Following the Money Chinese OFDI in the United States and Europe Thilo Hanemann Research Director thanemann@rhg.com Tsinghua University | Beijing | September 23, 2013 10 East 40 th Street, Suite 3601, New York, NY 10016 Tel: +1.212.532.1158 | Fax: +1.212.532.1162 | Web: www.rhgroup.net Chinese FDI I Tsinghua University 1 Address: 5 Columbus Circle, 18 th Floor, New York, NY 10019 | Tel: +1.212.532.1158 | Fax: +1.212.532.1162 | Web: www.rhg.com
China’s Ascent to the World’s Third Largest FDI Exporter Countries’ % share of total global OFDI flows, 3 years moving average 30% 25% UNITED STATES 20% 15% 10% JAPAN CHINA HONG KONG 5% GERMANY FRANCE INDIA 0% 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: UNCTAD, Rhodium Group. Chinese FDI I Tsinghua University 2
China’s Global OFDI: Three Different Perspectives Percent share of global OFDI stock 87 CDIS ECONOMIES (2011): $510 BN M&A (2000-2012): $252 BN MOFCOM (2011): $425 BN All Others Canada Rest of Australia 8% 2% Hong World, All other , 3% Kong, 19% 23% Luxembourg 27% 3% US, 2% Mauritius Singapore 3% , 2% Singapore , 3% Australia, South 3% Singapore Africa, 5% Cayman 3% United Islands, Kingdom, Switzerland 5% , 4% 10% British Virgin US , 6% Hong Australia, Islands, Canada, Hong Kong, Brazil, 9% 7% 7% Kong 62% 8% 76% Source: MOFCOM, IMF, Bloomberg, Thomson Reuters, *transactions ending in final stake of 10% or more. Chinese FDI I Tsinghua University 3
China’s Global OFDI: Alternative Approaches INSTITUTION DATABASE GEOGRAPHIC FOCUS COVERAGE Heritage F Foundation China Investment Tracker Global Non-Bond Investments over $100 million A-Capital Dragon Index Global M&A and some unexplained residual TAC TA ChinaObs/FDI Monitor Europe M&A and greenfield transactions Antwerp M Management School Euro-China Investment Report Europe Chinese companies Univ niversity of of Sydn dney Demystifying Chinese Australia M&A transactions Investment Rhodium G 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 (2011) USD billion 16 CHINA'S MINISTRY OF COMMERCE 14 13.5 US BUREAU OF ECONOMIC ANALYSIS 12 10 9.5 8 6 4 3.7 2 0 FDI Stock (2011) FDI Stock, UBO (2011) FDI Stock (2011) Source: Rhodium Group. Chinese FDI I Tsinghua University 5
Chinese FDI in the US: RHG Transactional Data, 2000-2012 Number of deals and USD million 80 8,000 Investment in M&A Deals (RHS) Investment in Greenfield Projects (RHS) 70 7,000 Number of M&A Deals (LHS) Number of Greenfield Projects (LHS) 60 6,000 50 5,000 40 4,000 30 3,000 20 2,000 10 1,000 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: Rhodium Group. Chinese FDI I Tsinghua University 6
RHG: Chinese Direct Investment in the US vs. EU, 2000-2012 USD million 14,000 Chinese FDI in the United States Chinese FDI in the EU-27 12,000 10,000 8,000 6,000 4,000 2,000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: Rhodium Group. Chinese FDI I Tsinghua University 7
RHG: Chinese FDI in the United States by Industry: 2000 – 2012 Number of deals, total investment value in USD 6,000 PRIMARY BUBBLE SIZE INDICATES TOTAL OIL & GAS SECONDARY INVESTMENT VALUE 5,000 TERTIARY 4,000 alue ent Val estmen ENTERTAINMENT & INDUSTRIAL HOSPITALITY 3,000 MACHINERY Inves al I UTILITIES Total ELECTRONICS 2,000 AUTO PARTS RENEWABLE ENERGY 1,000 REAL ESTATE COMMUNICATIONS METALS MEDICAL EQUIPMENT FINANCIAL SERVICES EQUIPMENT AVIATION SOFTWARE & IT 0 BUSINESS SERVICES SEMICONDUCTORS 0 10 20 30 40 50 60 70 Num umbe ber of of Deal eals Source: Rhodium Group. Chinese FDI I Tsinghua University 8
RHG: Chinese FDI in the EU and US by Industry, 2000-2012 USD million Coal, Oil and Gas Utilities Industrial Machinery and Tools Automotive Equipment and Components Consumer Products and Services Chemicals Entertainment, Media and Publishing US Transportation Services Metals and Minerals EU 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 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 Source: Rhodium Group. Chinese FDI I Tsinghua University 9
RHG: Chinese FDI in the US by State: 2000 – 2012 Source: Rhodium Group. Chinese FDI I Tsinghua University 10 10
RHG: Chinese FDI in the US by Source Province*: 2000-2012 NO. OF DEALS SOE 28% PRIV 72% DEAL VALUE PRIV 37% SOE 63% Source: Rhodium Group; * Source provinces coded by headquarter of the investing company. Chinese FDI I Tsinghua University 11 11
RHG: Employment at Majority Chinese-Owned US Firms USD million, number of jobs 35,000 7,000 Investment in M&A Deals, USD mn (RHS) Investment in Greenfield Projects, USD mn (RHS) 30,000 6,000 Total Jobs (LHS) 25,000 5,000 20,000 4,000 15,000 3,000 10,000 2,000 5,000 1,000 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: Rhodium Group. Chinese FDI I Tsinghua University 12 12
RHG: Troubled Chinese Investments in the United States YEAR ACQUIRER TARGET STATUS 1990 China National Aero Tech Mamco Manufacturing Blocked by President 1995 CNIEC/Hua San/Sextant Magnequench Completed Lenovo IBM Completed 2005 Haier Maytag Withdrawn, Commercial Reasons CNOOC Unocal Withdrawn, Politicized Minsheng Bank UCB Blocked by Federal Reserve Huawei 3Com Withdrawn after CFIUS Review 2009 Tengzhong Hummer Withdrawn after MOFCOM Intervention Northwest Nonferrous Intl. Firstgold Withdrawn after CFIUS Review Anshan Steel Greenfield, Mississippi Pending 2010 Tangshan Caofeidian Emcore Withdrawn after CFIUS Review China Aviation Ind. Cirrus Completed 2011 Huawei 3Leaf Dissolved after CFIUS Review Ralls Corporation Terna Energy Holding USA Corp. Blocked by President 2012 Beijing Superior Aviation Hawker Beechcraft Inc. Withdrawn, Commercial Reasons Wanxiang Group A123 Completed 2013 Shuanghui Smithfield Foods Pending Source: Rhodium Group. Chinese FDI I Tsinghua University 13 13
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