Fewer Chinese corporate acquisitions and investments in Europe and Switzerland

• The number of Chinese investments in Swiss companies falls from nine in the prior year to three in the year 2022
• Europe-wide decrease from 155 to 139 transactions – transaction value falls by 65% to 4.3 billion US dollars
• Switzerland ranks ninth among the most popular European countries for Chinese investments

Zurich, 21 February 2023 - Chinese purchasers were less frequently involved in corporate takeovers in Europe in the past year: Compared with the previous year, the number of transactions fell from 155 to 139. The value of the transactions also fell, with the value of the investments and takeovers dropping from 12.4 billion to 4.3 billion US dollars – no details of the purchase prices were available in the majority of cases, however.

Even in Switzerland, Chinese investors appeared on the scene less frequently than in the prior year: The number of acquisitions and investments fell from 9 to 3. The investment value remained on a similar level to the prior year (96 million US dollars). However, no purchase prices are available for two of the three transactions closed in Switzerland. Michael Messerli, Head of Strategy & Transactions at EY in Switzerland, explained: “2021 was in general an extraordinarily good M&A year with high volumes. The decline in 2022 may therefore be seen as normalization.” In a long-term comparison, 2022 was not a particularly bad year, added Messerli.

This means that, with regard to corporate acquisitions and investments by Chinese companies in 2022, Switzerland ranks ninth in a country comparison – on a level with Norway, Poland, Portugal, Russia and Sweden, with three transactions reported in each. The top position was taken, like last year, by the UK with 27 transactions (prior year 36), ahead of Germany with 26 transactions (prior year: 35). France took third place, being one of only a few European countries able to report more Chinese investment than last year – the number of transactions in France rose from 12 in the prior year to 17 in 2022.

These are the findings of a study by audit and consultancy firm EY investigating investments by Chinese companies in Germany and Europe.

General uncertainty a reason for caution

Hubert Stadler, Head of the China Desk at EY in Switzerland identified clear reasons for the obvious caution on the part of Chinese companies: “The general uncertainly, to be specific, rising energy prices, inflation, interest price hikes and political developments at an international level brought about this decrease.” Looking at China itself, Stadler added: “The pandemic and the protracted containment measures that did not come to an end in China until the close of last year made the initiation and successful implementation of transactions more difficult.” China was generally more inwardly focused last year.

Chinese are buying fewer industrial companies but more high-tech businesses

Over the past year, there were, for the first time, more corporate acquisitions and investments in the high-tech segment, consisting primarily of software and semi-conductor companies, than in traditional industrial sectors in Europe: Counter to the trend, the number of acquisitions of high-tech companies rose from 27 to 32, with the number of industrial companies falling from 30 to 25 at the same time. With nine transactions, Germany saw most of the deals in the industrial sector. Looking at transactions in the high-tech segment, the UK took top position with six deals – ahead of France (five) and Germany (four).

In addition, a particularly large number of transactions were reported in Germany’s health-care sector, which includes biotech companies as well as the pharmaceutical and medical equipment industries. In the whole of Europe, there were 17 transactions in this segment, of which nine in Germany.

The largest Chinese investments in Europe

“Since the beginning of the year, there have been a large number of delegations from China traveling around Europe with a view to identifying new potential target companies. Not least due to the political environment, the number of deals will remain significantly down on the boom years,” said Stadler. Stadler and Messerli are optimistic, nevertheless: “As soon as the sentiment in China improves, the number of foreign investments, including in Switzerland, will rise again.”

The largest investment throughout Europe last year was the sale of Dutch semiconductor manufacturer Ampleon, previously owned by a Chinese private equity investor, to Wuxi Xichan Microchip Semiconductor for just under 2 billion US dollars.

The second largest transaction was the initial stake taken by Chinese Internet company Tencent in Guillemot Brothers Limited, the family holding company that owns Ubisoft, for just under 300 million US dollars; this was followed by the acquisition of French drug producer Cenexi by Chinese pharmaceuticals group Fosun for 218 million US dollars.

                                                                                       - ends -

About the global EY organization

The global EY organization is a leader in assurance, tax, transaction and advisory services. We leverage our experience, knowledge and services to help build trust and confidence in the capital markets and in economies all over the world. We are ideally equipped for this task — with well-trained employees, strong teams, excellent services and outstanding client relations. Our global purpose is to drive progress and make a difference by building a better working world — for our people, for our clients and for our communities.

The global EY organization refers to all of the member firms of Ernst & Young Global Limited (EYG). Each EYG member firm is a separate legal entity and has no liability for another such entity’s acts or omissions. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Information about how EY collects and uses personal data and a description of the rights individuals have under data protection legislation are available at ey.com/privacy. For more information about our organization, please visit ey.com.

EY’s organization is represented in Switzerland by Ernst & Young Ltd, Basel, with 10 offices across Switzerland, and in Liechtenstein by Ernst & Young AG, Vaduz. In this publication, “EY” and “we” refer to Ernst & Young Ltd, Basel, a member firm of Ernst & Young Global Limited.