Chinese companies are moving to take over more and more European companies, according to research by Ernst & Young Global Ltd released on Wednesday. 

Ernst & Young reported that Japan and China led the pack in making investments in Europe in the first two months of 2012, completing nearly $11 billion in deals. They were followed by South Korea, India and Australia. 

Michel Driessen, partner at Ernst & Young, said Asian investors' interest in Europe has increased since 2010 and is likely to become even bigger in 2012. 

"It is clear that Asian investors understand the financial backdrop in Europe at present and are keen to take advantage of this situation," Driessen said. 

"Pricing, exchange rates and deal dynamics are all working to the benefit of Asian investors at present. It is the right time to acquire for growth in Europe." 

The deals pertained to a wide variety of businesses, most of them being in the industrial product, computer service and software, financial service and chemical industries. 

According to Ernst & Young, Asian companies should try to expand in Europe because that will allow them to immediately gain loyal customers and quickly increase the size of their market shares. 

Europe will also give them a solid means of expanding further into other international markets. 

Ernst & Young also said Asian companies hope to enter Germany, Britain and other countries to pursue more research and development and innovation, thereby strengthening their products and improving their ability to conduct research and development in the Asia-Pacific region. 

The combination of these influences has driven the Asia-Pacific region to increasingly turn to Europe to make acquisitions. 

During the past five years, Australia has become the lead buyer in this area, accounting for 22 percent of the foreign merger and acquisition deals that were completed in Europe. It was followed by India, with 19 percent, China, with 18 percent, and Japan, with 18 percent. 

Japan has spent more on mergers and acquisitions in Europe than any other market in the Asia-Pacific region, having invested about $79 billion since 2007. 

Driessen said the ongoing financial and economic situation in Europe is giving Asia-Pacific companies opportunities to make interesting purchases at attractive prices. 

 

Source: By Cecily Liu in London (China Daily)

 

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