How will Brexit impact China-UK deals?
Amid record levels of Chinese international deals, speculation is building whether Britain's decision to exit the European Union will turn off the tap of investment into the region.
Official data last week showed Chinese outbound direct investment soared 61.9 percent year-on-year during the first six months of 2016, with the ASEAN region, Australia, the EU, and Hong Kong among major destinations.
While no regional breakdown was available, business leaders at the World Economic Forum (WEF) in Tianjin said the U.K wasn't a major recipient compared to other European nations, which could mitigate the impact of last Thursday's referendum.
"I don't think a Brexit will have much impact on Chinese companies. We've seen more activity between China-Germany than the U.K.. Western Europe collectively has been a big destination for outbound investment but the majority of that hasn't been into the UK," John B. Veihmeyer, chairman of KPMG International, said on Monday.
Klaus Kleinfeld, Alcoa chief executive, echoed those sentiments. "Brexit won't have a substantial impact on China. The U.K. doesn't play as important of a role than other countries in the EU."
Global regulators have been concerned about Chinese purchases across the U.S. and Europe however, citing tax and antitutrst issues.
Earlier this year, Midea Group's attempts to buy out German industrial robot maker Kuka spared a political outrage in Germany, forcing the Chinese home appliances maker to offer numerous guarantees to preserve jobs, Reuters reported.
"Chinese investment shouldn't be feared, it should be welcomed. For example, we can help U.K. companies expand their reach in China," commented Victor L.L. Chu, chairman and CEO of First Eastern Investment.
"A Brexit means more opportunities for Chinese companies," he added.
Speaking on Sunday, Xu Shaoshi, chairman of the National Development and Reform Commission, told WEF attendees that mainland companies would likely wait and see to assess the impact of Thursday's vote. But KPMG anticipates outbound purchases to continue at their current rate as companies in China embrace a more forward-looking approach, instead of short-term profits.
"Half of the Chinese CEOs we surveyed in our Global CEO Survey indicated their primary responsibility was to drive innovation, that was a significantly higher percentage than any other country. That passion is driving Chinese outbound investment and M&A activity," said Veihmeyer.