Chinese Companies Buying US Companies - Okay?

[jyl]

Lenovo, the Chinese PC company, bought IBM's PC business for $1.75BN.

Haier, another big Chinese company, is bidding to buy Maytag for $1.3BN.

Now the China National Offshore Oil Corp (CNOOC), is bidding $18.5BN to buy Unocal.

Something in me is bothered by Chinese companies buying major US companies. But when I think hard about it, I can't come up with a good reason against it, other than a vague notion of national pride.

American-owned companies are already sending jobs overseas as fast as they can. I think US companies should be allowed to buy Chinese companies, so it goes both ways. I don't have a problem with a British or a German company buying a US company. And I remember that Americans were upset in the 1980s when Japanese companies were buying up lots of high-profile US real estate (Rockfeller Center in Manhattan, etc) - but in the end it didn't matter, did it?

What do you guys think - is there a good reason to put limits on Chinese companies buying US companies, or not?

(Assume that there's no direct national security issue - obviously you wouldn't want a foreign company buying a major US military contractor, for example.)

I'll add that I am Chinese-American, but I don't think that makes me either pro-China or anti-China - it probably makes me pay more attention to China.

[911pcars]

John,
Don't the Saudis have very large financial investments here too? If the Saudis, Germans, Japanese, British, etc. can do it, and we certainly do it in other countries, I say why not? Makes them less likely to nuke us (as if destroying all the Chinatowns wouldn't be bad enough). They would also have a stake (or an influence) in our economy.

Sherwood

[MotoSook]

Capitalism has no borders...

Remember when the Japanese started to heavily "invest" in American holdings?

American companies also own a good chunk of foreign companies...

....Chrysler...sure the merger had issues (what merger doesn't), but I think in the end it was a great thing for Chrysler.

Nothing to be concerned about IMO.

[RoninLB]

buying US re & corp's sucks them into playing with the big boys.

The Jap eco model is still constrained by their gov't thinking they know more about business than the pros. China's businessmen have a weight to carry called totalitarianism. Their business education will/has already cost them big bucks. It'll be interesting watching China's group eventually getting involved with the capitol mkt's. Maybe China's central bank will be paying dues to worldwide business to support their "political" bs.

We're at economic war with all these countries. I'm gonna bet on the US model.

[72doug2,2S]

On the economic side, we want China to invest in America, why? because they have a shed load of our dollars. Think about it, we buy their goods and they in return get and hold US currency. We don't want them to dump it into the currency market flooding that market and creating a surplus of dollars which drives the US currency down (even further). We need them to buy our goods and investments which reduces the trade deficit.

On the political side, I would feel much easier about the above if they weren't spending so much money on defense.

[red-beard]

Toyota's lastest CEO is...an American...

As long as the rules are 2 way, I am OK with it, since the US owns stakes in many many Chinese businesses...

[Shaun @ Tru6]

I don't think you can make ANY comparisons with China and other countries buying US companies. My thoughts, and no other single country in the world can claim even a fraction of these points:

China is loaning us $2B every day to keep our "strong economy" afloat and let us play in the Middle East. China is our bankers. Hard to negotiate with them from a weak position.

China is building a significant defense infrastructure, pouring $ into it at an alarming rate, with seemingly no outside threat.

China doesn't play by WTO rules RE: quotas, price fixing, etc.

China is not a democracy or any version of a free society. State owned and run companies are common.

China artificially fixes its exchange rate which undervalues the yuan by as much as 40% against the standard float with international currency demands.

Why is China buying U.S. companies? To obtain western brand names to market Chinese exports AND to grow a raw materials/natural resources base to feed their booming economy. Ever build a track car vs. buy someone elses? Same principle applies. China is buying companies worldwide that are in oil, steel, minerals, etc.

Chinese companies regularly steal the intellectual property of U.S. and other Western Countries. Since our economy has transitioned from mfg. to intellectual proptery, if China takes these ideas and puts them into mfg., we lose big!

China has an unlimited labor force that will work for $.30 per hour. Note the decimal. China is building a middle class on the backs off ours. By buying internationally established brands, China can leverage it's labor force cost advantages AND move up the value chain.

