Foreign ownership of European companies on the rise
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(BRUSSELS) - There has been a continuous rise in foreign company ownership in key sectors in the EU and an increase in investments from emerging economies such as China, a report detailing foreign direct investment in the EU shows.
The European Commission says the report - the first of its kind in terms of the detailed company level data used - illustrates the need for effective implementation of the freshly adopted EU investment screening framework.
As part of its proposal on the screening of foreign direct investments into the European Union presented in September 2017, the Commission committed to carry out a detailed analysis of these investments.
The EU needs to consider some "important trends" carefully, says Trade Commissioner Cecilia Malmstroem: "Europe benefits a lot from an open investment policy but we must be ready to act where our security and public interest are at risk. Together with the new framework on the screening of foreign direct investments we are now better equipped and better informed to deal with these types of scenarios in the future."
With more than 35% of total EU assets belonging to foreign-owned companies, the EU has clearly one of the world's most open investment regimes. Foreign direct investment stocks held by investors from outside the EU amounted to €6,295 billion at the end of 2017 providing Europeans with 16 million direct jobs.
While traditional investors such as US, Canada, Switzerland, Norway, Japan, and Australia remain by far the top investors, accounting for 80 percent of all foreign-owned assets across all sectors of the EU economy, the report notes also some important trends:
- Foreign ownership of EU companies has been on rise in the last 10 years;
- Investment by state-owned enterprises has grown rapidly over the last years. Such companies from China, Russia and the United Arab Emirates have performed three times more acquisitions in the EU in 2017 than in 2007;
- Foreign ownership is high in some key sectors such as oil refining, pharmaceuticals, electronic and optical products, and electrical equipment;
- There has been a surge in investments from emerging economies, notably China, for aircraft manufacturing and specialised machinery, and India, for pharmaceuticals;
- "Offshore investors" control 11% of foreign-owned EU companies and 4% of all foreign-owned assets in the EU. Their presence is growing.
The report also provides a detailed overview of the origin of foreign investments, sectoral and geographical distribution and characteristics of foreign-owned companies in the EU. Based on that information, the Commission will continue monitoring EU-wide investment trends, contributing to the implementation of the new EU foreign investment screening framework.