* "Overwhelming amount of inquiries"
* "Trees, tees and PhDs"
* Some Chinese companies wary of publicity
By Paul Eckert
RALEIGH, N.C., June 9 The biggest-ever Chinese
acquisition of a U.S. company faces hurdles in Washington from
lawmakers and regulators, but in much of America, Chinese
investment is quietly booming.
With over $10.5 billion of deals by Chinese companies in the
United States so far this year, 2013 is on pace to be the
largest year ever for mergers and acquisitions of U.S. firms by
Chinese companies, according to Thomson Reuters data.
Almost every week, the North Carolina state government
receives a "a wonderfully overwhelming amount of inquiries" from
Chinese companies looking to set up shop, says April Kappler,
the state official in charge of drawing investment from Asia.
Home to one of the headquarters of Chinese-owned personal
computer maker Lenovo Group Ltd, North Carolina is
fighting hard to draw computer component and software companies,
machinery makers and pharmaceutical firms from China.
To promote trade and investment, the state has offices in
Hong Kong and Shanghai, and its mayors and governor travel to
China frequently to meet potential investors.
The Chinese businessmen who come "always joke about trees,
tees and PhDs for all the greenery, golf courses and all the
higher education institutions," said Jean Davis, the state's
director of international trade.
North Carolina universities - Duke, the University of North
Carolina and North Carolina State - tap the connections of
professors and graduate students from China. UNC does a joint
degree with Tsinghua University, known as "the MIT of China."
North Carolina State University meteorology professor Lian
Xie set up the Carolina China Council 10 years ago to link local
economic development boards to investors back home.
He is now raising funds to build the first Chinatown in
North Carolina, a complex of restaurants, shops and hotels. His
group hopes to break ground in September on a 25-acre
(10-hectare) site near the Raleigh-Durham International Airport.
North Carolina is fifth in the ranks of U.S. states
receiving Chinese investment, following California, New York,
Texas and Illinois, according to the New York-based Rhodium
Group, an advisory firm that runs a database that tracks
'ONE OF THE FEW BRIGHT SPOTS'
Figures on total Chinese business investment in the United
States differ. According to Rhodium's database, which covers
only direct investments, the accumulative total is $23 billion,
most of it since 2008.
Another much broader measurement by Washington think tank
Heritage Foundation includes big portfolio investments by
Chinese sovereign wealth funds and reckons Chinese investments
in the United States between 2005 and 2012 were worth $50
"No matter whose data you use, the two-year period of
2012-13 is very, very strong for Chinese investment in the
U.S.," said Derek Scissors, an economist who compiles the
Heritage Foundation figures.
The Chinese stake in U.S. businesses is small compared with
leader Britain with more than $440 billion and second-place
Japan's roughly $300 billion.
But with the American economy still pulling itself out of
the 2008-2009 slump and crisis-hit Europe reluctant to buy into
the United States, "China was one of the few bright spots" in
2012, Rhodium Group researcher Thilo Hanemann told a U.S.
congressional panel last month.
Raymond Cheng, chief executive of Hong Kong-based SoZo
Group, a matchmaking firm that brought a $100 million Chinese
plant to rural Alabama that will employ 300 people making copper
tubes, said Southern states were "really open and welcoming."
Pockets of the South "need jobs more than anybody else,"
said Cheng, who is also trying to bring Chinese manufacturers to
other nearby states like Mississippi.
'LEVEL OF ANXIETY'
In Virginia, China's Shuanghui International Holdings wants
to buy Smithfield, the world's biggest hog producer. At nearly
$5 billion, it would be the biggest Chinese acquisition in the
United States if it goes ahead.
But a few U.S. lawmakers have aired concerns about the
Chinese meat company's safety record, and the deal will be
scrutinized by the Treasury's Committee on Foreign Investment in
the United States, which reviews deals for national security
While the purchase is expected to go through eventually,
that kind of political and regulatory fuss turns off other
Despite aggressive efforts by mayors and governors to court
them, Chinese companies often seem wary of promoting themselves
"A lot of these companies want to invest in the U.S., but
they want to stay under the radar because there's a level of
anxiety related to Chinese investment," said North Carolina
state official Kappler.
She said she had to keep mum about an impending $40 million
investment that would create 200 jobs because the wary firm did
not want it known that it was from China.
Many Chinese firms recall the uproar that sank the 2005
rejection of China National Offshore Oil Corp's $18.5
billion attempt to buy U.S. energy company Unocal. That chilled
Chinese investment in the United States for two years.
"There is absolutely this view among Chinese companies that
the U.S. is a difficult environment to operate in and there's
anti-Chinese prejudice. It's not well-founded," said Scissors.
Chinese firms in the United States employ at least 30,000
Americans, says Hanemann. That is a far cry from the 800,000
U.S. workers employed by Japanese companies or the 1.8 million
Chinese who work for U.S.-invested firms in China.
Chinese direct investment is small compared with the $3
trillion invested by foreigners in the U.S. economy overall. The
country also holds about $1.25 trillion in U.S. government
bonds, according to the Treasury Department.
Investment matters have been a long-standing issue ahead of
the summit that President Barack Obama and Chinese President Xi
Jinping held in California this weekend. Cyber attacks and
intellectual property theft are two other big issues for
State officials say North Carolina is not oblivious to the
issue of cyber theft.
"When you hear about Chinese hackers and all this stuff,
clearly there are some national issues that need to be
addressed, but when it gets down to the local level, our
experience has been good, stable jobs, with local managers, and
it's meant a lot for our community," said trade official Davis.