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Thursday, March 26, 2015, 12:35

Chinese investments pour into US

By Xinhua

WASHINGTON - Chinese investors have been in the limelight during the just concluded 2015 SelectUSA Investment Summit in Washington, DC.

"Fuyao has made three investments in the US state of Michigan, Alabama and South Carolina, with good profits. Since 2013, we have made new investments in the state of Ohio and Illinois," said Fuyao Glass Industry Group Chairman Cao Dewang during the two-day Summit.

Fuyao Glass Industry Group is the largest automotive glass supplier in China with 70 percent of the market share. In 2014, Fuyao set up a new American subsidiary in Moraine, Ohio and bought a factory in Illinois, expanding its glass production by investing US$200 million.

Chinese investment in the US has grown at an average annual rate of 41 percent from 2009 to 2013, according to data from the Commerce Department.

China tops the list of delegations for the 2015 SelectUSA Investment Summit which concluded Tuesday, with about 150 investors coming from the Chinese mainland and Hong Kong.

In 2013, the state government of South Carolina provided incentives from 4-million-dollar cashback to tax credits to secure US$218 million in investments from textile company Keer, John Ling, managing director of the Asia office of South Carolina's commerce department, told Xinhua.

Chinese investments pour into US

Huge market, advanced technology, a robust legal system, lower financing costs as well as high returns are the major reasons for investing in the United States, said Chinese real estate tycoon Wang Jianlin, chairman of Wanda Group, in a video broadcast at the Summit.

Wang said Wanda's first investment in the United States was the acquisition of AMC Entertainment in 2012. It has since made a profit of nearly 400 percent, as AMC was listed on the NASDAQ after the acquisition and its share price doubled.

Wanda will make further investment in the United Stated and encourage other Chinese entrepreneurs to explore the potential of the US market and make investments, Wang said.

Nonetheless, investing in the US is not all rosy. There are risks as two countries have different political, business and cultural environment. Chinese enterprises have lost US$36.8 billion between 2005 and 2013, according to China Global Investment tracker jointly launched by American Enterprises Institute and the Heritage Foundation.

"I'm not sure there's much understanding of our political system, and they (Chinese entrepreneurs) need to build relationships with policymakers when they invest here," Nancy McLernon, president of the Organization for International Investment (OFII), an association representing the interests of US subsidiaries of global companies, told Xinhua.

Sany Heavy Industry Corporation, a leading construction company in China, built a manufacturing base in the state of Georgia in 2007 with an investment of US$60 million.

Yuan said when Chinese entrepreneurs come to invest in the US, they have to change their mind about how to do business. In China, government plays a quite important role for the development of enterprises, while in the US the role of the government is quite limited. "To solve a problem here you need to look for help from the market instead of a mayor," Yuan said.

Management processes are also different. "The US companies advocate the importance of individual, while Chinese companies put more emphasis on the collective and authority," said Yuan.

High labor cost and limited financial resources for small and medium enterprises from China which do not have enough money also put great pressure on Chinese investors to succeed in the US.

Labor cost in the US is still too high. "To tackle this, some key parts of construction equipment that Sany produces in the US are still imported from China," said Yuan.

Cao Dewang, chairman of Fuyao Glass, also drew attention to the credit system here in the U.S. "At present our company's credit status is 2A+, which makes our finance cost quite low, at 3.5 percent. However, if without an A rating, loan interests can run up to 10 to 15 percent, which is too high to bear," he added.

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