Eastern Influence
Chinese investment is starting to pour into the West.
In the '80s and '90s, cash-rich Japanese firms acquired
and invested in a cornucopia of businesses and other U.S. assets.
Now, Chinese companies are becoming increasingly active in buying,
merging with and doing joint ventures with smaller U.S companies,
and experts say it looks like the beginning of another wave of
Pacific Rim investment.
"China is definitely becoming a source of capital for U.S.
companies," says Michael D. Lord, associate professor of
management and director of the Flow Institute for International
Studies at Wake Forest University in Winston-Salem, North Carolina.
Lord says Chinese investment could parallel--and exceed--the
Japanese buying binge.
Chinese investors are usually after technology, brands and
access to U.S markets, says Usha Haley, professor of management and
international business at the University of New Haven in Deep
River, Connecticut. "Nobody can beat the Chinese on labor
costs," Haley says, "so they're looking for companies
that have technology."
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Chinese investment in U.S. firms has risen recently as Beijing
relaxed regulations on such deals, says Haley. Like Lord, she
expects the trend to continue and intensify. But she cautions that
Chinese investments may not always be a boon. Compared to Japanese
and Korean firms, Chinese businesses place less stress on service,
expect profits more quickly and like to attack markets on a broad
front rather than using wedge-style tactics, she says.
Lord expects Chinese VCs to eventually set up formal processes
for tapping Chinese capital. For now, he urges entrepreneurs to
consider visiting the country and to simply keep in mind that the
world's biggest country could turn out to be a big source of
capital as well. "They have a lot of cash from all [the
Chinese imports] we're buying over here," he says.
"So it's definitely going to grow."