Chinese Foreign Investment in Spain, and its upside ahead
Chinese companies invest relatively little abroad, but see Spain as a favourable long-term partner for expansion into the EU and Latin America. A look at the numbers, the trends, and where a potential 2x to 3.5x upside sits.
While Chinese companies invest relatively little abroad and would rather export directly, they see Spain as a favourable location for their expansion. The reasons are: national market size, access to the European Union single market and as headquarters for Latin America, due to language and historical connection. Chinese firms see Spain as a long-term cooperative partner, welcoming them, with strong base infrastructure, energy and logistics network.
I have been approached by a Chinese company entering the battery market, so first hand I have experienced this interest.
Size of investments in foreign countries
Beginning from the fact that Chinese companies don't invest much abroad, at least relative to its economy and global power. Their total accumulated investment abroad accounts for 17% of China's GDP, while some Western countries reach between 37% to 63% of its GDP.
China is Spain's 13th largest foreign investor, holding about 2% of total accumulated FDI stock.
These numbers show that current Chinese investments have a 2x or 3.5x upside when China converges with Western outbound levels.
Why Spain?
Iberian market size, access to the EU, and the maturity of Spain's industrial, energy and automotive ecosystems are key factors.
3 top reasons: 1. Geographical location (78%), 2. Local market size (71%) and 3. Access to other markets (63%).
Some trends within this expansion
Preferred sectors: Already with presence in energy, transport and logistics, and, more recently, the electric vehicle sector.
M&A activity: the deal is for Spanish companies to gain access to global resources, while the Chinese company expands its international presence. Chinese firms acquire strategic assets in sectors such as agri-food, industrial manufacturing, construction infrastructure, engineering, transport and logistics, and energy.
Projects, greenfield investment still represents a small share, but its recent rise, particularly since 2023, signals a decisive shift towards new production facilities, especially in the sustainable mobility sector and across the electric vehicle value chain. I already spotted, over the past year, acquirable technology companies in energy generation and recycling, and greenfield projects for energy generation.
Research & Development: among already established companies, around 40% conduct R&D in Spain, up from 34% in 2023. Adoption of advanced technologies in supply chains and production lines has increased demand for innovation. Growing interest in establishing production operations in Spain, particularly in the automotive and advanced manufacturing sectors, generates demand for digital transformation support.
Due to traditional banking financing in Spain, innovative companies have historically lacked financial support and their technology development is under invested.
Synergies and Risks
Synergies are in sectors such as automotive, batteries, storage, and renewable energy, where China has world leading capabilities and Spain offers major industrial and technological complementarities. Noting challenges related to regulation, governance practices and cultural alignment, and a risk if the European Union creates strict measures against Chinese products, and Spain, as part of the Single Market, must obey, lowering its attractiveness.
Summary
Spain welcomes Chinese investments, remains cooperative and has fewer trade barriers compared to other European regions.
Chinese companies in Spain operate with a clear vision, supported by sustained capital commitments and organisational models designed for long-term operation. They are investing in R&D and shifting towards integration in supply chains and manufacturing.
Where I see high potential and can help international firms: previous clean energy booms left many companies, from hardware to software and engineering, in Spain which are viable for acquisition by Chinese firms and other foreign companies targeting market expansion to Spain.
If you are exploring an entry into Spain or hold assets this capital is looking for, contact me.
Source: Chinese FDI in Spain: Global Outlook 2026. ICEX-Invest in Spain China Desk, KPMG China Practice. Download the report.
About the author
Felipe Branch is a cross-border transaction advisor specialising in renewable energy infrastructure and IP commercialization. He works with institutional investors, technology companies, and research institutions across Europe.