The rapid expansion of Chinese companies into Britain and Europe is being followed by a wave of Chinese financial services firms keen to support their clients, experts said at the Sino-European Entrepreneurs Summit in London on June 13.

In particular, investment by Chinese private businesses in Europe has surged, while their diverse needs are providing opportunities for supporting industries to step in and fill the market gap.

One example is the expansion of private sector banks in London to provide financing and investment banking services to private Chinese firms, says Zheng Wanchun, president of China Minsheng Bank.

"In recent years, a number of flagship private Chinese businesses have invested significantly in Europe, and this trend is set to continue as Chinese firms internationalize under the wider context of China's structural change and the exporting of China's industrial capacity to other countries," he says.

Among the key examples Zheng mentioned are Chinese telecommunications company Huawei and property developer Wanda Group, which both have significant investment in Europe through organic growth and acquisitions.

There is a process for private firms to secure financing, so "banks like Mingsheng can use our expertise to help them go abroad", says Zheng, adding that one key mission for his current London trip is to explore the possibility of establishing a branch of his bank in London.

Last year, Chinese outbound investment reached an unprecedented $23 billion (20.4 billion euros) in Europe. About $2.6 billion were small-scale investments (under $100 million), with 80 percent of these made by private-sector investors, according to data compiled by law firm Baker & McKenzie and consultancy firm Rhodium Group.

Wang Yunfan, CEO of Morning Whistle, a Shanghai-based mergers and acquisition information platform, says a growing desire among Chinese private companies to acquire overseas assets is creating a significant opportunity for small- and medium-scale deal-finding and information provision.

"Traditionally, large Chinese firms going abroad for M&A activities can afford to hire famous investment banks and advisers, but these high costs may be less suitable for smaller deals by smaller and private-sector firms, which now make up an increasingly large bulk of outbound deals," Wang says.

The commission-based fee system of hiring investment banks to provide M&A services also puts private sector firms pursuing smaller deals in a difficult position, he adds, as the small scale of deals makes large investment banks unwilling to get involved.

To overcome such challenges, Morning Whistle Group developed an online platform for agents and companies to connect and share their deal opportunities or search criteria. The platform has 7,000 registered users. Last year, about 100 of the deal opportunities marketed on the platform received signed deal negotiation intentions from both parties.

Meanwhile, Chinese business associations are encouraging their members to internationalize and provide them with advice on how to do well in this process.

One example is the China Association for Public Companies, which provides regular seminars for Chinese listed companies to develop overseas.

"Going global is a necessary and natural process for Chinese companies, so we hold seminars to give our member firms advice on how to achieve this goal and connect them with professional financial services firms to help them in this process," says Yao Feng, vice-chairman of the association.

cecily.liu@mail.chinadailyuk.com

( China Daily European Weekly 06/17/2016 page16)