China rising

Amid the torrent of clothes, electronics and toys surging out of China comes a little-noticed export: international companies.

For centuries, individual Chinese have sought their fortunes abroad, creating Chinatowns around their restaurants and shops. Now, Chinese firms are going global, pushed by a government turned capitalist, pulled by untapped markets and armed with bundles of money from a thriving economy.

Auto plants are popping up in Latin America; a sprawling commodity bazaar promises a provincial Swedish city new life; a car parts distributor is snapping up ailing companies in the U.S. Rust Belt; a TV factory hums in South Africa; and a high-tech firm is landing contracts to revamp the Persian Gulf's telecommunication networks.

Just as the earlier arrival of Japanese companies changed U.S. manufacturing, over time Chinese companies could affect how their Western rivals approach innovation, competition and business itself.

"We not only consider ourselves pioneers," says Sean Chen, who at 26 is overseeing the construction of a $100-million electrical parts plant and industrial park in the American South. "We also consider ourselves explorers."

Chen and his fiancee, Joy Chen — both took American first names — moved from Shanghai to Atlanta to set up shop for General Protecht Group Inc., a company controlled by his father. While the goal is profits, Sean Chen and his father view the venture almost as a social experiment — its aim, he said through an interpreter, is to marry the best Chinese and American work practices.

"I want to have the efficiency and execution normally shown by the American employees and the brotherhood that a Chinese company normally shows," Sean Chen says. "There are capitalists and there are socialists, and I want to see whether they can get along."

Few Chinese companies have been in the United States longer than the American subsidiary of the auto parts giant Wanxiang Group, which incorporated in 1993. The founder of the home company is one of China's richest men. His son-in-law, Pin Ni, led the Chicago-area subsidiary from cheap parts supplier up the value chain by buying or working with distressed companies — owing to competition from China.

Wanxiang America Inc. has been welcomed for saving manufacturing jobs. Illinois has proclaimed a Wanxiang Day and Michigan offered the company subsidies.

Pin talks exactly like what he is — an executive who's part of a multinational. It's all about core competence and optimizing strength and horizontal integration. He casts himself as a matchmaker who spots what disparate firms do best to create as efficient a manufacturing process as possible.

"Even today you want to say, are there enough Chinese companies in the United States?" Pin asks. "I would say no."

>>Fast facts

Charting the growth

The Chinese corporate presence is still small overseas, but it's growing fast:

• Chinese companies invested more than $30-billion in foreign firms from 1996 to 2005, nearly one-third of that in 2004-05 alone, according to an analysis by Usha Haley, a professor of international business at the University of New Haven in Connecticut.

• In the United States and Canada, Chinese firms now have about 3,500 investment projects, compared with 1,500 five years ago, according to an estimate by Maryville University professor Ping Deng. Large state-owned companies jumped ahead; medium and small private firms are catching up.

• Total investment in the United States is between $4-billion and $7-billion, Ping estimates. In Europe, Chinese acquisitions last year alone totaled $563.3-million, according to research company Dealogic.

• Last year, 29 Chinese firms debuted on U.S. stock exchanges, just two shy of the total for the previous three years combined, according to the Bank of New York Mellon Corp.

• The number of U.S. visas issued to Chinese executives and managers who transfer to U.S. posts within their companies nearly doubled to 2,043 between fiscal years 2004 and 2007. The current fiscal year is on pace to top that, U.S. State Department statistics show.

China rising 04/17/08 [Last modified: Thursday, October 28, 2010 10:38am]

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