Chinese Investors On a Buying Spree of US Companies

chinese-investors-on-us-company-buying-spree

With over $15 billion of investment directly placed into the American market in 2015, Chinese investors continue their buying spree in US companies this year. Thus far Chinese investment has increased 30%, and 2016 will mark another record in China’s investment in the country.

American love affair

Despite the current state of China’s own mark and stemmed cash flows for outbound funds, Chinese firms are still infatuated with American companies. Yet, it isn’t just companies that Chinese investors are focusing on. Firms are buying up commercial properties, while individuals have been buying into residential properties in some of the US’s major cities.

“In 2016, China’s outbound foreign direct investment (OFDI) will likely grow even faster than in previous years,” a report from National Committee on U.S.- China Relations and a research firm Rhodium Group concluded.

“A more pronounced slowdown in economic growth and concerns about the stability of the renminbi exchange rate have visibly accelerated the pace of Chinese deal-making abroad since mid-2015, with a record $100 billion of announced M&A transactions worldwide in the first three months of the year.”

Will it increase?

Experts believe that China’s investment into the US could hit the $200bn mark by the end of the decade. That figure is incredible considering China’s involvement in direct investment in the North American superpower was nil a decade and a half ago.

Investors from China have purchased or created 1,583 US companies in that timeframe. Those companies are home to over 80,000 employees working on full-time basis. The continued investment from China and job creation proves, once again, the opposite of Donald Trump’s rhetoric that jobs are continually leaving the US for Asia.

Reasons for direct investment in the US

One of the main reasons given for Chinese investment in the US has been the increasing labour costs in the Asian nation. It is not the cheap manual labour provider it once was, which is encouraging firms to place money elsewhere. In addition, energy costs within China are on the up, another reason firms are investing abroad.

What is China investing in?

Until recently, China had focused much of its investments abroad into natural resources. However, the country is now diversifying those original moves, buying into technology companies, food providers and even videogame creators.

Buying Hollywood

According to a recent Los Angeles Times articles, Chinese investment is being spread across various industries in the Golden State. While technology companies are the number one target, investors are buying into properties in the Los Angeles area, too. Shenzhen New World Group bought the Sheraton Universal Hotel and Los Angeles Marriott Downtown in 2011, and other Chinese companies continue to buy into the city.

Los Angeles, New York and Seattle continue to be three of the major cities that investors buy into with few signs of that trend stopping. Although, due to high prices on both the east coast and west coast, there is thought that Chinese investors could move to the interior of the US for cheaper deals.

One thing is for sure for now, and that is the US continues to be an attractive country for Chinese investment.

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