PARIS -- Chinese companies are increasingly investing in sectors close to European consumers. They are trying to enhance their brand image in domestic and foreign markets by obtaining sophisticated European brands that they can use to expand their businesses.
Financially strapped European countries are welcoming Chinese investments, but the investments sometimes face fierce opposition from domestic populations.
Chinese companies buying European companies aim to learn management know-how and take advantage of refined brands for their businesses.
Large Chinese companies are gradually expanding globally. The low profile of their brands, however, is an obstacle to expanding market share. They are using acquisitions and tie-ups as a short cut into global market.
China's Dongfeng Motor in March decided to invest in major French automaker PSA Peugeot Citroen, which risks stirring negative reactions among Europeans. The debt crisis in Europe is forcing companies in the region to trim new investments, making Chinese companies flush with cash very attractive.
A French government source said Chinese investments are creating jobs and helping regions develop. But Chinese companies risk hostility when acquiring brands with deep traditions in Europe.
In 2012, a Chinese company trying to acquire a vineyard in the French region of Bourgogne met strong local opposition.
Tried and tested formula
A senior official of major Chinese dairy products maker Synutra International told French media in mid-June that his company is making investments from a long-term perspective. The company is currently building a baby formula factory in Bretagne, western France, at a reported cost of 150 million euros ($204 million).
Construction is scheduled for completion in 2015. The factory will produce some 100,000 tons annually, working with local dairy cooperative Sodiaal.
Synutra International aims to promote its brand as safe through the venture. By producing baby formula in France, the company wants to show that its products have fulfilled the strict safety and sanitary criteria imposed by the European Union.
Somewhere to stay
Club Mediterranee, better known as Club Med, on June 20 opened its third Chinese hotel on Dong'ao Island. China's Fosun International holds a more than 9% stake in the French resort hotel operator. The Chinese conglomerate is aiming to raise its profile in China by taking advantage of the French brand.
Fosun International and an investment company affiliated with major French financial service provider Axa are planning a takeover bid of Club Med, aiming to acquire a more than 50% of its shares.
On the other hand, Club Med's largest shareholder, an Italian with an equity stake of more than 10% in the company, has indicated he wants to increase his stake. Club Med CEO Henri Giscard d'Estaing on July 4 said he supports the takeover by the French-Chinese alliance.
In May, China's major Nanjing Xinjiekou Department Store purchased a 89% equity stake for roughly 27 billion yen ($263 million) in the company that owns the U.K.'s department store chain House of Fraser.
Chinese investment firm Kai Yuan Holdings plans to acquire classiest Paris Marriott Hotel Champs-Elysees for nearly 50 billion yen. The company will complete necessary procedures by September.