Chinese Firms Aiming at Solar Panel Industry in the U.S.

Global Business

Wanxiang America is known in the U-S for its auto parts operation. But it is in the energy business, too. The company makes solar panels at a facility about 90 minutes northwest of Chicago. Phillip Yin is joined by CCTV’s Wang Guan to share more about this story.

Chinese Firms Aiming at Solar Panel Industry in the U.S.

Chinese Firms Aiming at Solar Panel Industry in the U.S.

Wanxiang America is known in the U-S for its auto parts operation. But it is in the energy business, too. The company makes solar panels at a facility about 90 minutes northwest of Chicago. For more on this, Phillip Yin is joined by CCTV's Wang Guan.
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A lot more Chinese firms are doing green-field investment, creating local jobs and setting up local plants, than traditional Merger and Acquisition.

This is Rockford, Illinois, a small town some 130 kilometers from Chicago. And it’s where Wanxiang, one of China’s largest auto parts makers, has set up a solar plant, the first such Chinese factory in America’s Midwest.

CCTV’s Wang Guan interviewed Brent Anderson, manager of Universal Solar of Wanxiang America, to see how a Chinese company can benefit from a solar factory in Illinois.

Wang Guan: “So Brent, why would Wanxiang set up a solar factory here? What’s the comparative advantage?”

Brent Anderson:“There are several advantages. One is that the government has a Buy American Act. So it makes it conducive for some government agencies to buy American panels. There are shipping costs involved. So if you buy an Asian product, you have to ship it over. Energy costs are very low. In Illinois, in the mid-west, to run a production facility, very very little of our over-head is energy cost.

Wang Guan: “Is there a concern of rising labor costs in China ”

Brent Anderson: “There is a concern . They are continually raising labor costs in China.””In June there is supposed to be a tariff that could be as high as 30 to 40 percent.”

Wang Guan: “Making it here saved all the trouble ”

Brent Anderson: “Saved all that trouble.”

It’s not just Wanxiang. Chinese textile company Keer is investing more than 200 million dollars to set up a textile plant in North Carolina. And last year, China’s largest PC maker Lenovo built a production facility in North Carolina, creating more than 100 local jobs. According to Rhodium Group, Chinese investment in the U.S. reached 14 billion dollars in 2013, twice as much as in the previous year.

On the local and state level, American mayors and governments are craving for Chinese investments to set up plants such as this one to create local jobs. But on the federal level, there seems to be a disconnection. More and more Chinese investments are under intensified scrutiny from the U.S investment watchdog agency, out of national security concerns.

In the election year of 2012, a number of Chinese investments were blocked by the Committee on Foreign Investment in the U.S., or CIFIUS. In 2013, Wanxiang America met similar challenges.

Pin Ni is President of Wanxiang America and he shared his advice for Chinese firms on dealing with CIFIUS. He says: “We totally respect different voices because that’s what democracy is about. What we are doing is to make sure there is no national security issue and what we are doing is to clearly demonstrate such acquisition will only help the U.S. economy. Politically the wind could blow from the left and it could blow from the right. What we need to pay attention is the procedure, policy analysis and how we can comply with the procedure properly.”

According to statistics from Boston Consulting Group, in 2004 manufacturing in China cost 14 percent less than that in the United States.

By this year, the China advantage has narrowed to just 4 percent. Over the past decade, labor costs in China shot up 187 percent, in other words, it’s three times AS expensive to hire people to make stuff in China. Labor costs only rose 27 percent in the United States. Energy costs in China are now more expensive than that of the U.S. If this trend continues, BCG predicts that manufacturing costs in China will be as expensive as that in the US in less than three years.

Based on CIFIUS statistics, topping the list for CIFIUS review are companies NOT from China but from the United Kingdom.

Between 2009-2011, one in four foreign transactions under its review is British firms. Chinese investors in fact only accounted for 7 percent. But we need to put those figures into context here. British investment account for 17 percent of all FDI in the US, while Chinese only less than 1 percent. After all, British companies have been around much longer. That said, the increase in the rate in which Chinese firms have been targeted by CIFIUS is fast.

For more on Chinese investment in the U-S, CCTV’s Phillip Yin is joined from New York by Benjamin Wey, CEO of New York Global Group– a strategic advisory firm that focuses on Asia.

Benjamin Wey on Chinese Investment in the U-S

Benjamin Wey on Chinese Investment in the U-S

For more on Chinese investment in the U-S, CCTV's Phillip Yin is joined from New York by Benjamin Wey, CEO of New York Global Group-- a strategic advisory firm that focuses on Asia.
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