U.S. Policies And Trade Battle Are Pushing Chinese Auto Investors To Europe

As the U.S. administration locks horns with China in a fierce trade battle, Chinese auto investors are taking their money to Europe rather than the United States.

Speaking to industry sources and reviewing data from merger and acquisition bankers, lawyers and consultants, Reuters discovered that the number of mandates from Chinese clients investing throughout Europe is increasing while those in the United States are falling.

Throughout the first five months of the year, the United States accounted for 26 per cent of the total number of Chinese deals in the auto sector. In the same periods of 2017 and 2016, that figure was a firm 31 per cent.

The U.S. is no longer the dreamland is used to be

Reuters’ sources confirmed that their Chinese clients are choosing Europe over the U.S. due to struggles presented by the Committee on Foreign Investment in the United States (CFIUS).

The U.S. government intends on broadening the reach of CFIUS to examine deals for national security risks in an attempt to restrict Chinese companies from getting their hands on U.S. technology.

Head of Asia M&A at UBS, Samson Lo, says big Chinese car manufacturers don’t consider the U.S. a viable option for doing overseas deals.

“The immediate reaction is: ‘I don’t think in the current environment it is for me’,” he said.

Charlie Simpson from KPMG’s global strategy group agrees, adding that “the way that things are tightening up in the United States, Europe for China is the most obvious non-domestic market that they’re pushing into.”