Rich pickings for French and Chinese firms to invest money 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 such as 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 because 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 because 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. He cites the role his organization is playing in helping AJ Auxerre, a football club, get a potential Chinese investor.

Chinese investors, Limido says, should pursue more investments in small and medium-sized French companies as they "have good and profitable business models but are often short of financial and human resources to expand to a far-away market".

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.

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

Limido also says the Shanghai free trade zone will attract investment attention from several French companies.

"It shows how seriously the Chinese authorities are taking the issue of helping foreign investment to establish and succeed in China," he says.

lixiang@chinadaily.com.cn

(China Daily USA10/28/2013 page14)