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The EU’s release of raw materials list and the impact of the current epidemic have brought difficulties and opportunities for Chinese investors

Time: 2020-09-14
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Affected by the new crown epidemic this year, the country's internal development and external imports and exports have been greatly restricted. Moreover, the EU has undergone major changes in the foreign investment review framework with various member countries, and it has been greatly affected in the import and export of raw materials from the import and export countries that cooperate with it. In response to the current EU level, the 'Regulations on the Review of Foreign Direct Investment'; Member States Guidelines on International Direct Investment, Free Flow of Capital and Protection of EU Strategic Assets Before Implementation, and the White Paper on Creating a Level Competitive Environment in Foreign Subsidies ', the new EU foreign investment review regulations will also be officially implemented in October. At the member state level, countries such as Germany, France, Italy, and Spain have all imposed strict temporary restrictions on foreign mergers and acquisitions in strategic industries.

Because import and export trade is extremely severely affected by the epidemic, among them, the key raw materials that are most valued by the EU are the focus of the strengthened review of relevant parties. Therefore, investors in raw materials face higher investment risks and uncertainties. However, for Chinese material investors, although the new EU investment regulatory environment has increased the corresponding difficulties and challenges, it also brings more opportunities.

In terms of challenges, with the release of the list of key raw materials in 2020, as well as the EU’s demand forecasts and supply warnings for raw materials in strategic technical fields in the future, EU member states will be more vigilant about Chinese capital in this field, especially in the newly added aluminum In the four major directions of earth minerals, lithium, titanium and strontium, the risks of Chinese investors’ failure to invest in Europe in the new three years are rising sharply. It is recommended that Chinese companies conduct in-depth research on the latest EU newsletters and reports on key raw materials, carefully assess the compliance risks of their own M&A transactions in accordance with the latest EU foreign investment review regulations, and adjust investment destinations and market entry methods in a timely manner.

For the EU, what they really worry about is whether it can maintain a stable supply of key raw materials. From the table data, it can be seen that the EU is highly dependent on imports from China in the field of rare metals, for example: magnesium 94%, antimony 90%, bismuth 84%, and cerium 62%. Therefore, if Chinese companies make market-oriented direct investment in Europe, there is a high probability that they will still be welcomed by the EU. In this way, Chinese companies need to actively strengthen communication with various stakeholders, fully integrate into the EU’s EIT RawMaterials supply assurance network, and obtain the EU and member states’ approval by combining long-term supply contracts with EU companies and high-quality fulfillment of social responsibilities. trust.

In particular, Chinese high-tech enterprises engaged in substitution (research and development of new materials) and recycling (recovering key raw materials from mining waste and landfill waste) will be supported by EU preferential policies. Companies can refer to the EU’s 2019 Report on the recycling of key raw materials and other raw materials from waste and garbage landfills' to obtain information on recycling prerequisites, technical procedures, recycling estimates, and practical cases.

If the business of the above-mentioned companies includes current hot industries such as clean energy, electric vehicles, and digital technology, consider the vertical deployment of Chinese-funded enterprises in the value chain of the EU, which can achieve industrial clustering to achieve economies of scale and information spillover. effect. Of course, Chinese companies must pay attention to retaining operating, financial and legal documents in the process of cooperation, so as to ensure that they are submitted in the EU interest test link under the new-generation EU foreign investment supervision system, indicating that they have played a role in the EU's construction of a sustainable key raw material value chain. The role of positive promotion.

In the post-epidemic era, the regionalization of the global industrial chain supply chain will become an irreversible trend. From a global perspective, this is part of protectionism. However, industrial restructuring also objectively indicates that international direct investment will rebound rapidly. China's manufacturing industry has a lot of room for progress in key basic materials, and companies can focus on this wave of 'going to sea' opportunities. In the long run, the domestic material industry going global will help my country improve the security of the industrial chain and supply chain, and promote the realization of a manufacturing power strategy.

 In addition, the 'Strategic Technology and Industry Key Raw Materials Report' was released together with the 'Key Raw Materials Newsletter 2020'. It is based on the EU’s 2050 climate neutral vision and estimates such as clean energy technologies (photovoltaics, wind energy, energy storage ), electric vehicles, digital technologies (ICT, AI, 3D printing) and other strategic areas of the EU, the prospects for the demand for key raw materials by 2030 and 2050, and pointed out the bottleneck of the EU supply chain. The report will provide important guidance for the EU and member states' governments to adjust their industrial and foreign investment policies in the future. Related market opportunities are worthy of Chinese investors' attention.

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