Posted on 02/21/2016 11:20:05 AM PST by SeekAndFind
Here's a story you'll be hearing about a lot this year.
Chinese companies have been buying up foreign businesses -- including American ones -- at a record rate, and it's freaking out lawmakers.
There is General Electric's sale of its appliance business to Qingdao-based Haier, Zoomlion's bid for the heavy-lifting-equipment maker Terex Corporation, and ChemChina's record-breaking deal for the Swiss seeds and pesticides group Syngenta, valued at $48 billion.
Most recently, a unit of the Chinese conglomerate HNA Group on Wednesday said it would buy the technology distributor Ingram Micro for $6 billion.
And the most contentious deal so far might be the Chinese-led investor group Chongqing Casin Enterprise's bid for the Chicago Stock Exchange. A Chinese deal spree
To date, there have been 102 Chinese outbound mergers-and-acquisitions deals announced this year, amounting to $81.6 billion in value, according to Dealogic. That's up from 72 deals worth $11 billion in the same period last year.
And they're not expected to let up anytime soon. Slow economic growth in China and cheap prices abroad due to the stock market's recent sell-off suggest the opposite.
(Excerpt) Read more at businessinsider.com ...
That is a liquidation strategy. Selling the means of production for trade goods is an out of business strategy.
As one who has been directly involved with Chinese companies buying western companies my take is this.
They are not buying companies so much as they are buying talent. You will not find anything designed or engineered by Chinese talent that hasn’t been ripped off from a western company. Any big shop in China is run by expat French, German, English, or Americans. Their students can learn to recite advanced calculus and engineering skills but the second something outside of the box is required the entire line shuts down. The mindset of the average Chinese is to NEVER question the person above you. If some obstacle is in your way you stop and wait for someone above you to fix it. And it goes all the way up the chain to some central planner in Beijing. A westerner will be given the authority to make on the fly decisions and no one else.
Most Chinese companies are still state owned. So chances are, the Chinese business man was simply working on behalf of the Chinese government all along.
Yes, frequently the technology and know how does leave America. And along with it all of the related products and jobs.
Only about 50% of our working age people are employed now. And many of them are underemployed, working part time or at jobs that require less skills than they have to offer.
The wealth of a company accrues to the owner.
When a company is owned by a foreigner the profits leave America.
Colonies don’t become strong and independent by creating wealth for foreign owners.
I tend to agree with you.
Another point to consider is this — Chinese acquisitions are more defensive for wealthy families and wealthy businessmen.
Rich Chinese people moving their money out of China before the crash!
The Chinese invest more of their money in T-bills and real estate (this is why homes in Santa Monica, San Francisco and New York are out of reach for most Americans), but they are increasing their investments in our companies and technologies.
The main thing that is different and potentially dangerous about the Chinese is the degree their investments are controlled/influenced by the Chinese military, government and general nationalism of the country. They have been buying some of our politicians (Hello Hillary!)
THIS is what we have to be vigilant about.
No it isn't. Selling a going concern is not liquidation. The buyer buys in anticipation of future profits. Why in the world would anyone pay up for the the good will over book value to then liquidate?
No it isn’t. Selling a going concern is not liquidation. The buyer buys in anticipation of future profits. Why in the world would anyone pay up for the the good will over book value to then liquidate?
You are right.
The buyer buys in anticipation of profits. And the seller sells his ability to make future profits for immediate cash. If that cash was reinvested in a more profitable venture, it might make sense. But it’s not. Our national debt is rising.
Our people are unemployed. We are losing the manufacturing capacity that makes us strong during war. And we are losing our technological edge
But we still have the biggest market. And we can use that to our advantage. We can restore the import tariffs that worked great for this country for 180 years.
“This will not end well.”
For China.
This is a repeat of the japanese story in the 90s, when Japan had so many dollars due to their trade surplus, they were buying stuff left and right in the US at inflated prices (including the Rockefeller Center). They took a bath in most of those deals.
And it isn’t Donald Trump.
“The Capitalists will sell us the rope with which to hang them.”.
Private buyers and sellers transacting for cash has zero impact on national debt. The proceeds may be re-invested, or spent (maybe the seller is old and wants to retire), or any number of things. But, national debt is created when the government issues bonds.
You are making some good points about employment and mfg but I don't think the solution is found in limiting the freedom to sell businesses.
Free Trade bump for later.....
The difference is, the Chinese government doesn’t care if they sacrifice their companies, their goal is to undermine their enemies.
Yup. Maybe not a good business model, but a good tactical move . Of course, our friends in Cathay would never turn their war machine against us.
“The difference is, the Chinese government doesn’t care if they sacrifice their companies, their goal is to undermine their enemies.”
Oh Please! We’re such saints!
That’s our goal too, to undermine our enemy.
There are thousands of Chinese families buying up houses in California (and probably elsewhere). That must be to undermine us as well.
We complain when we send money over there to buy their goods, and then when they come back over here with those dollars to buy OUR goods we also complain?!
It’s pure ignorance of both economics and human nature, which when you boil it down, it’s the same thing.
You are correct. This is a currency based trend. The Yuan is expected to lose value against the dollar over the next few years. So if the Chinese buy a dollar producing asset now, it will only get more valuable as the Yuan falls.
Perhaps in a narrow sense of Capitalist economies, I could agree with you. But Red China, however free their economy has become, is still a Totalitarian dictatorship in which the Individual’s Rights are Granted or Withheld by the Government. They have zero concept of government being the Servsnt of the People!
“They have zero concept of government being the Servant of the People!”
Whereas our fabulous Congress, President, Supremes and Bureaucrats and Politicians sure are “servants of the people”.
I think you’re being a bit naive.
I am employed by one of these companies and by a weird quirk because of age and years of service it may work out good for me. I might have an opportunity for early pension.
I agree that overall the wholesaling of America is not good.
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