The resilience of the entertainment and consumer goods sectors has been underpinned by their ability to attract multi-billion-euro deals in recent years. In 2021 and 2022, such significant acquisitions included Hillhouse Capital’s purchase of Philips’ home appliance business unit and Tencent‘s acquisition of video game studio Sumo Digital. In fact, unlike EV-related FDI activity of the past three years, most investments in these sectors took the form of acquisitions, with a significant geographic concentration in the “Big Three” economies of France, the UK, and Germany.
The consumer goods sector alone accounted for 32 percent of non-EV-related investment value over the past three years, while entertainment and healthcare both drew 16 percent each.
Persistent Chinese investor interest in these sectors is linked to a combination of push and pull factors. The entertainment sector is facing a tighter regulatory environment at home, as Beijing’s tech rectification campaign aims to redirect investment towards strategic industries rather than consumer-oriented sectors. For firms like Tencent, well-capitalized and competitive, with accumulated knowledge of the video game industry, it makes sense to look for new, more lucrative opportunities overseas.
The European regulatory environment has also been permissive to many of these consumer- oriented investments, unlike more sensitive sectors. Indeed, the increased scrutiny of Chinese investment in critical infrastructure or semiconductors over the past five years may partly explain the recent focus on consumer goods and services (if only because it has led to a drop in the number and volume of transactions in the transport or energy sectors).
As these conditions persist, we will likely continue to see large-scale acquisitions in the consumer and entertainment sectors. Although no billion-euro acquisitions were recorded in 2023, Tencent acquired a majority stake in the Polish video game studio Techland in January 2024 for EUR 1.5 billion.
Lastly, Europe’s tightening data governance regime was a big factor in convincing ICT companies to establish operations on the ground in Europe (including TikTok owner ByteDance). The shift can be seen in the dramatic rise in the proportion of greenfield investments within the sector, up from 10 percent of total ICT investment in the past five years to 45 percent between 2021 and 2023.
2.2 Deep-dive: healthcare emerges as the top non-EV-related sector in 2023
Healthcare stands out as a sector that has attracted robust interest from Chinese investors in recent years. Average annual investment in healthcare has remained relatively steady, at EUR 990 million over the last decade, and EUR 738 million over the last three years. This means the sector accounted for 16 percent of non-EV FDI between 2021 – 2023, compared to just 5 percent between 2014 – 2020.
This made healthcare the second most significant sector for Chinese FDI in Europe in 2023. Previously, the investments in the sector were primarily driven by pharmaceuticals and biotechnology, which accounted for 58 percent of sectoral FDI over the past decade. However, in the last three years, medical devices have emerged as the predominant area of interest, attracting 66 percent of the total investment value between 2021 and 2023. The biggest investment in 2023 was Mindray Medical’s acquisition of German-based DiaSys Diagnostic Systems for EUR 143 million (Mindray is China’s largest medical device producer).