'Prime time' to invest in Europe

No speculation

With Chinese investors moving into Europe, some worry about their plans and motives.

"The investment attitude must be correct, without speculation and vulture-like behavior," said Cui Hongjian, director of the European section at the Institute of International Studies.

Chinese investors are strongly driven to seek bargains in Europe, where many companies are short on cash and governments are eager for foreign investment to boost their economies, according to Cui.

But if investors go in with the wrong ideas or bad information, the project won't work, he said.

One example of such a failure was the Chinese trade center project, a proposal intended to replicate the "Yiwu model" in northern Europe.

Yiwu, in Zhejiang province, is a global center of trade in thousands of small goods.

When visiting Switzerland five years ago for the acquisition of a vehicle parts factory, Yiwu-based merchant Luo Jinxing found that these products from China were selling for 10 times the original price.

He decided to invest and establish a Chinese trade town with 1,100 booths, plus a hotel. But work ground to a halt after two years.

Problems that included the rights to permanent residency, labor force benefits and funding shortfalls are thought to have doomed the project.

"The European market is very complex, so every company in every industry needs different solutions and strategies. Before investing in Europe, one must do careful, in-depth case studies on the market and investment. Understanding the policy environment is crucial for investment success," Cui said.

Some Chinese investors are not familiar with the language, culture, customs, laws, policies and regulations of their target markets. And staying within their own narrow circles is another problem, according to the Ministry of Foreign Affairs.