Most recent post in Business and Finance

American paranoia or prudence: Why block Chinese direct investment?

_44753692_yuan_ap226b.jpg

This article is by Pete Sweeney, a Fulbright Scholar researching business policy in Chengdu, China.

The surge of investment developing countries are pouring into more developed economies is a phenomenon that is receiving increasing attention. According to Kofi Annan's preface to the 2005 United Nations Committee for Trade and Development (UNCTAD) World Investment Report:

The conventional wisdom of developed countries as capital and technology exporters and developing countries as importers is gradually giving way to a more complex set of relationships. The geography of international investment flows is changing. Developing countries are emerging as outward investors, and their importance as recipients of foreign direct investment in more knowledge-intensive activities is increasing.

Outbound investment from the People's Republic of China is part of this trend. A recent article in the China Daily claimed that outbound investment from the BRIC countries (Brazil, Russia, India and China) and other developing nations is a "sign of a new world order." The claim sounds dramatic, but it is nevertheless indisputable. According to MOFCOM statistics compiled by Professor Lu Bo, Deputy Director of the Chinese Academy of International Trade and Economic Co-operation (CAITEC), China has established about 10 thousand companies in 172 countries and regions with a total investment of $90.63 billion. Thanks to its attraction of inbound investment and its accumulation of foreign currency reserves, China is now one of the world's largest sources of investment. This naturally includes investments in developing countries. "Nearly half of US capital inflows over the past year and a quarter came from China, Brazil, Mexico, and Russia," the Xinhua News article claimed.

Indeed, during the recent global economic downturn, driven by the subprime mortgage crisis in the United States, Chinese firms have emerged to inject cash into troubled firms like Morgan Stanley and Citigroup. Michael Heise, writing for the International Herald Tribune, called these firms "white knights from afar." "Is [this] something to fear?" asks Heise. "The answer is no, at least, not directly." If the Chinese Ministry of Commerce has its way, we are likely to see more of such Chinese knights in the near future. A recent article on the Chinese Council for the Promotion of International Trade (CCPIT) website quoted Fu Zi Ying, Vice Minister of the Ministry of Commerce (MOFCOM), who argued that the current economic crisis offered Chinese firms unprecedented M&A opportunities. "Several well-known enterprises and research organizations have fallen into difficult positions. This offers Chinese firms a great acquisition opportunity. These [Western] firms possess well-known brands, formidable international sales networks, and relatively strong research capabilities. If our firms can successfully acquire them, we can use these resources to greatly enhance Chinese firms' international competitiveness."

In the current political climate, however, Chinese firms still face obstacles investing in developed economies, particularly when it comes to taking control of US firms. The Committee on Foreign Investment in the United States (CFIUS) recently blocked an attempt by Huawei, a well-known Chinese telecommunications firm, from acquiring a $2.2bn stake in the US firm 3com, citing security concerns related to 3com's technology assets. Huawei is hardly the first Chinese firm to run into a wall when it comes to acquiring controlling stakes in US firms. The Chinese National Offshore Oil Corporation (CNOOC) attempted to acquire Unocal and was rebuffed due to security concerns. While not subject to a security review, Haier's attempt to acquire Maytag was politically unpopular in the US and was ultimately stymied.

Predictably, the Chinese are irritated and blame US protectionism and paranoia. Opinion in the US varies according to the speaker's assessment of Chinese intentions. In short, a lot of political sound and fury. What does it signify?

