Greek assets catch Chinese companies' eyes

Updated 2018-02-27 13:39:02

Bargains for buyers also offer support to ailing economy

Chinese companies have been acquiring more assets in Greece in recent years, in line with the China-proposed Belt and Road (B&R) initiative, a trend that experts said has supported Greece's weak economy while also helping the buyers establish a global network.

The most recent example involves Greece's largest port Piraeus. In 2016, State-owned China COSCO Shipping Corp bought a 67 percent stake in the port from Piraeus Port Authority, which manages Pier I.

The move followed COSCO's acquisition of Pier II's and III's operating rights for a period of 35 years in 2008.

On Monday, an event was held in Greece to mark the port's improved ability to handle vessels that can carry 20,000 containers of 20-foot equivalent units (TEUs), the largest container ships in the world, according to a statement COSCO sent to the Global Times.

COSCO Shipping Taurus, a container vessel of that scale, was scheduled to arrive at the port on the same day.

Zheng Ping, chief analyst of industry news site, told the Global Times on Monday that the capacity of the once-sleepy Piraeus port has improved dramatically since COSCO spent millions of dollars to upgrade its facilities.

"Although there are many ports in the world that can handle ships of 20,000 TEUs, it's still a milestone, taking account of how Piraeus was a decade ago and Greece's weak economy," Zheng noted.

For example, in 2010, container throughput at Piraeus was 880,000 TEUs, but that surged to 3.74 million TEUs in 2016, the statement noted. In parallel, the port's global ranking jumped to 38 in 2016 from 93 in 2010.

COSCO's investment in the port is also creating huge benefits for the country. By 2052, the deal is estimated to contribute 1.5 billion euros (.85 billion) to Greece's economy and create 125,000 direct and indirect local jobs, the Xinhua News Agency said on February 20, citing an industry paper.

On January 22, COSCO unveiled a plan to further upgrade the harbor into a home port for large cruise companies and attract more tourists.

The plan includes constructing three five-star hotels near the port's entrances and a shopping center within the harbor that will include shops and restaurants, news website reported.

"The new plan reflects Chinese companies' desire to be more deeply involved in their investment projects and tap more into the value chain [of such projects] instead of being a nominal owner," Zheng explained.

"It's more than a port. It could be a tourist destination, a logistics center, a trade area … a comprehensive facility," Zheng said.

Zheng noted that this model represented the future of Chinese companies' overseas mergers and acquisitions (M&As).

In addition, industry insiders said that deals like this will elevate the global competitiveness of Chinese companies.

"Cosco has one of the world's largest fleets. Capturing overseas strategic hubs like Piraeus would generate an industrial synergistic effect and help it to form a global network," Zheng explained.

Gao Liankui, a member of the Advisory Board of the Royal East and West Strategy Institute of Oxford University, also compared the port of Piraeus to a "rising star" in the B&R initiative.

He told the Global Times on Monday that it could showcase how Chinese companies' M&A deals in Greece could increase bilateral connectivity and benefit both countries.

Similar to COSCO, State Grid Corp of China, the country's biggest utility, announced in June 2017 that it had signed deals to purchase a 24 percent stake in Greece's power grid operator, ADMIE, said another Xinhua report.

The two companies will cooperate in power grid building, financing, operating and new technology development.

In 2017, China signed a three-year cooperation plan with Greece, pledging to further cooperate in the transportation, energy and telecommunication sectors. Chinese companies in the plan include ZTE Corp, Shenhua Group and the Export-Import Bank of China, the Xinhua report noted.

Gao told the Global Times that because assets in most industries where Greece has a competitive advantage, such as tourism and ports, are vulnerable to economic cycles, Chinese companies have "a perfect time to buy on the dips."

"They are good bargains, while also helping Greece to escape from its economic crisis," he said.

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