EUROPE was the main destination last year for Chinese overseas direct investment (ODI). According to a new report by A CAPITAL, an investment fund, Chinese ODI into Europe in 2012 shot up to $12.6 billion (see chart), 21% more than in 2011. Though some countries are equivocal about a Chinese presence (see article) others welcomed investment in companies ranging from Weetabix, an English food brand, to EDP, a Portuguese utility. The trend is accelerating. Huawei, a Chinese telecoms firm officially blacklisted in America, has been selected by Wind, an Italian mobile-phone operator, to help build its $1.3 billion 4G network. Dalian Wanda Group, a Chinese conglomerate that stunned Hollywood by purchasing America’s AMC cinemas last year, is rumoured to be in talks to acquire a big European cinema chain.

The new report reveals two notable trends. Investment, once directed mainly at commodities, is going more into services. That change mirrors the shift in China’s economy from manufactured exports to domestic consumption. To compete for the new middle class in China and to sell across the world, Chinese firms need brands and technologies. Europe has both.

The other shift, notes André Loesekrug-Pietri of A CAPITAL, is the increasing willingness to take minority stakes, which now make up 58% of Chinese deals. He believes this is a pragmatic response to local hostility at outright takeovers and to the fact that it is hard to run a company from abroad (as Geely, a Chinese car firm, has found after purchasing Sweden’s Volvo).

The EU Chamber of Commerce in China recently asked some six dozen local firms about their European investments. The chamber’s Piter de Jong says that nearly every firm said it would invest again in Europe, but many had grumbles.

A big complaint is regulatory delay, especially for visas. Another is the EU’s many legal systems and languages, and onerous labour practices: a Chinese manager was shocked that a union representative should have a say in where to put a coffee machine. Mr de Jong says Chinese firms should unite to lobby for change.

Luxembourg is a favourite destination of Chinese investors. Many use holding companies there to expand across the continent. In addition to seeking tax advantages, they are attracted by its swift action on permits and visas and its willingness to handle paperwork in English. Nicolas Mackel, the country’s consul general in Shanghai, notes that its only advantages over rivals are “speed and pragmatism”. Eurocrats and their national counterparts might take note.