Following the Money Chinese OFDI in the United States and Europe Thilo Hanemann Research Director thanemann@rhg.com Tsinghua University Beijing September 23, 213 1 East 4 th Street, Suite 361, New York, NY 116 Chinese FDI I Tsinghua University Tel: +1.212.532.1158 Fax: +1.212.532.1162 Web: www.rhgroup.net Address: 5 Columbus Circle, 18 th Floor, New York, NY 119 Tel: +1.212.532.1158 Fax: +1.212.532.1162 Web: www.rhg.com 1
China s Ascent to the World s Third Largest FDI Exporter Countries % share of total global OFDI flows, 3 years moving average 3% 25% UNITED STATES 2% 15% 1% JAPAN 5% CHINA HONG KONG GERMANY FRANCE % INDIA 1981 1982 1983 1984 1985 1986 1987 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 212 Source: UNCTAD, Rhodium Group. Chinese FDI I Tsinghua University 2
China s Global OFDI: Three Different Perspectives Percent share of global OFDI stock MOFCOM (211): $425 BN 87 CDIS ECONOMIES (211): $51 BN M&A (2-212): $252 BN US, 2% Singapore, 2% Australia, 3% Cayman Islands, 5% British Virgin Islands, 7% Rest of World, 19% Hong Kong, 62% Canada Australia 2% 3% Luxembourg 3% Mauritius 3% Singapore 5% All Others 8% Hong Kong 76% Singapore, 3% South Africa, 3% All other, 23% Switzerland, 4% US, 6% Canada, 7% Brazil, 8% Australia, 9% Hong Kong, 27% United Kingdom, 1% Source: MOFCOM, IMF, Bloomberg, Thomson Reuters, *transactions ending in final stake of 1% or more. Chinese FDI I Tsinghua University 3
China s Global OFDI: Alternative Approaches INSTITUTION DATABASE GEOGRAPHIC FOCUS COVERAGE Heritage Foundation China Investment Tracker Global Non-Bond Investments over $1 million A-Capital Dragon Index Global M&A and some unexplained residual TAC ChinaObs/FDI Monitor Europe M&A and greenfield transactions Antwerp Management School Euro-China Investment Report Europe Chinese companies University of Sydney Demystifying Chinese Investment Australia M&A transactions Rhodium Group China Investment Monitor United States and Europe M&A and greenfield transactions Source: Rhodium Group Chinese FDI I Tsinghua University 4
Chinese FDI in the US: Official Data (211) USD billion 16 14 12 US BUREAU OF ECONOMIC ANALYSIS CHINA'S MINISTRY OF COMMERCE 13.5 1 9.5 8 6 4 3.7 2 FDI Stock (211) FDI Stock, UBO (211) FDI Stock (211) Chinese FDI I Tsinghua University 5
Chinese FDI in the US: RHG Transactional Data, 2-212 Number of deals and USD million 8 Investment in M&A Deals (RHS) 8, 7 6 Investment in Greenfield Projects (RHS) Number of M&A Deals (LHS) Number of Greenfield Projects (LHS) 7, 6, 5 5, 4 4, 3 3, 2 2, 1 1, 2 21 22 23 24 25 26 27 28 29 21 211 212 Chinese FDI I Tsinghua University 6
RHG: Chinese Direct Investment in the US vs. EU, 2-212 USD million 14, 12, Chinese FDI in the United States Chinese FDI in the EU-27 1, 8, 6, 4, 2, 2 21 22 23 24 25 26 27 28 29 21 211 212 Chinese FDI I Tsinghua University 7
RHG: Chinese FDI in the United States by Industry: 2 212 Number of deals, total investment value in USD 6, 5, OIL & GAS PRIMARY SECONDARY TERTIARY BUBBLE SIZE INDICATES TOTAL INVESTMENT VALUE Total Investment Value 4, 3, 2, UTILITIES ENTERTAINMENT & HOSPITALITY ELECTRONICS INDUSTRIAL MACHINERY 1, AVIATION REAL ESTATE MEDICAL EQUIPMENT METALS FINANCIAL SERVICES RENEWABLE ENERGY SOFTWARE & IT AUTO PARTS COMMUNICATIONS EQUIPMENT SEMICONDUCTORS BUSINESS SERVICES 1 2 3 4 5 6 7 Number of Deals Chinese FDI I Tsinghua University 8
RHG: Chinese FDI in the EU and US by Industry, 2-212 USD million Coal, Oil and Gas Utilities Industrial Machinery and Tools Automotive Equipment and Components Consumer Products and Services Chemicals Entertainment, Media and Publishing Transportation Services Metals and Minerals Food Processing and Distribution IT Equipment Real Estate Renewable Energy Software and IT Services Financial Services and Insurance Aerospace Equipment and Components Pharmaceuticals and Biotechnology Other Transportation Equipment Hospitality and Tourism Electronics and Electronic Parts Healthcare and Medical Devices Business Services Semiconductors US EU 1, 2, 3, 4, 5, 6, 7, Chinese FDI I Tsinghua University 9
RHG: Chinese FDI in the US by State: 2 212 Chinese FDI I Tsinghua University 1
RHG: Chinese FDI in the US by Source Province*: 2-212 NO. OF DEALS SOE 28% PRIV 72% DEAL VALUE SOE 63% PRIV 37% Source: Rhodium Group; * Source provinces coded by headquarter of the investing company. Chinese FDI I Tsinghua University 11
RHG: Employment at Majority Chinese-Owned US Firms USD million, number of jobs 35, Investment in M&A Deals, USD mn (RHS) 7, 3, Investment in Greenfield Projects, USD mn (RHS) Total Jobs (LHS) 6, 25, 5, 2, 4, 15, 3, 1, 2, 5, 1, 2 21 22 23 24 25 26 27 28 29 21 211 212 Chinese FDI I Tsinghua University 12
RHG: Troubled Chinese Investments in the United States YEAR ACQUIRER TARGET STATUS 199 China National Aero Tech Mamco Manufacturing Blocked by President 1995 CNIEC/Hua San/Sextant Magnequench Completed Lenovo IBM Completed 25 Haier Maytag Withdrawn, Commercial Reasons CNOOC Unocal Withdrawn, Politicized Minsheng Bank UCB Blocked by Federal Reserve 29 Huawei 3Com Withdrawn after CFIUS Review Tengzhong Hummer Withdrawn after MOFCOM Intervention Northwest Nonferrous Intl. Firstgold Withdrawn after CFIUS Review 21 211 212 213 Anshan Steel China Aviation Ind. Ralls Corporation Wanxiang Group Greenfield, Mississippi Cirrus Terna Energy Holding USA Corp. A123 Pending Completed Blocked by President Completed Tangshan Caofeidian Huawei Beijing Superior Aviation Shuanghui Emcore 3Leaf Hawker Beechcraft Inc. Smithfield Foods Withdrawn after CFIUS Review Dissolved after CFIUS Review Withdrawn, Commercial Reasons Pending Chinese FDI I Tsinghua University 13