Chinese FDI in Italy: Performance, Perception and Prospects

Using new and detailed post-acquisition performance data, the article shows that Chinese acquisitions in Italy had an overall positive impact on target companies. The majority of them experienced an increase in turnover, employment, and other performance variables. Some case-studies illustrate the factors that can turn a Chinese takeover into a success story. The rapid growth of Chinese FDI is raising many concerns. The most important is the fear of predatory investments with a one-sided transfer of technology and other strategic assets from acquired Italian firms to China. New regulations in Europe and Italy add to this the risks to national security or public order arising from FDI in specific industries, particularly when the investor is controlled by the government of a third country. This is making the screening of inward FDI increasingly more restrictive. The article shows how a more cautious attitude of the Italian government towards China is affecting Chinese investments in the country. In particular, the use of the so called “golden power” has blocked or constrained some recent Chinese takeovers. Some political parties and stakeholders are pressing the government to extend the use of the “golden power” to block foreign acquisitions in "strategic" industries or national champions, even if there are no strict security reasons. This could significantly reduce the opportunities for Chinese investors in the future. On the other hand, greenfield investments are always welcome, but China probably needs more time and technological updating to increase this type of investments in Europe.