According to Spanish media reports, Chinese capital is increasingly globalizing, with 95% of China's foreign investment concentrated in seven major sectors: energy, real estate, agribusiness, finance, logistics, infrastructure, telecommunications, and software. In recent years, Chinese investment has begun to focus on Spain, with many overseas investors choosing to immigrate to Spain to facilitate market expansion. There are approximately 75 large Chinese enterprises operating in Spain. Chinese investment groups such as China Construction Bank, Wanda Group, and Fosun Group have begun to explore the Spanish market, while companies like Huawei, ZTE, Lenovo, Haier, Cisco, COSCO Group, Industrial and Commercial Bank of China, and Air China have been operating in Spain for many years.
Reports state that billionaire Wang Jianlin, chairman of the Dalian Wanda Group, has been quite interested in investing in Spain for several years. His latest move was the acquisition of a 20% stake in Atlético Madrid, but in 2014, Wang Jianlin had already spent 266 million euros to purchase the landmark Edificio España in Madrid. This week, the Wanda Group confirmed that it is in negotiations to purchase a 75% stake in the Spanish resort Marina d’Or for 1.2 billion euros.
Ivana Casaburi, a professor at ESADE Business School in Spain, recently released an annual report on Chinese investment in Europe. She stated that China's investment in Spain is expected to reach approximately 2.2 billion US dollars in 2015, and this amount may double in the future through investments by Chinese public or private enterprises, as the Spanish market is inherently attractive and holds infinite potential as a gateway to European and Latin American markets.
The Attractiveness of the Spanish Market
Casaburi said, "Chinese investment in Spain came later than in Germany and France, as China began investing in those two countries in the late 1990s. This is because China lacked historical ties with Spain, whereas its historical ties with Germany, France, and the UK were stronger. Now, the opposite is true; Spain is willing to take a step forward into a new phase, developing industries and sectors that are very important to China, such as energy, real estate/hotels, finance, and agricultural products."
At the same time, the Spanish market itself is very attractive for Chinese investment. Casaburi pointed out that Spain has high-quality human resources and advanced infrastructure, especially in ports and airports; Spain accounts for 3 of the 15 major ports in Europe, which is very important for bilateral trade between China and Spain.
Reports state that Guillermo Martínez-Taberner, head of the Economy and Business Department at Casa Asia in Spain, believes that "Chinese investment in Spain only began in recent years, as the investment amount was only 1 million US dollars in 2008, reaching 600 million US dollars in 2014. Everyone knows that Spain does not rank high among China's investment destinations, and major European economies like France and Germany, as well as some Eastern European countries like Hungary and Poland, were more competitive than Spain a few years ago."
Martínez-Taberner said, "Chinese investors come to Spain looking for brands that Chinese customers like, which is why they invest in teams like Real Madrid or Atlético Madrid."
Quality Investment
Martínez-Taberner said, "Chinese investors have a unique vision; they have also found good companies in Spain at reasonable prices, such as the recent acquisition of the Spanish distributor Miquel Alimentació by Bright Food Group for over 100 million euros."
Martínez-Taberner explained that China's production model is transforming, focusing on developing an economy based on services rather than labor-intensive products, which forces Chinese public and private investors to acquire companies overseas to purchase industrial management technologies they do not possess, in order to increase the added value of Chinese exports. Chinese investors are carrying out similar major operations in the machinery and equipment sector in Spain, or investing through joint ventures.
Reports state that one current issue is whether Spanish companies have enough cultural understanding to face the arrival of Chinese investors. Experts believe there is still room for improvement in this regard; generally speaking, due to a lack of cultural exchange, Spain does not understand the cultural "background" of how Chinese entrepreneurs do business.
Reports state that despite this, apart from cultural barriers, transactions between Chinese and Spanish companies are progressing smoothly, though there is still a gap compared to other European countries. Casaburi believes that if the projects currently under discussion are successful, Chinese investment in Spain may double next year, with the amount exceeding 3 billion euros in the 2016-2017 period.
Projects Under Discussion
A project under discussion was confirmed in September: China's HNA Group purchased a 48.42% stake in Globalia, a subsidiary of Air Europa. In addition, HNA Hospitality Group has already acquired a 29.5% stake in the Spanish NH Hotel Group. China's HNA Group focuses on the air transport industry, with businesses covering air transport, tourism services, airport management, logistics, hotel management, financial services, real estate, retail, aviation food, and other related industries. In 2014, HNA Group's annual revenue was 27 billion US dollars.
Reports state that in the banking sector, China's investment in Spain is similar to its global approach. China's four major banks rank in the top four globally in net income, so it is natural for them to open branches in countries where Chinese companies are located. China Construction Bank also has a branch in Spain, serving 130 Chinese companies operating in the country.
A few weeks ago, at a seminar, China Construction Bank stated that Spain has the following attractions for Chinese investors: strong economic growth after the recession, high industrialization (highly developed highways, airports, automated container ports, tourism, solar power generation, automobile manufacturing, food and textile industries, etc.), low labor costs, and a superior strategic geographical location.
Reports state that Chinese investment has also encountered problems in Spain. Casaburi said, "It takes a long time to complete important projects in Spain. I believe that starting from 2016, the time required for major project operations will gradually shorten."