China's Investors Aren't Scared of Parisby
November terrorist attacks capped growth in Chinese tourism
Pierre & Vacances, Accor among those with Chinese shareholders
After years of drawing bus-loads of Chinese tourists, France saw the flow ebb following November’s terrorist attacks in Paris. China’s investors haven’t been so squeamish.
While the Eiffel tower and the Champs Elysees are seeing fewer Chinese visitors, investors from the Asian giant are plowing money into Europe’s second-largest economy. Chinese investment in France jumped 160 percent last year, reaching $3.62 billion, according to a study by Baker & McKenzie. Although small compared with the $15.3 billion they poured into the U.S., investments in France may be set to rise.
“There are simply good deals to be made," Yan Jufen, general secretary of the Chinese chamber of commerce in Paris, said in an interview. "In all sectors, both the amount and the number of investments increased. Chinese investors invest in anything that can be put to work.”
With growth slowing at home and France offering euro-denominated assets and a stable economy, Chinese investors are snapping up everything from Bordeaux vineyards and hotels to suburban shopping malls. More than 80 percent of the Chinese money coming into France is currently going into the real estate and hospitality industry.
Take Jack Ma, founder of Internet conglomerate Alibaba and China’s second-richest individual, who has just picked up Chateau de Sours, a wine producer that traces its origins to the 14th century. Or Wang Jianlin, its richest, who’s contributing funding for EuropaCity, a 3 billion-euro ($3.3 billion) retail and leisure project north of Paris.
“We’ve wanted to develop in France and Paris in particular, for a long time,” Jianlin said Feb. 26, explaining that he discussed his plans with President Francois Hollande in China in November. “This project is ambitious and innovative and is for now for us the biggest outside China.”
Large French companies are also tapping China for funding. China’s HNA Group Co. acquired a 10 percent stake in holiday rental operator Pierre & Vacances-Center Parcs for about 25 million euros in January and agreed to provide 1 billion euros in financing for the development of five projects in China. In February, Jin Jiang International raised its stake in French hotel group Accor to 11.7 percent, becoming the hotelier’s largest shareholder.
Shanghai-based Jin Jiang also acquired the Louvre Hotels Group last year, while Fosun, controlled by Chinese billionaire Guo Guangchang, bought the Club Med resort company along with other investors.
Andre Loesekrug-Pietri, the founder of ACapital, a private equity fund which invested in Club Med and brought in Fosun International as a co-investor, said the investment that began in 2010 was in part to bring more Chinese business to the company’s resorts.
“The goal of this deal was to capture the growth of Chinese clientele,” Loesekrug-Pietri said.
Chinese investment isn’t limited to tourism and leisure, said Stephane Davin, M&A Partner in Baker & McKenzie’s Paris office. In 2014, Dongfeng Motor Group Co. bought a stake in the French carmaker PSA Peugeot Citroen and a consortium led by Shandong Hi-speed Co. bought a minority stake in Toulouse-Blagnac airport, while telecommunication equipment company Alcatel-Lucent SA sold its enterprise unit to state-owned China Huaxin.
Overall, France is now the second-largest European recipient of Chinese funds after Italy, Baker & McKenzie’s study shows. Italy climbed to first place after ChemChina agreed to buy a stake in Italian tire maker Pirelli.
The one financial flow from China to France that has stopped growing? Tourist spending. While tourist growth for the Paris region was 40 percent in 2015, arrivals fell after the Nov. 13 attacks that killed 130 people in the French capital, according to the city’s Office of Tourism.
Chinese tourist spending in Europe is down about 7 percent in the first quarter, mainly because of a drop in trips to France, according to an estimate by UBS. The bank estimates that Chinese spending in France alone fell 10 percent in February.
Thomas Deschamps of the Paris Office of Tourism says he’s confident that a rebound will come before long. As the middle class expands, the Chinese will become better informed and come as independent visitors rather than in organized groups, he said.
“Mass tourism is made of people who are less informed and more anxious,” he said in an interview. “Individuals take the time to get informed and will come,” he said.