That’s a common misconception, but it's factually incorrect. European companies can, and do, acquire and control companies in China.

The legal framework and the reality on the ground show a very different picture.

1. The Law Explicitly Allows It: China's Foreign Investment Law (effective since Jan 1, 2020) clearly states that foreign investors are permitted to acquire the shares, equity, or other similar interests of domestic Chinese enterprises.

2. The "Negative List" System: China uses a "Negative List" model. This means any industry not on the list is fully open to foreign investment, often up to 100% ownership. This list has been shrinking every year, opening up more sectors. For instance, all restrictions in the manufacturing sector were removed. While there are still restrictions in very specific strategic areas (like news media or rare earth mining), this is not a blanket ban by any means.

3. Real-World Examples of European-Controlled Companies in China:

You don't have to search hard to find major Chinese operations controlled by European firms. Here are just a few high-profile examples:

Automotive: German automaker BMW raised its stake in its Chinese joint venture, BMW Brilliance Automotive, to 75%. This is a landmark case of a European company taking majority control of a major automotive manufacturer in China. Similarly, Volkswagen owns a 75% stake in its EV-focused Volkswagen Anhui venture.

Chemicals: Germany’s BASF is building a massive new Verbund site in Guangdong. It's a €10 billion project that is 100% owned and operated by BASF.

Retail & Consumer Goods: All IKEA (Sweden) stores in China are operated by its wholly-owned subsidiary. French beauty giant L'Oréal and luxury groups like LVMH and Kering all operate through wholly foreign-owned enterprises in China.

Finance: German insurer Allianz established Allianz (China) Insurance Holding, the very first 100% foreign-owned insurance holding company in the country.

So, the idea that a European company "wouldn't be allowed" to buy a Chinese company is a myth. While the process involves regulations (just like any country), it is legally possible and happens frequently across many industries.