China, India topple Europe in investment appeal: E&Y survey

China, India topple Europe in investment appeal: E&Y survey

La Baule (France): Foreign investors see markets such as China and India as their preferred route through the tough economic recovery as Western Europe struggles with meagre growth, a report showed on Wednesday.

China was ranked the most attractive foreign direct investment destination for 2010, edging ahead of Western Europe, in an Ernst and Young (E&Y) survey of 814 companies released on Wednesday.

India came level with North America in fourth position, after Central and Eastern Europe in third.

Both China and India have improved their scores from 2009, when risk aversion was strong.

“In 2010, investors look at a forecast global growth of 4%, see that only 1% is likely in Europe and turn their eyes to high-growth markets," said the authors of the report.

China is a key growth area for European firms such as Siemens AG and Peugeot, while French retailer Carrefour SA plans its first step into India this year.

At least half of the survey’s respondents said they had no plans to invest in Europe, unchanged from 2009, but with an increasing number of undecided.

Some 85% of those polled already operate in Europe.

Worries over debt-stricken euro zone countries such Greece have cast doubts over foreign direct investment into south-eastern Europe’s emerging economies.

Even the euro zone’s strongest economies face rising unemployment and weaker investment as banks stay cautious on lending, said E&Y.

The economic slump saw new foreign investment projects fall by 11% in Europe in 2009, to 3,303, though a fourth quarter pickup could mean a better 2010, its report said.

China suffered a 2.6% drop in foreign direct investment in 2009, to $90 billion (Rs4.25 trillion today), with cash-strapped companies outside the country undoubtedly affected by the financial crisis.

The country was the third biggest foreign investor into Europe in terms of job creation in 2009 and was the eighth biggest in number of projects, according to the E&Y survey.