Europe is most popular location for Asian investors. - According to a study carried out by Ernst & Young Global Ltd, Chinese companies are moving to take over more and more European companies. Japan and China led the pack in making investments in Europe in the first two months of 2012, completing nearly $11 billion in deals. They were followed by South Korea, India and Australia. According to Ernst & Young, Asian investors' interest in Europe has increased since 2010 and is likely to become even bigger in 2012. It is clear that Asian investors understand the financial backdrop in Europe at present and are keen to take advantage of the situation. Pricing, exchange rates and deal dynamics are all working to the benefit of Asian investors. It is the right time to acquire for growth in Europe, emphasised an expert from Ernst & Young. The deals pertained to a wide variety of businesses, most of them being in the industrial product, computer service and software, financial service and chemical industries. According to Ernst & Young, Asian companies should try to expand in Europe because that would allow them to immediately gain loyal customers and quickly increase the size of their market share. Europe will also give a solid means of expanding further into other international markets. The study also points out that Asian companies are hoping to enter Germany, Britain and other countries to pursue more research and development and innovation, thereby strengthening their products and improving their ability to conduct research and development in the Asia-Pacific region. The combination of these influences has driven the Asia-Pacific region to increasingly turn to Europe to make acquisitions. Over recent years, Australia has become the lead buyer in this area, accounting for 22% of the foreign merger and acquisition deals that were completed in Europe. It was followed by India, with 19%, China with 18% and Japan, with 18%. Japan has spent more on mergers and acquisitions in Europe than any other market in the Asia-Pacific region, having invested about $79 billion since 2007. Ernst & Young explained that the current financial and economic situation in Europe is providing companies in the Asia-Pacific region with opportunities for mergers at attractive prices. Germany is by far the most popular destination for Chinese investors (14% intend to invest there), significantly ahead of the United Kingdom, Spain and France (around 2%). The main reason for investing in Europe is obtaining access to new markets (73% of those questioned). Germany attracts Chinese investors because of the quality of its products, its know-how in production methods, innovation and the quality of its employees. Affinity with the mentality of German management methods in business negotiations is also mentioned. Ernst & Young is not, however, afraid of any inappropriate pillaging of European know-how by the Chinese. On the contrary, the Chinese guarantee maintaining and developing industrial jobs in current industrial areas, particularly in the car and machine tools sectors. Ernst & Young also points out that investment flows between Germany and China are currently very imbalanced. According to the Bundesbank, Chinese investment in Germany stood at a total of €829 million at the end of 2010, as opposed to €29.5 million going in the opposite direction. This disparity is expected to become less pronounced. Another survey carried out by Ernst & Young, in collaboration with the Economist databank between February and March, confirmed these trends. A panel of 1,500 senior representatives from more than 400 companies in the top 500 global firms, including 85 Chinese entrepreneurs, contributed to the survey. Almost 70% of Chinese businessmen consider that the world economy is now coming out of the financial crisis and the euro debt crisis provides them with investment opportunities. More than 40% of Chinese companies say that they are thinking about investing in Europe through merger or acquisition operations. (IL/transl.fl)