China’s richest people are stepping up investment in U.S. real estate and other foreign assets as they try to preserve their fortunes in the face of a fast-changing economy, a report by China Merchants Bank (CMB) and the consulting firm Bain & Company said. Investor attitudes are being influenced by “the political environment and possible changes in tax policy,” said Chen Kunde, Director of China Merchants’ wealth management business. They are “switching their focus from deriving more profits to protecting their existing wealth.” Growth in the number of Chinese people with at least CNY10 million in investable assets slowed in 2010-12, according to China Merchants and Bain. The total rose 18% over the previous two-year period to 700,000, down from 29% growth in 2008-10. At least 100,000 of those people have more than CNY50 million, while 40,000 have more than CNY100 million. The report was based on questionnaires filled out by 3,300 people and more detailed interviews with about 100 of them and with bank employees. Almost 60% of people surveyed with investments abroad plan to increase them, the report said. Real estate makes up the bulk of investment and top destinations include the United States, Canada, Hong Kong and Singapore. Last week, Australia’s government announced a Chinese toy manufacturer and his family have become the first people to receive visas under a program for “significant investors”. It requires an investment of at least AUD5 million in the country, the South China Morning Post reports.

A new wave of European investment in Asia is being fueled by small and medium-sized enterprises (SMEs), which may be unknown today but could become multimillion-dollar brands tomorrow. While overall foreign direct investment (FDI) in China continued to fall in the first two months of this year, investments from the 27 member states of the European Union climbed 34% to USD1.21 billion – the first rise in more than two years. Invest Hong Kong – the organization that helps foreign firms move into the city – said the number of EU companies setting up offices in Hong Kong had jumped by at least 10% in the first quarter. While France and Germany still make up the biggest European business sector in town, companies from Bulgaria, Romania, Turkey, Poland and Scandinavia are taking root in Hong Kong too, in areas from wine trading to multimedia communications. In the four years to 2011, total investments held by EU states in Hong Kong increased by 38% to €124 billion – even beating the €101.5 billion of investment that EU countries hold in China. More European companies established themselves in Hong Kong than on the mainland last year. While 60 companies from the 17 countries that use the euro currency set up shop in Hong Kong, the number of euro-zone companies on the mainland declined by 16% on the previous year to 1,698. Piter De Jong, Vice Chairman of the European Union Chamber of Commerce in China, also expects more small and medium-sized enterprises to come to China. SMEs recently looking to enter China included small car-parts suppliers, green technology firms and consumer goods distributors, the South China Morning Post reports.

China’s direct investment in the United States showed strong momentum in the first three months of this year despite a weak fourth quarter of 2012. During the first quarter, Chinese companies concluded eight mergers or acquisitions and nine greenfield investments worth a total of USD2.2 billion, according to a report by the Rhodium Group, a New York firm that tracks Chinese investment in the U.S. M&A highlights were the acquisition by China National Offshore Oil Corp (CNOOC) of the U.S. drilling operations of Canada’s Nexen; auto-parts company Wanxiang Group’s successful USD257 million bankruptcy-auction bid for electric battery maker A123 Systems; BGI-Shenzhen’s purchase of California-based Complete Genomics; Hanergy Holding Group’s purchase of solar technology company MiaSole; and Shanghai Fosun Pharmaceutical Co’s stake purchase in Saladax Biomedical. Greenfield deals included a power-generator manufacturing factory in Virginia planned by Shenzhen Superwatt Power International Co; a joint venture involving developer China Vanke Co in a San Francisco condominium project; and offices in Silicon Valley for search engine giant Baidu. Chinese acquisitions in the U.S. now under discussion or awaiting regulatory approval have a total value of over USD10 billion, the highest ever, according to Rhodium’s report. Privately-held Chinese companies have increased their investment in the U.S. Over the past 15 months, they spent more on U.S. deals than in the previous 11 years combined. State-owned enterprises (SOEs) have long dominated investment by China in the U.S., but private companies accounted for 80% of deals and 50% of deal value from January 2012 through March of this year. According to the Rhodium Group, U.S. subsidiaries of Chinese companies employed an estimated 32,000 people at the end of the first quarter, 2,000 more than were employed during last year’s fourth quarter. Overall, 2012 was a record year for Chinese direct investment in the U.S., totaling USD6.5 billion. Cui Tiankai, China’s new Ambassador in Washington, expressed concern over barriers to Chinese investment in the U.S. He said he hasn’t been persuaded by U.S. regulators’ stated reasons for rejecting some deals. “I’m afraid that will affect investors’ confidence,” Cui told the Committee of 100, a Chinese American group. “That will, in the long term, turn away some important investors.”

The past few years saw a growing number of Chinese investment deals in Germany through mergers and acquisitions (M&As). China’s outbound direct investment (ODI) in Germany increased by more than 100% last year, overtaking Germany’s annual investment in China for the first time. Germany was the destination for more than 50% of China’s ODI in Europe in 2012. The largest direct investment by a Chinese company in Germany was the takeover of concrete pump maker Putzmeister by Changsha-based Sany Heavy Industry Co for €360 million. In August 2012, Chinese industrial manufacturer Shandong Heavy Industry Group purchased a 25% stake in Germany’s Kion Group, the world’s second-largest forklift maker, for €467 million. Wang Weidong, China’s Commercial Attaché at the Consulate General in Frankfurt, said that “China’s purchases in Germany are expected to grow in the coming years”, and the high-end manufacturing and processing and high-tech and machinery sectors would be targeted. “Chinese companies in Germany create many jobs, paying a large amount of taxes and stimulating the local economy,” said the Chinese Ambassador to Germany. China’s cumulative investment in Germany accounts for 2% of total foreign direct investment (FDI) in the country and is 10% of Germany’s total investment in China. Facts have shown that Chinese companies help their German counterparts expand in Asia and create local employment, Wang said.

Jilin province is looking to Hong Kong businesspeople to invest in 300 projects, ranging from technology and resources to tourism. In all, CNY235.3 billion is needed, with individual projects ranging in investment scale from CNY30 million to CNY20 billion. Among the 300 projects, 10 require more than CNY5 billion each. A methanol industrial chain project in Jilin city is looking for CNY18 billion, while a polyurethane project in the city needs CNY5.8 billion in investment. “Jilin is accelerating the transformation of its production model and upgrading its industrial structure,” Governor Bayin Chaolu said, adding that a “world-class vehicle production base” is being set up. The province was also promoting the use of new energy, development of modern mechanized agriculture and large-scale water conservation projects. Jilin is also working on the Hunchun International Cooperation Demonstration Area to boost exchanges and cooperation with Russia and North Korea. The demonstration area covers over 90 square kilometers and enjoys preferential policies, ranging from taxes and land-use to financial support and talent pooling.