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Surging Chinese investment a boon for Britain

Destination target for big deals from sovereign wealth funds, state enterprises and private firms

PUBLISHED : Monday, 09 September, 2013, 12:00am
UPDATED : Monday, 09 September, 2013, 3:44am

Mainland Chinese firm Dalian Wanda has more than £1 billion (HK$12.1 billion) of investments in Britain, enough to warrant a recent tour of inspection by its chairman.

The firm's website features a photo of Wang Jianlin shaking hands with London mayor Boris Johnson on August 29 during Wang's visit.

Wanda had committed to a £700 million development of a luxury hotel and residential complex in London, said Catherine Raines, Britain's director general of trade and investment with China. It will be the city's first mainland Chinese-owned luxury hotel.

The firm is just one of many from China pursuing big-ticket deals in Britain. Chinese investment in Britain soared nearly 80 per cent year on year to more than US$4 billion last year, according to China's Ministry of Commerce.

Britain rose to fifth place as an overseas destination for investment from China last year from eighth in 2011 and 21st in 2010, according to the ministry, which ranks the country as the third most important investment destination in Europe.

"The biggest change is the concentration of Chinese investment into a smaller number of European countries over the past 10 years, including the UK. Over the last 18 months, we've seen huge deals from three main categories of Chinese investors," Raines said.

These categories were sovereign wealth funds, state-owned enterprises and private firms, she said.

Strategic investments from China Investment Corp and the State Administration of Foreign Exchange totalling more than US$5 billion, had been made in real estate and infrastructure, Raines said.

Huawei, a telecommunications technology firm, has announced its intention to invest more than £1 billion in Britain.

However, China still accounted for a small fraction of the US$62 billion of foreign investment in Britain last year, Raines said. It was ranked fifth as an investment source, trailing behind France, India, Germany and the United States, in that order.

"Over the last few years, there has been a significant increase in the volume and value of investment from both state-owned and privately owned Chinese businesses," said Simon Weller, a corporate partner at Freshfields Bruckhaus Deringer, an international law firm. "To some extent, this growth is a reflection of [Chinese firms'] increased deal-making experience and confidence."

Freshfields advised Wanda on its £320 million acquisition of Sunseeker International, Britain's largest manufacturer of luxury yachts, which was completed on August 27.