Foreign investments in Central and Eastern Europe (CEE)

Theis Klauberg, bnt attorneys-at-law

Investment environment – Economic conditions•Transition process of CEE countries completed•CEE countries have overcome economic crises •Emerging markets with ready excess to western European markets•Steady GDP growth•Skilled labour force •Comparatively low labour costs •Good transport infrastructure •Investment incentives (SEZ, tax exemption etc.)•Business friendly environment

Source: eurostat

Investment environment: Legal conditions

•Bilateral investment agreements between China and many CEE countries•Modern legislation framework (often influenced by EU legislation/Western European legislation e.g. Baltic States)•High level of legal certainty, rule of law, predictability •Business friendly legal environment (e.g. little bureaucracy when setting up a company / acquiring shares)

•Anti corruption legislation •No political risks

Poland: Acquisition of machinery division

• Investor: Chinese company LiuGong Machinery Limited• In 2012 LiuGong acquired the construction machinery

division of Polish company Huta Stalowa Wola (HSW) and its distribution subsidiary Dressta

• Investment volume approx. US-$ 100 million• Objective of investment is transfer of technology and

better access to European markets

Hungary: Construction of logistics center

•Investor: Huawei Technologies (Shenzhen/Guangdong)•Huawei is currently the largest Chinese investor in Europe with 7000 employees around Europe•In 2012 Huawei signed an agreement with the Hungarian government to set up a new logistics center in Hungary•Investment volume US-$ 1.5 billions

Czech Republic: Production of meat products

•In 2006 Chinese Shanghai Maling Aquarius entered into a cooperation with Gastro Sunwick Ltd. for the construction of a factory in the Czech Republic•Volume of investment: approx. US-$ 23 million•In 2011 the company has 150-200 employees and produced 3-4 thousand tons of meat in 2010

Latvia: Furniture production

•Aim: Establishment of furniture production in Latvia•Investor: Chinese company based in Huzhou/China •300 Latvian employees / app. 5 Chinese specialists

•Locational advantage:• Resources (wood) are locally available• Part of the European Common Market• Special Economic Zone: tax exemptions

Legal Services Provided

Investors needed legal advice particularly in the following fields of law:

– corporate law– labour law– law of contracts– commercial law– real estate – tax law

Summary

•CEE is an excellent region for foreign investments (cost structure, qualified labour force, geographical location)•CEE countries are open to and are looking for foreign investments•CEE countries have significantly improved their investment environment (infrastructure, SEZs, curbing corruption)•CEE countries provide a stable legal and political environment