China backs up state-owned companies with special treatment allowing them to compete with an unfair advantage in any bidding process.


In principle, sure, China can buy any U.S. firms it wants to. Is it in the best interest in the future of our country, of our economy? Absolutely not!

This country needs a real, long-term strategic, economic plan or 5-10 years from now, we will be an economic insignificance compared with China.

My $.02.

[turbo6bar]

Originally posted by Shaun 84 Targa
I don't think you can make ANY comparisons with China and other countries buying US companies. My thoughts, and no other single country in the world can claim even a fraction of these points:

Are these supposed to be advantages or disadvantages?

Originally posted by Shaun 84 Targa
China is loaning us $2B every day to keep our "strong economy" afloat and let us play in the Middle East. China is our bankers. Hard to negotiate with them from a weak position.

OK, this is good for China.

Originally posted by Shaun 84 Targa
China is building a significant defense infrastructure, pouring $ into it at an alarming rate, with seemingly no outside threat.

Sounds like a poor investment.

Originally posted by Shaun 84 Targa
China doesn't play by WTO rules RE: quotas, price fixing, etc.

Can only come back to bite them in the arse. If we were getting our a$$es kicked while China played by the rules, then I'd be worreid.

Originally posted by Shaun 84 Targa
China is not a democracy or any version of a free society. State owned and run companies are common.

The people are getting a taste of jobs and income. That can't be good for those in power.

Originally posted by Shaun 84 Targa
China artificially fixes its exchange rate which undervalues the yuan by as much as 40% against the standard float with international currency demands.

Certainly gives them an edge, but at some point it will likely adjust, and hurt their export advantage.

Originally posted by Shaun 84 Targa
Chinese companies regularly steal the intellectual property of U.S. and other Western Countries. Since our economy has transitioned from mfg. to intellectual proptery, if China takes these ideas and puts them into mfg., we lose big!

I'd much rather be the country that creates ideas than the one known for stealing ideas.

Originally posted by Shaun 84 Targa
China has an unlimited labor force that will work for $.30 per hour. Note the decimal. China is building a middle class on the backs off ours. By buying internationally established brands, China can leverage it's labor force cost advantages AND move up the value chain.

No comment.

Originally posted by Shaun 84 Targa
China backs up state-owned companies with special treatment allowing them to compete with an unfair advantage in any bidding process.

Worked for all the other Communist countries, eh?

I don't like to see Chinese companies buying US companies, but that's life.

[Shaun @ Tru6]

Originally posted by turbo6bar
Are these supposed to be advantages or disadvantages?


Sounds like a poor investment.

Naive at best.



Can only come back to bite them in the arse. If we were getting our a$$es kicked while China played by the rules, then I'd be worreid.

When you are as big as China, you dictate the rule. See above.



The people are getting a taste of jobs and income. That can't be good for those in power.
More of the same. You clearly have little understanding of China's history and socio-economic infrastructure.




Certainly gives them an edge, but at some point it will likely adjust, and hurt their export advantage.
See above. Likely? Likely? C'mon.




I'd much rather be the country that creates ideas than the one known for stealing ideas.

You'd rather be in a country that comes up with ideas and has those ideas stolen and monetized with a huge economic advantage? See above. Your statement here says it all!


No comment.

Why?



Worked for all the other Communist countries, eh?

Again, pick up a book, do a search on the web, buy a subscription to The Economist. No other communist country has/had even a fraction going for it as China does, and at a time when globalization is "cake" given advances in Communications alone. But there are so many other factors to consider RE: advances in technologies, mfg, etc.

I don't like to see Chinese companies buying US companies, but that's life.

This exactly the kind of stragegy I was saying we needed. You should run for President!

[72doug2,2S]

The bottom line is they have US dollars. Buying US companies is better than dumping it into currency market, which devalues the US dollar. We need those dollars invested back in the US. Buying our goods is nice, but I'll take investments over the dumping scenario.

Good point on the political side, once the capitalism starts wouldn't that spell self-destruction to the communist state.

[legion]

The thing that worries me is that many of these Chinese companies are state-controlled, or at least follow unsolicited suggestions from the government. That essentially puts some U.S. businesses under the control of the Chinese government. That really worries me in the case of Unocal.

