Chinese Investors Give Western Businesses Much-needed Capital Injections

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Investors from China are seeking opportunities in Europe and U.S. for growth. M&A Matchmakers Manuel Agudo and John Eubanks of Global Advisors Group bring together supply and demand.

It’s a classic win-win situation which makes for successful and mutually beneficial partnerships.

China has many wealthy investors who are looking for investment opportunities with return-on-capital potential. Western companies, both in Europe and the US, are currently under particularly interesting economic conditions. A European-born American with bases in the US and Netherlands, Global Advisors Group LLC Senior Partner Manuel Agudo, and his Partner John Eubanks bring supply and demand together.

“We bring together Chinese investors with Western companies with an interest in merging, divesting equity, or in need of capital,'' says Agudo from Miami and The Netherlands. In many cases, our clients are particularly interested in European companies with growth potential. There is also considerable interest from the Chinese to invest in European and American real estate and farmland.''

Economic conditions
The steady growth of Global Advisors Group’s client base is related, first and foremost, to economic conditions in the Western world. Many Western banks are divesting equity in fully or partially owned companies. Also, owners of Western companies looking for investors or partners or those which are acquisition candidates, call on Agudo and Eubanks, who have a diverse Chinese and worldwide network of investing entities.

Many wealthy Chinese investors are now looking for investments beyond their own country. This is related to the expectation that, while China leads today in Manufacturing Competitiveness Index Rankings (and possibly through 2018), that might not be the case in 2020 and beyond, as rapidly rising labor and energy costs, and higher supply-chain costs to key European and North American markets puts downward pressure on margins of Chinese-made products. From a regional perspective, manufacturing in Mexico already creates a competitive option to Chinese exports to North America. The United States gains in labor productivity and its attractive energy costs have become a magnet for Chinese firms looking to profit from the reviving North American economy up close and personal. Europe has seen Chinese investments on renewable energy and industrial raw materials justified as a net cost-effective way to reach European customers and to avoid threatened or imposed punitive import tariffs.

Strategic acquisitions
“Recognizing the benefits of regional manufacturing, Chinese investors, as well as state-owned enterprises and large, publically-held Chinese companies, are fast embracing a globalization strategy of merger and acquisition, seeking economic improvement in bottom-line gains, as well as beneficial political and tariff impact,” cites Agudo.

Chinese investors work hand-in-hand with GAG BV, and its Miami-based GAG LLC in identifying and completing strategic acquisitions in Europe, the US and Latin America. “It’s a classic win-win situation which makes for successful and mutually beneficial partnerships. Chinese companies want a foothold in Europe and America, and Chinese investments can rescue European and American businesses in need of capital, as well as make an important contribution to securing employment,” Agudo emphasizes.

Chinese managers and investors are particularly impressed by Western work ethics, entrepreneur spirit, and talent-driven innovation capabilities which is considered the most critical driver of a nation’s competitiveness. “They are not interested in meddling with day-to-day operations and do not feel the need to make their mark immediately on the operational end of the acquired asset. A focus on bottom-line and Western productivity drivers are of greater interest,'' adds Eubanks.

An important obstacle in business deals between China and the Western world are cultural differences. “We are aware of the large cultural differences, and know how to act and how to bring cultures together for successful negotiations, ‘' says Eubanks. Global Advisors Group takes care of the negotiations and, if needed, engages in issues such as strategy, cost, management, manufacturing best practices, union negotiations and talent retention.”

China has the money that Europe at present so desperately needs. And Europe and America offer interesting companies and markets. So the pendulum of opportunity swings both ways.

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Kathy Eubanks
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