The report noted that almost three quarters (72 per cent) of companies surveyed intend to grow their Asian operations in the next five years. More than 80 per cent of companies from the United Kingdom, France and Germany -- where the survey was conducted last month -- see the region as a major profit centre. In fact, they expect their Asian divisions to grow 27 per cent on average in the next three to five years.
This expectation has empirical basis. The report noted that 25 per cent of companies with operations in the three countries earn 20 per cent or more of their revenues from Asia, with 20 per cent or more of their cost base in Asia.
"On average, 16 per cent of their revenue originates from Asia or Asian-based organisations, with German companies earning the highest proportion (19 per cent), compared to just 13 per cent in France and 15 per cent in the UK," the report stated. These figures indicate the importance of the Asian region in driving growth in the world economy, DC Advisory Partners said.
Tosh Kojima, managing director and head of the Japan Asia Focus Group, DC Advisory Partners, noted that the European companies are looking at different options in investing in Asia, including mergers and acquisitions, and joint ventures.
Sixty-seven per cent of French companies and 75 per cent of German companies prefer joint ventures with Asian firms while only a quarter of UK firms are considering this option. Those companies which are already trading in Asia prefer a joint venture followed by direct exports. German companies, however, prefer to acquire Asian businesses, the study further revealed.
Kojima added: "We have already seen that European companies turn to mergers and acquisitions and joint ventures in Asia to fuel their ambitions and market share in the region. As our report shows, this is an option which is being actively considered alongside greenfield investment and organic growth by many UK, German and French companies. The trend of more deals is something that we would expect to continue and to grow."
The study also included a comparison of Asian investments in Europe at two levels -- perceived investment interests and actual investments.
The report noted that companies from the three European countries do not value Asian investments in Europe as much. Only a third, or 33 per cent, of companies from the three major European countries regard investments from Asia as important for their businesses over the next five years.
In reality, however, since 2006, Asian companies have invested almost double what the European companies have invested in Asia.
"Already we are seeing a significant number of Asian companies making large transformational acquisitions into Europe that will give them significant competitive advantage back in Asia," said Kojima.
It is not surprising that European companies are eyeing the big Asian countries for their investment plans. China is at the top of the mind of top executives of 81 per cent of the companies surveyed, followed by India at 69 per cent. A third investment preference is Japan at 29 per cent.
DC Advisory Partners is a wholly-owned European M&A arm of securities brokerage firm Daiwa Securities Group.