Ireland at forefront of Chinese plans to conquer Europe
Ambitious Chinese companies are pouring money into cash-strapped Ireland and Greece to gain a foothold in Europe
The Chinese have spotted another buying opportunity: Europe. After snapping up large tracts of Africa to extract oil and minerals, Chinese businesses are taking advantage of cash-strapped eurozone nations to gain a foothold. As soon as next month a group of Chinese manufacturers hope to get the green light to develop a €50m (£40m) plot in Athlone, central Ireland and begin transforming it into what local papers have dubbed Beijing-on-Shannon. Similar plans are under way inGreece, which along with Ireland has been the worst hit by the credit crunch and financial crisis.
Both countries are under pressure to bolster government finances at a time when most homegrown industries are flat on their back.
Greek officials have signed deals to allow Chinese shipbuilding and hotel construction with Chinese management and workers in the driving seat. Chinese investors are also said to be considering buying the train system that Greece has put up for sale to raise funds.
Britain is about to advertise the sale of assets, including the air traffic control system Nats, which the Chinese are reportedly interested in.
Ireland is keen to build on its reputation for supporting hi-tech foreign manufacturers such as the California-based duo Hewlett-Packard and Intel.
The Athlone project, which has yet to gain planning approval, involves shipping 2,000 Chinese workers to build a "Chinese hub" of factories on a 600-acre stretch of land outside the County Westmeath town that will eventually employ 8,000 Irish staff. The manufacturers would gain access to the lowest corporation tax rates in Europe and the M6 motorway to Dublin, and doorstep-access to the eurozone for their products. Tariffs and quotas imposed by the EU and individual countries would be bypassed.
Taoiseach Brian Cowen this week gave his blessing to the project, which promises to cut the entire region's dole queue. Cowen said he had met Chinese promoters and businessmen to hammer out a deal, though there are few details.
"It's about exploring the potential of this idea and I have met with some of the promoters to see if we can proceed with it," he told the Irish Independent newspaper.
It is understood that bulldozing the land would result in the construction of a school, railway station and hundreds of factory units and apartments.
Greece is also a beneficiary of the billions of dollars languishing in Chinese government coffers after a decade of trade surpluses. Last week during a visit to Athens, China's vice-premier, Zhang Dejiang, signed a series of industrial co-operation deals.
Just as Greek bonds were downgraded to junk status by credit rating agencies, Zhang promised his country's government "will encourage Chinese businesses to come to Greece to seek investment opportunities." While Athens is desperate to see any foreign investors taking an interest in their debt-ridden economy, Beijing is keen to build a European base for its consumer good exports.
Cosco, the ambitious and powerful Chinese shipping group, promised to proceed with a $3.5bn (£2.3bn) plan to build a massive container-handling facility at the port of Piraeus and turn it into a regional hub. There is also talk of Cosco building a huge logistics centre there, from where trucks would be able to move containers around the rest of the continent.
Chinese construction firm BCEGI used the top-level visit to sign a €100m agreement to develop a hotel and shopping mall complex in Piraeus, while there is talk of Beijing money being injected into loss-making Greek railway operator OSE, the airports and even the postal service.
Partnerships on everything from telecoms to olive oil have been signalled. "We have discussed other investments with them, notably in tourism and infrastructure," said Greece's deputy prime minister Theodoros Pangalos.
It is not all one-way traffic. Greek shipowners are hugely influential on the world maritime stage and 15 bulk carrier orders were signed by Greek operators to be constructed in China.
Last year Greek shipping companies placed orders for 80 panamax-sized bulk carriers in China, which has within 10 years become a rival to Japan and South Korea for the title of world's biggest shipbuilder.
Some Washington thinktanks have viewed the increasing interest in Greece by China as suspicious, fearing it part of a political move to increase the nation's global power.
In March, Ford agreed to sell its Volvo subsidiary to Chinese company Geely for £1.2bn in a move viewed as the beginning of a shift in the car industry's centre of gravity from the west to China.
The deal was the largest acquisition of an overseas carmaker by a Chinese company and the first time China had acquired a major luxury brand. Geely said it would keep Volvo's manufacturing presence in Europe, where it has two car plants in Sweden and one in Belgium. Geely said it intended to run Volvo as a separate company with its own management team, based in Gothenburg, and a new board of directors.
This year China Investment Corporation agreed to invest up to €800m in Apax Partners' €11.2bn seventh European fund, giving existing shareholders in the fund the opportunity to waive or reduce their remaining commitments. CIC also took a minority stake in the private equity firm's management company as part of the deal.
Britain is a favoured destination for Chinese companies, according to a recent report, with London ranking as the most popular destination for those expanding into Europe. Figures from Think London show that since 1997, London has attracted 34 Chinese foreign direct investment (FDI) projects, and 15% of all Chinese FDI into Europe since 2002.
"London is seen by Chinese companies as a natural base for expanding into the wider European, African and Middle East markets," said the report.
CNOOC has established a London office to co-ordinate its oil and gas exploration and foreign partnership activities in the Middle East and Africa, while medical equipment supplier Mindray has opened its European base in London, focusing on marketing and after-sales service.
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