Investing in U.S. Makes Sense for Chinese Companies

Ann All

I wrote in March about several Indian outsourcing companies, including Wipro and Tata Consultancy Services, establishing operations in the United States.


Prompted by some of the same market forces, including a weak U.S. dollar, desire to expand into new markets and receptive local governments, more Chinese companies are following suit, according to a Los Angeles Times article published in The Seattle Times.


One company featured in the article, Shanxi Yuncheng Plate-Making Group, is building a printing-plate factory that will employ 120 in Spartanburg, S.C. Though a desire to get closer to potential U.S. customers was his primary rationale, the company's CEO found that real estate and electricity costs in South Carolina are far lower than what he pays in China.


While labor costs are higher in Spartanburg -- $12 to $13 an hour, considerably more than the $2 earned by Chinese workers -- the company will narrow that gap with a tax credit of $1,500 per employee it will receive from South Carolina.


According to the article, several states including Wyoming, Alabama and Georgia have sent officials to China to woo investors. Chinese companies can get a good deal in the United States, thanks to a weak dollar and falling real-estate costs. And the Chinese government is loosening its trade restrictions to help promote these types of investments.


More investments flow from China to United States than in the other direction. Thanks to a combined $8 billion stake in Morgan Stanley and the Blackstone Group, China's total investment in U.S. companies was $9.8 billion in 2007, up from $36 million in 2006. During the same period, U.S. investment in China fell from $3 billion to $2.6 billion.


Chinese companies are making other moves to win business with the West, including recruiting English-speaking executives and forging partnerships with American companies, as I wrote earlier this month.

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Add Comment      Leave a comment on this blog post
Jun 9, 2008 5:57 PM Season Season  says:
it is kind of a trend to prove china is becoming bigger in economy... but the roaring cost in china is leaving no choice for labor-intensive industries to change.A good opportunity for china. Reply
Jun 9, 2008 5:59 PM Jennifer Price Jennifer Price  says:
We are giving away our Intellectual Property and the profit is going to the Chinese economy! Reply
Jun 11, 2008 6:58 PM Remi Remi  says:
Jennifer, if I am getting you right, we can sell all sorts of products to China, like cars, planes, food, but Chinese cannot come to the US, hire local people and do business here.That's an interesting point of view. It has a name: colonialism.Anyway, I still wish you a great day.Remi Reply
Jun 12, 2008 1:00 PM Lucas Lucas  says:
Um.. I don't know where these figures are coming from but US investment in China fell to $2.6B sounds extremely low. Reply

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