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Thursday, March 18, 2021

Executive Forum Explores Opportunities for China-EU in the Post-CAI Era

March 18, 2021. Shanghai – “There’ll be a new era for the economic cooperation between China and the EU.”

This was one of the promising messages delivered by Mr. Eddie Chen, Managing Director and Head of China & Asia at the French PE firm EURAZEO, to an eager audience at a CEIBS Executive Forum this evening.

The EU-China Comprehensive Agreement on Investment (CAI) is the result of over seven years and 35 rounds of negotiations between the EU and China. Amongst all the agreements China has signed with other countries, the CAI is the first one to include rules preventing the forced transfer of technology, obligations for SOEs’ behavior, comprehensive transparency rules for subsidies and commitments related to sustainable development.

“In short, CAI means more opportunities. It allows market access mainly for European companies in China,” Mr. Chen said.

Despite the impact of COVID-19, Mr. Chen explained, China-EU trade has been on the rise. In 2020, China was crowned the EU’s biggest trading partner (overtaking the US) and China is now the biggest market in the world for French cosmetics. These are just some of the trends creating new opportunities for China-EU cross-border investment.

“China-EU trade and investment in 2020 reached another historic high. [With] momentum between China and the EU and with the final signing of CAI hopefully by the end of this year, it’ll be a very encouraging environment for those working in Sino-EU businesses,” Mr. Chen added.

Nevertheless, Mr. Chen acknowledged that, for European companies, accessing China can sometimes be challenging due to local market dynamics.

“Traditional ways for foreign companies to set up local presence in China, such as buy and build, strategic alliances and joint ventures could be challenged by a complicated local regulatory atmosphere, relationship-driven business environment and culture, and increased localisation furthered by the COVID-19 health crisis,” Mr. Chen explained.

He also shared some successful cases and EURAZEO’s vision for cross-border investment and China value creation with the CEIBS audience.

“Strategy, experience, opportunity – you have to integrate them together. If you do so, as an investor, you’ll definitely be able to get a good return from the companies you invest in,” Mr. Chen concluded.

Watch the recorded livestream of the entire event here.

Vivian Yang
Michael Thede