[gaijindabe]

The long term goal for the U.S. is to encourage private property rights, democratic institutions and rule of law in China. Has entry into the WTO and wide open American markets done that? Not yet. But then again, theft of state assets (like Russia) has not happened either.. A communist party apparatus controling a major oil company. Well, that is an interesting one. We do live in interesting times!

[RoninLB]

ahh.. a good example of the protectionist mentality instead of dynamic capitalism concerning China way above. So then according to this protectionist thought China's leaders will beat Wall Street. This explains the worlds confidence in the US dollar doesn't it?

afaik China's leaders have done a good job preventing internal revolution. Any time the US tries protectionism our growth is lowered. Any time politicians try to directly manage business they screw it up. Germany's Schroder sic is a good example of a political hack begging for mercy from capitalism by asking Bush for a pat on the head in DC early this week. Good luck believing that hacks will succeed.

[nostatic]

the problem with you guys who say, "oh, it didn't work before" fail to realize that the rules are very different now. We live in a networked world and economy. The old models start to fall apart. Just because a communist country couldn't become an economic powerhouse before doesn't mean they can't now (or already have).

At this point all we have left is "innovation." And given the sad state of our schools and the lazy arse attitudes of students and parents, we will lose that within 15 years. Distance learning will fuel intellectual revolutions in India and China. Couple that with sheers numbers, and have a nice day. I'm still learning mandarin...

[72doug2,2S]

Just what this thread needs.
I'll take an order of Sesame Chicken, dumplings, and green tea please.

I like Chinese,
There's nine hundred million of them in the world today,
You'd better learn to like them, that's what I say.
Chorus: I like Chinese,
I like Chinese,
They come from a long way overseas,
But they're cute and they're cuddly, and they're ready to please.
Verse: I like chinese food,
The waiters never are rude,
Think of the many things they've done to impress,
There's Maoism, Taoism, I Ching and chess.
Chorus: So I like Chinese,
I like Chinese,
I like their tiny little trees,
Their Zen, their ping-pong, their
yin and yang-ese.

[gaijindabe]

Originally posted by RoninLB

afaik China's leaders have done a good job preventing internal revolution.

Excellent points Ron. But as you can see, it is getting tougher every day. The Communist Party truly is riding the tail of the dragon. A number of these incidents are happening lately, this is from today's news:

BEIJING (Reuters) - Thousands of Chinese rioted in a dispute sparked by a lopsided roadside brawl, set fire to cars and wounded six police officers in an outburst likely to worry communist leaders in Beijing desperate to cling on to power.
The official Xinhua news agency, in a rare report on a local disturbance, blamed Sunday's riot in Chizhou in dirt-poor eastern Anhui province on a few criminals who led the "unwitting masses" astray.


The last event in the press was about a riot over private property being taken for a public right of way. (Seems "the masses" have a few things to teach our fellow citizens back in Connecticut.)

Otherwise, back to Unocal, this is from today's news:


Foreign Ministry spokesman Liu Jianchao said that China National Offshore Oil Corporation's $18.5 billion offer for Unocal was "normal commercial activity between enterprises."

Liu said "economic cooperation between China and the U.S. serves the interests of both sides and commercial activities should not be interfered in or disturbed by political elements."



Yeah, Unocal is 70% government owned, it is an $18.5B deal and it has not been signed off at the highest levels??

[techweenie]

Gajinda, the last two paragraphs of the original story you excerpted refer to 58,000 protests in China last year. I pasted them into the thread on Souter...

[Vipergrün]

Would you rather have foreign companies like China actually spend and invest money in the US, or have blood sucking countries like Mexico and the mass immigration from there mooch our resources? I think I'll take the Chinese....

[Don Ro]

'Crisis of Conscience'
Wednesday, June 28, 2005
.
Rep. Duncan Hunter, R-California, explains why he wrote a letter to President Bush expressing concern over the proposed sale of Unocal to a Chinese oil company.
.
http://www.cnn.com/CNN/Programs/lou.dobbs.tonight/

[legion]

Maybe this was all a charade put on by Chevron and Unocal to allow Chevron to buy Unocal without the normal protests?

http://msnbc.msn.com/id/8405579/