Rich pickings for French and Chinese companies to invest in one another

Despite recent bribery scandals involving several European companies, China is still one of the top candidates for outbound investment from French companies, the top official of a leading industry organization says.

Emmanuel Limido, president of France Emerging Enterprises, which promotes two-way investment for French companies in international markets, especially in emerging ones, says China still has terrific investment potential.

The Chinese government's recent crackdown on illegal operations of foreign companies has netted several prominent multinationals like French food products company Groupe Danone and raised fears of a tougher investment environment for overseas firms in China.

"Many French companies believe that China is a tough investment destination. Solving that problem is part of the challenge to succeed," Limido says.

The problem also shows that the relationship between foreign firms and the Chinese market has reached a certain level of maturity, he says.

Foreign investment in China has transformed from simply creating a production base for exports to establishing localized companies for the Chinese domestic market, he says.

Limido says FEE strives to help French companies gain access to China through partnerships with Chinese companies that are flush with funds and have excellent knowledge of the domestic market.

There is a huge potential in the complementary roles of French and Chinese companies when it comes to bilateral investment between the two countries. Limido recently traveled to China with former French Prime Minister Jean-Pierre Raffarin, hoping to put French and Chinese companies in touch with one another.

"It will be a win-win relationship as French companies can benefit from the Chinese capital and the access to the Chinese market while the Chinese companies could gain technical know-how by becoming shareholders in the French companies," he says.

"This kind of partnership also reduces the risks exposed by the recent bribery scandals for foreign companies as it is also in the interest of the Chinese partners to make sure the business prospers well in China."

One successful deal that FEE has helped facilitate is the Shandong province-based heavy vehicle manufacturer Haide Group's investment in the French electric vehicle producer PVI Group.

By owning a 40 percent stake of PVI Group, the Chinese company gained the core technology for producing electric buses for public transport. Meanwhile, the partnership helped the French company gain necessary capital to fund expansion and access to the Chinese market for electric buses.

Limido says similar opportunities exist in the French sports industry, and he cites the role his organization is playing in helping AJ Auxerre, a football club, get a potential Chinese investor.

"The football club could benefit from Chinese capital while the Chinese investor can take advantage of the club's expertise and know-how in identifying and training top-level football players which will help improve the local football teams," he says.

Chinese investors, Limido says, should pursue more investments in small and medium-sized French companies.

"The opportunities are in the small and medium companies which have good and profitable business models but are often short of financial and human resources to expand to a far-away market. So they are our targets, and this is where the need is the most on the French side," he says.

The French government has formulated a series of favorable policies to facilitate greater foreign investment to the country with a goal of realizing 1,000 investment decisions and creating 300 new companies by 2017 under its national competitiveness pact.

In 2012, France was the largest recipient of job-creating investment from China, attracting 21 percent of Chinese projects in Europe, according to the Invest in France Agency, a French government body that facilitates foreign investment in the country.

With 31 investment decisions in sectors such as manufacturing, agriculture and aerospace, China was the eighth-largest foreign investor in France, according to the French agency.

Limido says that acquiring high-end technology will continue to drive China's investment in France.

"The appetite for technology is very high as it will gain time for the Chinese companies to develop," he says.

"Although in some areas, Chinese companies are already able to develop technology of the same quality as we do, there are still enough attractive technologies for the Chinese companies, in Europe."

China and France will celebrate the 50th anniversary of establishing diplomatic relations next year, which is an important occasion to enhance the bilateral business and investment relations between the two countries, Limido says.

A series of business events will be held next year including a large forum supported by Raffarin in Chengdu, Sichuan province, which is expected to bring together 1,000 Chinese and French companies.

"We come with clear proposals and projects, hoping to create a perfect alignment of interest between Chinese and French companies," Limido says.

lixiang@chinadaily.com.cn

(China Daily European Weekly 10/25/2013 page20)