By Vidhan Rana

In April of this year, China based Yanfeng USA Automotive Trim Systems announced a $45 million investment in an auto parts manufacturing plant that will serve its clients in the U.S. This investment will result in 263 jobs for the city of Riverside, Missouri, a small town of around 3,000 people that lies north of Kansas City.

In the last few years, Chinese companies have significantly increased their investment in the U.S. as they look to get closer to the market where its products are consumed. As fuel costs keep increasing, it makes economic sense to manufacture products closer to the market than transporting them halfway across the world. However, many people in the U.S. view Chinese investment with skepticism. There is a sense of distrust among both the business community and the political leadership about such investments. However, as more Chinese firms show interest in investing in the U.S. it is important for state, regional, and local economic development agencies to pay attention to this trend.

According to the Chinese Investment Monitor, a study by the Rhodium Group, there were 670 deals made by China amounting to a total of $27.9 billion between 2000 and 2013 in the U.S. Of these investments, government investments accounts to over $17 billion, while the rest is from the private sector. The Chinese Investment Monitor provides an interactive tool where you can see industry and state breakdown by year of these deals.

A majority of this Chinese investment, as tracked by Rhodium Group, appears to be concentrated in the energy and real estate sectors (around 60 percent).
Conway Data – New Plant Database, a database that tracks investments larger than $1 million in the U.S., revealed a total of 53 investments from companies headquartered in China between 2005 and 2012. The frequency of these investments has increased over the years. The graph below shows the major Chinese investments by year in the U.S. since 2005.

According to Conway Data, geographically these investments appear to be concentrated around the east coast. Sixteen investments happened in North Carolina. The other two states with a high concentration of investments were Georgia (7) and Virginia (7). Tracking these investments across sectors as seen on Conway Data, they appear to be concentrated in the manufacturing sector with a higher frequency of investment in furniture manufacturing and machinery manufacturing.

With such major investments coming to the U.S. from China, it is worth keeping an eye on these trends. In the next few issues of the Whittaker Report, our team is looking to study these trends within Chinese investments in the U.S. in greater detail.