Chinese FDI to Ireland rises 56% as it falls to nine-year low in US

Forecast that FDI to the State from China will continue to grow due to pipeline of deals

With the exception of Latin America, all regions of the world saw a decline in Chinese activity in 2019

With the exception of Latin America, all regions of the world saw a decline in Chinese activity in 2019

 

Chinese foreign direct investment into Ireland rose by 56 per cent to $145 million (€130.5 million) last year as FDI in Europe and North America hit its lowest point in almost a decade.

Among the biggest deals announced by Chinese companies locally in 2019 were China Re’s $41 million acquisition of Chaucer, Emeri Nutrition’s opening of a $60 million infant formula facility in Co Meath. In addition, WuXi Biologics, which is building a €325 million plant in Dundalk, said it was doubling down on that investment with plans to build a $240 million vaccine production facility on the new campus.

Law firm Baker McKenzie, which compiled the latest figures, said FDI was likely to grow further this year thanks to a pending pipeline of deals that have been locked in.

‘M&A activity’

“Investment into Ireland increased last year due to both continued M&A [mergers and acquisitions] activity and greenfield projects completing,” according to Peter Lu, partner and head of Baker McKenzie’s China group in London.

“The rise is underpinned by a number of factors – but none more so than good relations. Throughout the year these two nations have continued to build a strong relationship, and now key industries across Ireland are witnessing the benefits as a result.”

The latest data shows that while Chinese FDI to Ireland is on the rise, investment in Europe and North America hit a nine-year low in 2019 to $19 billion. This compares to FDI of $107 billion just two years earlier.

FDI to Europe at $13.4 billion was more than twice that of North America. Chinese investors completed only $5.5 billion in deals in Canada and the US, down from $7.5 billion in 2018, and the lowest annual investment in the region since 2009.

Geopolitical tensions

Chinese outbound M&A declined 29 per cent to $57 billion from $80 billion a year on the back of tighter capital controls and geopolitical tensions.

With the exception of Latin America, all regions of the world saw a decline in Chinese activity in 2019.

Baker McKenzie forecast a slow start to 2020 investment given a fairly weak pipeline of just over $10 billion in announced deals for Europe and North America.

In contrast, inbound M&A to China reached $43 billion in 2019, up nearly 30 per cent in two years.