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China's "going out" investment in Spain

  Photo: Rising profile: China's ICBC in Spain.
  Rising profile: China's ICBC in Spain.
Spain's economic problems took a back seat to strategic opportunities as China's investment and commercial deals jumped 11.7% last year, with further double digit rises expected for 2012 and next year.

The value of commercial exchanges rose to US$27.3 billion in 2011, according to China's Consul General, Yan Banghua.

China's largest privately-owned conglomerate Shanghai Fosun High Technology (Group) Co is currently the talk of investment circles as it considers taking part in a high-profile tourist project, Barcelona World, with the prospect of developing the market for China's growing tourist trade.

Barcelona World is being developed in nearby Tarragona, representing a Euros4.7 billion investment over four years to build six theme parks along with amusement facilities, casinos, hotels, convention venues and shopping centres. The investment is being bankrolled by one of the country's largest savings institutions, CaixaBank, and could be the largest family amusement resort in Europe.

China's investment is being courted on a broader front too. Some 30 Mainland firms participated last month during the "China at Barcelona Summit", an event aimed at promoting Barcelona as a hub for investment in southern Europe.

Photo: Shanghai Fosun’s Director General Patrick Zhong.   Photo: Summit in Barcelona.
Shanghai Fosun's Director General Patrick Zhong.   Summit in Barcelona.

The summit was organised by the Barcelona Chamber of Commerce, CaixaBank, Casa Asia and the French-based consultancy, Mazars.

Casa Asia is a public consortium, made up of Spain's Ministry of Foreign Affairs and Cooperation, the Catalonian Autonomous Government (Generalitat), the Barcelona City Council and the Madrid City Council, and aimed at promoting Spain in Asian countries.

Developing larger business

At the event, CaixaBank's Deputy General Director Ignacio Alvarez-Rendueles talked of the bank's desire to enhance relations with China and added that in the first nine months to September this year, CaixaBank carried out more than 159,000 transactions between Spain and China, amounting to Euros2.2 billion.

CaixaBank has branches in Beijing and Shanghai, and since 2007 is a 17.2% shareholder of Hong Kong-based Bank of East Asia. CaixaBank is keen to build its base of Chinese mainland customers, of which it has nearly 100,000 in Spain.

One session at the event focused mainly on the role of China banks and investment agencies undertaking foreign investment.

Leon Pang, Director of the Barcelona Office of the Industrial and Commercial Bank of China (ICBC) and Lisa Nie, representing the Shanghai Foreign Investment Development Board agreed that Spain's top priority is to work harder on its promotional strategy to show the country's geo-strategic advantages.

One outstanding problem could be that China banks view the Spanish approach to the working day as being less productive than it should be, beyond the more intractable economic environment.

Discovering Catalonia

Chinese mainland technology firm Huawei and ICBC are among firms that have arrived in the Spanish region of Catalonia over recent months.

According to sources from the Department of Enterprise and Employment of the Catalonian Government, the automotive and telecommunications sectors are the two main gateways for China's investment in Catalonia.

ICBC last October acquired an 850 sqm site in Barcelona to open its second branch in Spain. In both Barcelona and Madrid, ICBC offers both corporate and retail facilities.

Photo: Cubigel Compressors factory.  
Cubigel Compressors factory.  
Hong Kong-based firms are becoming interested too. Industrial equipment maker Huayi International Industrial Group last July acquired the production centre of Spain's Cubigel Compressors SAU, a leading manufacturer of industrial compressors, which was in bankruptcy proceedings.

Business and Employment Counselor for the Catalonian Government, Xavier Mena, said the deal "guaranteed the continuity of the company in our country, representing the maintenance of 386 jobs."

The purchase price of the production centre was Euros600,000, and its offer also  included the purchase of stock for Euros100,000. The company aims to carry out R&D as well as logistics and manufacturing.

In another strategic move in November last year, Shenzhen Sunfor Light, an electronics and photo-luminescent material manufacturer and LED lighting producer, decided to install its distribution centre for Europe and Latin America in Catalonia.

The investment was set at Euros4 million for the next four years, including the creation of about 70 new jobs.

Sunfor's main European markets are France, Portugal, Italy and Germany, while in Latin America major customers are in Mexico, Brazil, Panama, Cuba and Venezuela.

At the Beijing Olympic Games, Sunfor was responsible for light signage and has also worked on projects to install urban lighting. In Catalonia it plans to launch start up lighting projects for hospitals, hotels and parking lots.

While Chinese mainland investments in Catalonia have been relatively small to date, firms are beginning to take greater interest.

Photo: Solar project for China-Spain joiunt venture.   Photo: Taking advantage of advanced energy drive.
Solar project for China-Spain joiunt venture.   Taking advantage of advanced energy drive.

Solar WS, a joint venture between Spain's Niñerola Group, with 40 years of history, and Jiangsu Sunrain Solar Energy, a leader in research and production of solar thermal systems, has shown that specialist opportunities are emerging.

Foreign involvement in Catalonia is moving along. India's Sapa Group has developed a plant specialising in aluminium usage while Malaysia's BenQ Technology Iberia has entered sectors for informatics and office automation.

from special correspondents Isabel Herrero and
José M Alarcón, Barcelona

Content provided by Picture: HKTDC Research
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