Should we fear or hope for Chinese acquisitions? Evidence from Italy

In 2016, Chinese outward FDI exceeded inward investment flows, making the country a net exporter of capital, like the large advanced economies. The majority of Chinese investments are M&As, with the aim to acquire strategic assets (advanced technology and know-how) and access to markets (brands). The rapid growth of Chinese direct investments has raised many concerns among the advanced economies. The most important one is the fear that these investments will not produce the positive effects on the host economy typically associated with FDI from advanced countries, but a one-sided transfer of technology and know-how from acquired European firms to China. However, there does not seem to be any evidence so far of a negative impact of Chinese investors on the acquired companies and the host economies. In particular, accurate studies on the pre and post-acquisition behaviour of European companies acquired by Chinese investors are still lacking. This research intends to offer a contribution in this direction by providing new and detailed data on Chinese investments in Italy and by trying a first and tentative assessment of the performance of Italian companies recently acquired or controlled by Chinese investors. To this purpose, we have built an original database gathering detailed company information on more than 7.000 Italian companies with Chinese shareholders. Second, we have studied the pre- and postacquisition performance of 198 Italian target firms.