 
More posts in Business and Finance
China Businesscast: China's new labor law, everybody gets tenure
China Businesscast: China's New Oriental and ETS, a classic IPR case study
Danwei FM: Technology policy in Asia
Danwei FM: CEO of China-based vertical search engine
Danwei FM interview with Bill Bishop of Red Mushroom
Danwei FM: Inflation in China
Finance and family values
Danwei FM: Chinese demand more plastic
When strategy consultants collide; "the good stuff" vs "its good enuff"
Pan Shiyi, my heart bleeds for thee
China Businesscast: Olympics Marketing Part 4
The return of Mr China
China's nuclear option — dumping dollars
China Businesscast: Olympics Marketing Part 3
Geely cars and CEO Li Shufu
China Businesscast: Olympics Marketing Part 2
China Businesscast: Olympics Marketing
China Businesscast: Models for Online Video Sharing--Part 1
Air China profits rise 2,000%
China Businesscast: Small companies investing in China
Winners on the new Chinese Internet
Stock cheat's blog leads to calls for Internet regulation
Nuclear fusion and motorbike business
Baidu in the music business?
Price controls on Lanzhou beef noodles
Playboy mansion for Macao - but will anyone go?
How to donate money to a bank
China's "gray" economy: what about the handjobs?
The Family will talk to Rupert
Toxic Evian?
An American apprentice barber in Fuzhou
What would Guanyin do?
MySpace China launches, Wendi officially on board
Stock market trembles at a fake People's Daily editorial
Aussie newspaper kills story about Rupert Murdoch's wife
Wa Ha Ha Ha Ha, Danone's been done in
Mia Farrow's "Genocide Olympics"
China Businesscast: ChinesePod
U.S. vs China at the WTO: "We're too old!"
CNboo spam
Kosher factories in China
The Economic Observer: Sino-French joint venture stealing Yellow River water?
A new look for The Economic Observer
Viacom vs Youtube: good for the small guys?
China Businesscast: mobile web and marketing with Naviblog
China Businesscast: Henry Winter of SmartClub
Hu Jintao in Africa: a roundup of news and views
Mobile phone advertising: will datamatrix codes work?
MySpace China under construction
China Businesscast: interview with James McGregor
China Businesscast: Republishing Shaun Rein Interview
137 million Internet users in China
Chinese tourists: some numbers
China Businesscast: Strategic Consulting with Shaun Rein
Chinese cars in Kenya, female ethnic Chinese minister in Zimbabwe
Chery car sales to hit 1 million
Farming out the annual success story
China Businesscast: Mobile Marketing
Chinese authors ranked by income, sort of
eBay China to form joint venture with TOM?
China Businesscast: Mobile Space in China
Musings about money
Good news from Africa
GAPP official: no public listings for newspapers
Medical ads in China - restrictions
Mobile Business in China - podcast
China's stock exchanges: world's biggest source of capital
Updated China video website list
Oriental Outlook: The dog-eat-dog tourism industry
Will you be lucky next year?
Africa's Silk Road
Hard Hat Show: African Billboards of Beijing - Chinese subtitles
Murdoch and blogs
Hard Hat Show: African Billboards of Beijing
More Murdoch action in China
Low price Fox DVDs
Rupert Murdoch and Wendy in town for a shmooze
Chinese and South African billionaires hook up
More rumbles from MySpace about entering China
Chinese company to operate Zambia Tanzania railway
China Businesscast: The Future of Chinese Media
China's African commitments
China to build and finance Guinea Bissau infrastructure
Nigeria and China railway deal: $8.3 billion
Sexy Beijing: Weddings Gone Wild
Chinese air ticketing goes fully electronic
GAPP and book price wars
China Businesscast: Chinese Word of Mouth with Sam Flemming
Google - Youtube: it's all about search
China Businesscast: Interview with Ogilvy
No More Chinese Whispers
by James McGregor
China Businesscast: China PR Expert Vanessa Seow
China Businesscast: TongTong.com
Actress accuses CCTV director on blog
China Businesscast: Fritz Demopoulos, CEO Qunar.com
China Businesscast: Interview with Lenovo
My Hero wins ratings war
Spoofing fights back
Foreign newspapers to be printed in China?
Air China's stock loses altitude
Youtube advertising: American Chamber of Commerce video
