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