Chinese investors turn to France

Sébastien Guillo, HSBC’s Head of International Subsidiary Banking in France

With nearly nine in ten (88%) foreign executives recognising that it is an attractive place to do business, France is in a good position to win foreign direct investment (FDI). Perhaps the most striking part of this trend, however, is the growing influence that Chinese outbound investment is having on innovation and employment in France.

Last year, France recorded an outstanding 86% growth in acquisitions by Chinese investors.1 And more broadly, while the bulk of FDI comes from other European member states (61%), there are positive signs that Asian corridors (11%) are growing.2 This growth is being driven by China, already the leading Asian investor in France.3

Foreign investment into France hit an all-time high last year, reaching 25 new investment decisions per week.4Mainland Chinese or Hong Kong investors operate over 800 companies in France, employing more than 30,000 people.5 The most popular sectors for Chinese investors are the textiles industry and the consumer electronics sector. And in the latter, Chinese projects accounted for almost two-thirds of all projects (64%).

These investments reflect China’s willingness to support both the new and the old. Unsurprisingly, the tech sector attracts significant FDI flows. France’s culture and heritage is itself an investment opportunity, as the acquisition in 2010 of the traditional tapestry manufacture of Cogolin by Tai Ping group shows. Reviving this cultural treasure, the deal not only saved it from bankruptcy but it has now doubled its staff.

The character of Chinese investment has evolved. Over the past 12 to 18 months, we have seen more greenfield investments – where Chinese corporates set up structures from scratch, rooting themselves deeply into the French economy. This is testament to the confidence they have in the local market, both today and in the future.

That confidence is well founded. To overseas investors, France represents a gateway into Europe and its dynamic consumer market. 61% of foreign executives believe that France’s attractiveness has increased over the last two years.6 Healthy demographics combined with an efficient infrastructure network and advantageous geographical position provide an attractive combination. Government support for R&D through tax incentives also attracts new business.

HSBC is well placed to cater to a greater demand for investments, through a team of 35 international subsidiary banking experts based between Paris and other major cities. Our international connectivity, combined with in-depth local expertise, offers support to foreign corporates of all sizes who want to set up operations in France. To meet China’s growing appetite to invest, HSBC has expanded its China desk with new Mandarin-speaking international business experts.

As the eyes of the world turn to China, France stands to benefit as commercial relationships strengthen.