China’s communist regime has moderate to heavy influence over 40 percent of European businesses acquired by Chinese companies in the last decade, research has found.
Datenna, a Dutch consulting firm specializing in screening Chinese investments, looked at data for hundreds of European companies that have sold most or all of their shares to Chinese firms to find out how much influence the Chinese state has over the companies as a shareholder.
The data is presented as the China–EU FDI (Foreign Direct Investment) Radar—an interactive map that illustrates levels of state influence.
The FDI Radar, based on Datenna’s analysis of the acquisitions’ ultimate beneficial ownership (UBO), “is an on-going research initiative aimed at providing greater transparency on Chinese investments in Europe,” Datenna said in a statement.
Currently, the map illustrates over 650 acquisitions since 2010.
Almost one in four (161) of the acquisitions were found to have high levels of influence by the Chinese state, meaning the ultimate controlling shareholder is part of the communist bureaucracy.
Approximately 15 percent of acquisitions have medium state control, where state apparatus have a “substantial” stake but are not necessarily seen as controlling the company.
The other 60 percent of the companies has no substantial state influence behind their investors.
Over half of the acquisitions were in Germany, the UK, and France, with 174 (27 percent), 102 (16 percent), and 69 (11 percent) of acquisitions, respectively.
Layers of Ownership
Datenna said it is “extremely challenging” to determine UBO in China, because state influence is often buried under layers of ownership.
“The government’s influence in a legal entity is commonly found in several layers of ownership and can consist of a combination of central and local government investment vehicles, amongst others,” Datenna said in a white paper published in September.