Euro zone crisis leaves CEE ripe for investment

With more than 700 million people, a third of the worldwide GDP, and assets under management exceeding US$30 trillion, Europe is undoubtedly one of the places to be for doing business. Its traditions of innovation and technology, its rich culture and long history all add to Europe’s appeal. Even more tempting for entrepreneurs is central and eastern Europe (CEE), the bigger and more complex half of Europe.

Western European markets are rather mature, growth forecasts are low and public households tend to be heavily indebted. By contrast, public and private debt levels across CEE are generally low and GDP growth is forecast to be at least twice as high as the euro zone in the years to come.

However, the euro zone crisis has also left its mark on the region: asset prices have come down significantly and a general shortage of traditional financing adds to the pressure on companies to look beyond their traditional business models. These circumstances create highly attractive opportunities for Chinese investors to enter high-end markets outside of Asia and also gain access to natural resources, innovative technology, European management culture and renowned European brands. By way of example, last month an Austrian engine producer, Steyr Motors, was acquired by a Chinese investor with the aim of leveraging the benefits of European innovation, research and development competencies and access to Western markets, and adding Chinese advantages such as high market potential and low production costs.

Christian Mikosch is a CEE expert and a partner at Wolf Theiss in Vienna. He can be contacted at +43 1 515 10 – 5310 or by email at christian.mikosch@wolftheiss.com

Christian Oehner is an M&A lawyer and a partner at Wolf Theiss in Vienna. He can be contacted at +43 1 515 10 – 5105 or by email at christian.oehner@wolftheiss.com