundred thousand, experts say.

Walter Schuhen, PR and marketing director of Dusseldorf China Center (DCC), is just one of such several Chinese-speaking German professionals. Schuhen has worked for more than three years with DCC, a platform for economic and cultural exchanges between German and Chinese professionals working for private companies, governmental and non-governmental companies.

Like many fellow Europeans, he says that China is a fascinating country with a long tradition and history and speedy economic and social development.

Schuhen says that the general consensus among most German employees when dealing with Chinese companies is a sense of security. To some extent, it has also been fuelled by the increasing number of employees Chinese companies are hiring in Germany, he says.

"As an employee myself, I think the main challenges are different cultural and educational backgrounds," he adds

Schuhen says that Germans are generally used to long preparation periods and planning cycles, stricter regulations and rules. In contrast, the Chinese are more spontaneous and flexible.

"The most impressive feature has been the speedy decisions that are taken and implemented by Chinese companies," he says.

According to data provided by Eurostat, the statistics office of the European Union, Germany leads the list of countries in the eurozone that are the least affected by the debt crisis, with an unemployment rate of 5.4 percent during the third quarter of this year. This is merely half the average rate of the European Union's 27 member states.