Exclusive Feature: China's economy is heavily dependent on exports and Europe is China's largest trade partner but a recent report by the Chinese government shows a more than 16% drop in exports to Europe.
During a recent visit by Germany's Chancellor Angela Merkel to China, China's Prime Minister Wen Jiabau said: 'China is willing, on condition of fully evaluating the risks, to continue to invest in the Eurozone sovereign Debt market'.
If China wants to support its own economy it needs to invest in Europe. Now would be a good time and tourism and transportation would be a good place to start.
Tourism is a major driver of EU economy. The EU tourism industry generates more than 5% of EU GDP, with about 1.8 million enterprises employing 5.2% of the total labor force (approximately 9.7 million jobs). Europe is the world's number one tourist destination with 504 million tourist visits in 2011. When related sectors are taken into account, tourism contributes even more to the EU economy, generating about 10% of GDP and 12% of jobs.
China's outbound tourism is growing fast. The World Tourism Organization estimates that 100 million Chinese will travel abroad annually by 2020, making China the world's leading international travel market. In 2010, Chinese tourists spent US $55 billion abroad, overtaking the UK as the world's third largest by outbound tourist spend.
Chinese travel and aviation companies have already expressed interest investing in Europe, but no significant deals have been signed to date. One potential investment which eventually fell through was in Germany's second largest airline, Air Berlin (an investment eventually made by Etihad airways). Another potential investment that didn't materialize was the acquisition of a twenty percent stake in Spanish hotel operating company NH HOTELES by HNA Group, parent of China's Hainan Airlines which is China's fifth largest airline.
In both cases, Chinese investors were concerned with the volatility and uncertainty of the macro picture in the EU. But these concerns are exactly why the EU currently offers very attractive long term investment opportunities.
A growing number of European legacy airlines are having difficulties due to the ongoing economic crisis. Air-France-KLM, Lufthansa Group, TAP, Cyprus Airlines, Air Malta and Alitalia all need to strengthen their competitive position and balance sheets. China's airlines are Asia's largest carriers in terms of number of passengers and a deal with one of Europe's major carriers could offer significant synergies.
Very attractive opportunities also exist in Europe's Hotel industry. Potential targets include:
- Accor, Europe's largest hotel chain
- Groupe du Louvre (has a JV for hotel development for China with Jin Jiang)
- Travelodge
- NH Hoteles
- Melia International
China's hotel development pipeline is the largest in the world and Chinese hotel companies dominate the local market.
Home Inns with 1,580 hotels and 176,562 rooms (after the recent take-over of Motel 168) is the world's ninth largest hotel chain. Jin Jiang with 858 hotels and 123,000 rooms and 7 Days Group Ltd. with 1,132 hotels and 112,631 hotel rooms are two other large platers.
They can all potentially benefit from an investment in a European hotel chain/brand.
Investing in European hotels, airlines and other travel and tourism related business such as large amusement parks, airport hubs, convention centers will support the Eurozone economy and job market, thereby supporting Chinese exports to the EU. It will also provide intangible benefits of good will towards China.
Offer very attractive economics to Chinese investors: buying low and leveraging some of the potentail cost and distribution synergies.
In order to attract Chinese investors, Europe has to address several key issues:
- Put on hold or ease the European Union law to regulate greenhouse gas emissions from Chinese airlines traveling to and from Europe
- Ease regulations for Chinese citizens to receive a Schengen Visa
- Reduce any barriers for Chinese companies and individuals from invest in tourism related businesses
China has to feel welcome in the EU. Only positive measures towards the Chinese government will push China to make these much needed investments.
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Joseph - Yossi - Fischer is the owner's representative and Executive Board Member IDB Tourism Holdings Leisure, Travel & Tourism industry. IDB Tourism Holdings is the tourism arm of IDB Group, Israel's largest mixed use holding conglomerate - IDB Group. IDB Tourism consists of a Travel Agency chain called Diesenhaus-Unitours, Clal Aviation, NATOUR-UNITAL Wholesale, Diesenhaus Wholesale, Diesenhaus Incoming Travel, Israir Airlines, Yossi Tours, Open Sky - Airline GSA Representation The annual turnover of IDB Tourism is over US$ 800 millions which makes it one of Israel's largest Travel & Tourism groups. 
