Ironically, the country where the coronavirus crisis started seems to be the only one that is finding the opportunity during the worst pandemic in 100 years. Chinese companies are hunting for distressed assets. You may ask what are distressed assets? These are companies that need cash to endure. Today because of the economic crashes seen around the world there are a lot of companies that require urgent funds to keep abreast of these challenging times. China is ready to bail out many companies and their latest hunting ground in Europe.
The two of the worst affected countries due to the coronavirus Spain and Italy are on China’s radar. China certainly incubated the virus in Wuhan by not blowing the whistle about the new virus then eventually exported the virus to Europe and elsewhere and now it seems to profit or it seeks to profit from the whole fiasco. Chinese firms at present are selling medical supplies such as test kits, masks, ventilators and more, although many of which have been returned by Spain on the pretext of the supplies being faulty and of low quality.
But it seems that they won’t stop here, they want to take over Europe’s businesses. The plan is to buy foreign companies at throwaway prices and flush money into these companies so as to later reap benefits from these ailing companies. A few reports suggest that global bankers are getting multiple requests from Chinese companies making queries for investment opportunities particularly in Europe and this includes China’s state-owned enterprises meaning the government itself. After taking over distressed companies in Australia, now they see huge prospects in Europe.
European governments have a reason to believe that China might use force to fulfill their agendas and are concerned as their economies are vulnerable. At the time when businesses want bailouts, as the governments are fighting the virus where will the money come from? Thus, these companies are becoming an easy target for China. European governments are now upping their defenses as they want to protect companies at any cost and key sectors. They’re so worried that in the middle of this deadly pandemic they are amending laws. European governments have no choice but to formulate new foreign investment rules in the middle of this crisis.
On Monday Italy announced curbs in foreign coups, the decision covers sectors like banking, insurance, energy, and healthcare.
“We have provided the country with a very effective tool to protect all companies that carry out some activity of even minimal strategic importance in our country by imposing new obligations of financial transparency. In particular, we have strengthened the instrument that is technically called the golden power through it we will, therefore, be able to control what is possibly hostile corporate operations hostile takeovers not only in the traditional sectors such as critical defense infrastructures but also in the finance banking and insurance sectors. We have extended it to energy, transportation, water, health, and food safety, and to artificial intelligence, robotics, and cybersecurity too.” Said the Italian Prime Minister – Giuseppe Conte
Looking at Italy, Spain to has come up with some new rules. Today, if a foreign firm wants to invest more than 10% in a Spanish company they must get the government’s approval.
Germany – has strengthened a law that would make foreign takeovers harder. Checks on foreign investments are set to increase in Germany as the new rules say that investments that could cause likely harm to the public system will be reviewed, which indirectly means that any major foreign direct investment will need the government’s nod.
Countries like Italy, Spain, and France has not seen so much loss since the world war II and Italy, in particular, has been abandoned by the European Union it alleges, in a difficult time like these opportunistic countries like China is doing what it is good at.
It’s a wake-up call for the world in my opinion. Fight the virus but at the same time reinforce your defenses against financial takeovers because by the time you’re done controlling the rampaging virus China might be controlling your businesses and eventually your freedom.
