Posted on 10/23/2002 1:59:31 AM PDT by Cincinatus' Wife
While American companies have flocked to do business in China, a state-owned Chinese company on Monday did just the opposite. It bought a Gainesville company it plans to turn into the world's fourth biggest battery manufacturer.
Shanghai Huayi Group paid $20-million for the assets of Moltech Power Systems Inc. which will be lifted out of a Chapter 11 bankruptcy proceeding. The new owners plan to use the deal to make a new brand of rechargeable batteries to compete with Rayovac, Energizer and Gillette in North America while bringing new technology to the Chinese consumer market. The venture is supposed to triple Moltech's annual sales to $150-million within three years and double its Gainesville payroll to 200.
"It combines the technical expertise of the U.S. company with the capital and market potential of China and the rest of Asia," said Eric Li, chairman of Business Data Integrated Inc., a San Francisco company that advised Huayi on the deal.
Get used to it, say trade officials who foresee a wave of Chinese investment in U.S. businesses.
China's government-owned manufacturers, which control more than half that nation's gross domestic product, have $250-billion in foreign currency reserves. Since being admitted to the World Trade Organization, Chinese companies' investments in the United States soared to $4.8-billion last year, up from $1.25-billion in 2000, according to the U.S. China Business Council.
"This is a natural outgrowth of China's economic development and integration into the world system," former U.S. Trade Representative Charlene Barshefsky said. "This deal won't be the last."
In fact, it is the second since June. That's when Shanghai Haixin Group Co., a fabricmaker, became the world's biggest manufacturer of plush toys with the purchase of Glenoit Corp. of New York. The $25-million buy included two U.S. factories and 46 trademarks. Chinese companies have flooded their embassy in the United States with expressions of interest in U.S. acquisitions.
The acquisition binge is an outgrowth of government-run enterprises trying to find their place in a world market, said He Weiwin, economic and commercial counselor at the Chinese Consulate in New York City.
"This is a natural extension of business, not a government function," he said. "The companies need to extend their product line, get into new markets and integrate."
Added Barshefsky: "This is a function of China's desire to do what nations and companies around the world all do: move capital to where it is the most productive."
In Moltech the Chinese acquired a company that can provide new markets for Chinese-made materials and the know-how to manufacture small rechargeable batteries for devices such as cell phones and electric bicycles.
"People say American companies cannot compete with Chinese companies, but we are proving you can if you get your costs down," said Martin Higgins, president and chief executive of Moltech.
The company, which a few years ago employed more than 800 workers at its Gainesville plant, needed the power of a bankruptcy filing, however, to get there. Layoffs cut the staff, which has been represented by the International Brotherhood of Electrical Workers, to 100 workers who design and fabricate battery cells. They have not had a raise in two years. The company also cut pay by about a third to roughly $1 a hour at its 500-worker assembly plant in Juarez, Mexico, where the batteries are shipped duty-free, welded together and charged before being sent to retailers.
"Our employees have been through hell," said Higgins, the Moltech CEO, adding that the employees and the union have been supportive "of our getting a new beginning."
The company makes no-name batteries found in Makita power tools and Mag Lite brand flashlights that are sold by stores such as Home Depot and Wal-Mart. With the backing of Shanghai Huayi, Moltech hopes to sell in the same chains its new Millenium line of rechargeable batteries.
Huayi has been making batteries in China since the 1930s. It also makes electric bicycles and is one of China's biggest producers of chlorine and alkaline chemicals. Moltech will get access to low-cost Chinese steel, nickel and cadmium. The company also will ship some of its more technologically advanced manufacturing equipment to China.
"There are some incredible subtleties at work here," Higgins said. "The Shanghai factory gets very capable equipment and know-how at a good price. We get new access to capital and Chinese materials, which will help us be more competitive in North America."
-- Information from Bloomberg News was used in this report. Mark Albright can be reached at albright@sptimes.com or (727) 893-8252.
LMAO yea until they decide it costs to much to produce goods in the good ole USA and the move the manufacturing back to china where they can get slave labor for pennies on the dollar and ship it back over here to sell it for way more than what its worth
Its reverse Capitalism
What stopped them from doing that straight away?
It never ceases to amaze me. If an American company runs a factory in a foreign country, people howl about the destruction of the American economy. But if a foreign country runs a factory in the U.S., people howl about the destruction of the American economy.
and ship it back over here to sell it for way more than what its worth
It's worth whatever the market will bear.
Nothing thats the problem
It never ceases to amaze me. If an American company runs a factory in a foreign country, people howl about the destruction of the American economy. But if a foreign country runs a factory in the U.S., people howl about the destruction of the American economy.
As what i said dont fit your little rant get back on the porch im talking about them bying a company here and moving it to china ....TAKING JOBS FROM OUR AMERICAN CITIZENS AND THEN SELLING THE GOODS IN THIS COUNTRY AT ABSURD PRICES IS DOUBLE JEOPARDY FOR OUR COUNTRY if you dont see that then take the blinders off
They could more easily have done that right now, but they didn't. Why do you suppose that is?
TAKING JOBS FROM OUR AMERICAN CITIZENS AND THEN SELLING THE GOODS IN THIS COUNTRY AT ABSURD PRICES IS DOUBLE JEOPARDY FOR OUR COUNTRY
Same old Harkin barking. Tell me, if someone invented a machine that could turn a truckful of dirt into a truckful of batteries for a nickel, would it be good or bad for our economy? Would it change the problem if the truckful of batteries were being sold by an inscrutable Chinese battery merchant off a container ship?
But perhaps by "ABSURD PRICES" you meant high prices (in contrast to the usual mercantilist mantra). Suppose instead the Chinaman sold "D" cells for $100 each, rather than for what other sellers charge. How would it damage our economy?
They have been doing it all along many many companies have moved overseas after bying out american companys
Same old Harkin barking. Tell me, if someone invented a machine that could turn a truckful of dirt into a truckful of batteries for a nickel, would it be good or bad for our economy? Would it change the problem if the truckful of batteries were being sold by an inscrutable Chinese battery merchant off a container ship?
BAD if you flood the market with sales that are going overseas where does the profit go? not here ! as for the container ship i dont know the laws concerning merchant mariners and the sales made from ships
But perhaps by "ABSURD PRICES" you meant high prices (in contrast to the usual mercantilist mantra). Suppose instead the Chinaman sold "D" cells for $100 each, rather than for what other sellers charge. How would it damage our economy?
STILL THE PROFIT GOES OVERSEAS AND NOT BACK INTO OUR ECONOMY AND THERE HAVE BEEN NO MANUFACTURING JOBS CRATED FROM ANY OF THESE SALES just more stripping of the american economy
The purpose of the economy is not to produce money, nor even to provide jobs. The purpose of the economy is to create wealth.
Money is simply a passive medium of exchange; money isn't wealth. Jobs are simply a means by which goods and services are produced; jobs are not wealth.
Batteries are wealth. Cars are wealth. Shoes are wealth. Leisure time is wealth. Music is wealth.
If these things can be dumped into the economy as manna from heaven, it doesn't matter, economically, where they come from. Let the batteries come from China. Let them come out of a black box. Let schmoos morph into them. Let them fall from the sky. It is not better for the economy if they require American labor before they come into existence. The labor that goes into the batteries could instead be used to create other forms of wealth, and then we'll have both.
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