Bus bombs, Israel, Dell and robot chicks in China
CCTV investing in Hong Kong TV, People's Daily editors on acid
Springtime for China blog consultants
Snow beer expands again
CNOOC's new global headquarters
Churches and the market economy
ICBC looking for loads and loads of cash
Beijing taxi strike, and why the city's cabbies deserve more respect
The great African shmoozefest
The history of skirting the law in China's private enterprise reform
Free trade and new art
Bank of China gets $9.7 billion from the market
Fewer Mainlanders visit Hong Kong during May 1 holiday
RMB strengthens: $1 buys 7.99 yuan
Sex and the Financial Times
Foreign exchange czar: China to take "faster steps" to capital account covertability
Photos of Liu Xiang and flying cranes
The cost of marketing a young web author
China's retail market "saturated"
China's talent shortage
The Chinese media market is "absolutely open"
Start up airlines in the Pearl River Delta
Danwei TV 3: Thomas Shao of Modern Media
Prices jump on Beijing porn, but is it possible not to buy?
Rolling Stone China: a dud that will probably succeed
Business Briefs: Translation, beverages, and Hunan TV
The first banking scandal of 2006
Baidu earns while Google squirms
Business Briefs: Hello Kitty, Pepsi price wars, and Shanda TV ads
Business Briefs: Ring tones come home and latte prices go up
Keep Cool: Americans and Chinese Internet censorship
Focus Media gobbles up its rivals
Business Briefs: Imported oil and the online job hunt
Business Briefs: Women's spending and luxury goods
The many faces of the RMB
Business Briefs: Super Girl sponsors and Shanghai news
Business Briefs: Cheap underwear and super vision candy
Business briefs: fake chips and fake bird flu vaccines
Internet curfew in Chongqing
U.S. businessman kidnapped or arrested in Sichuan?
Top 10 Chinese business stories for September
Renting out Golden Week for 5000 RMB
Simplicity: Baidu vs. Google
Music and movie pirates: if you can't lick 'em...
Kingsoft attacks Microsoft: free download of Chinese equivalent to Microsoft Office
Geely's opera mask
Politics and the CNOOC-Unocal debacle: assigning blame
The death of Nanfang Sports
Explaining Chinese book prices
Baidu IPO: investors go nuts but doubts remain
Nanjing Auto and SAIC to fight it out over MG Rover?
Chinese TV goes exclusive
Find a work unit: lots of jobs on Danwei
Poisoned beer update: it's (probably) not as bad as all that
Bad beer, fake beer
2008, that magic year
Siemens cuts jobs; workers protest in Beijing
Greenspan to Congress: yuan revaluation won't help America
Danwei Model Workers
laomo2008fpA.jpg
Recommended blogs and new media
China Media Timeline
Major media events over the last three decades
Books on China
Leslie_Chang_Factory_Girls_s.jpg
To die poor is a sin: An excerpt of Factory Girls by Leslie T. Chang.
In Wang Shuo's No Man's Land: Geremie Barme addresses Wang Shuo's 千万别把我当人.
Swimming with Mao, a memoir essay: This memoir piece is by Xujun Eberlein, author of the new short story book Apologies Forthcoming'.
Front Page of the Day
A different newspaper every weekday
From the Vault
Classic Danwei posts
+ David Moser on Mao impersonators (2004.10): I first became aware of this phenomenon in 1992 when I turned on a Beijing TV variety show and was jolted by the sight of "Mao Zedong" and "Zhou Enlai" playing a game of ping pong. They both gave short, rousing speeches, and then were reverently interviewed by the emcee, who thanked them profusely for taking time off from their governmental duties to appear on the show.
+ Lu Jinbo: Marketing the Wang Shuo brand (2007.06): Larry Lu Jinbo (路金波) talks about how he markets books by Wang Shuo (王朔), Han Han (韩寒), and Annie Baobei (安妮宝贝).
+ Wang Xiaofeng: Why is SARFT so uptight? (2008.03): A translation of a Wang Xiaofeng blog post about SARFT and their ban on actress Tang Wei.
Danwei Archives
Danwei Feeds
Via Feedsky rsschiclet2.png (on the mainland)
or Feedburner rsschiclet.gif (blocked in China)
rsschiclet2.png rsschiclet.gif Main posts: All main page posts
rsschiclet2.png rsschiclet.gif Top Links: Links from the top bar
rsschiclet2.png rsschiclet.gif Danwei Jobs: Want ads
rsschiclet2.png rsschiclet.gif Danwei Digest: Updated daily, 19:30