The Strategist

'Chinization' of US Companies



04/13/2016 - 15:18



The volume of Chinese investment in the US reached a record level last year. There was $ 15 billion injected in the American economy in spite of many politicians’ appeals to tighten control over the purchase of local assets by Chinese companies. According to forecasts, the volume of Chinese investment could grow by half in 2016 - to $ 30 billion. While the Chinese prefer to buy commodities in developing countries, but in the US, they pay more attention to high-tech industries.



U.S. Department of State - United States government work via flickr
U.S. Department of State - United States government work via flickr
At the end of 2015, direct Chinese investment in the US amounted to a record $ 15 billion, whereas a year earlier, Chinese investors bought the US assets for $ 12 billion in total. These data are brought in a joint report made up by the research firm Rhodium Group and the US National Committee for the development of US-China relations.

The statistics shows that Chinese companies have made 171 deals in the US in the past year. As a result of Chinese investors’ investments, 13 thousand new jobs were created in 2015 in the United States. Overall for last 15 years, investors from China produced more than 90 thousand jobs. 

Largest deals between Chinese and Americans in 2015

$ 2.4 billion 
Chinese investment company Fosun purchased diversified US insurer Ironshore Insurance

$ 1.95 billion 
Chinese financial company Anbang bought hotel Waldorf Astoria in New York

$ 1.3 billion
Paid by Chinese real estate development company Yantai Xinchao for oil infrastructure facilities in Texas 

in the past year, US-Chinese deals were recorded in 42 US states, which resulted in 327 new operations in the US managed by the Chinese owners. In addition to the Texas and New York, Chinese investors are actively investing in infrastructure, high-tech, construction, and media projects in California. The experts are noticing the increased interest of Chinese investors to innovative projects in the US. The investors prefer to inject funds in high-tech companies, from automotive and aerospace to medical.

Due to Chinese investment, many small US companies can hire new employees, buy new equipment and develop research work. Some US politicians are increasingly louder calling to establish greater control over the growing activity of Chinese companies in the US. However, according to estimates of the National Council, the volume of Chinese investment could double up to $ 30 billion this year. The Council notes that "although public opinion is often subject to alarmist theories about Chinese intentions, it is important that public discussion was as broad and open as possible. This will help to optimally assess the risks and benefits of investment openness."

The Council reports that in the first quarter of this year, Chinese companies in the US have made deals totaling more than $ 5 billion, including the purchase of Chinese diversified holding Wanda Group production company Legendary Entertainment for $ 3.5 billion, and Omnivision semiconductor manufacturer bought for $ 1.9 billion by a consortium of Chinese CITIC Capital and investment funds Hua Capital.

source: wsj.com