January 31, 2010

Chinese Direct Investments in France: No French Exception, No Chinese Challenge

Fran├žoise NICOLAS

http://www.ifri.org/index.php?page=contribution-detail&id=5844


International Economics Programme Paper, IE PP 2010/02, Chatham House, January 2010.


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  • China’s direct investment in France remains surprisingly low even
    compared to other EU states although the targets are quite
    similar, being heavily biased towards export-support and services
    rather than industrial activities.

  • In terms of motivations, Chinese companies are primarily seeking
    access to the French and European market, although strategic
    asset seeking considerations also prevail in some cases.

  • In terms of performance, Chinese investors have seen mixed
    results, at best, with a number of spectacular failures and a more
    limited number of success stories. The latter tend to occur in
    industries where there are substantial complementarities between
    the two partners and when the Chinese partner is already a large,
    established firm with international experience.
  • Some acquisitions have been win-win deals, with Chinese
    investors building up international competitiveness and the
    French firm also benefiting, not only by surviving but also by
    gaining better access to the booming, but often difficult to
    penetrate, Chinese market.

  • The modest presence of Chinese firms in France is not surprising
    given domestic comparative advantages in many manufacturing
    activities. But country-specific characteristics also account for this
    relatively poor position. France appears to be overshadowed by
    Germany’s strength in key industrial sectors and by the UK’s
    attractiveness. Most importantly, bilateral trade between France
    and China remains below potential and is therefore failing to help
    stimulate commercial relationships and investment growth.
  • As a result, it is no doubt in the interest of the French government
    to take appropriate steps to improve opportunities for both
    bilateral trade and Chinese investment. Enhancing the country’s
    reputation for openness in trade and investment relations should
    rank high on the policy priority list.

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