China’s Richest Billionaires Are Buying American

Posted: November 5, 2014 in Econ 101, Free Trade

SOURCE: http://www.forbes.com/sites/liyanchen/2014/11/05/hungry-dragon-how-chinas-richest-billionaires-are-buying-american/

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Hungry Dragon: How China’s Richest Billionaires Are Buying American
This story appears in the November 24, 2014 issue of Forbes.

Chinese firms have inked 896 deals and poured $43 billion into the U.S. since 2000, according to data compiled by Rhodium Group. Over the past five years, China’s foreign direct investment in America has grown from $2 billion to $14 billion in 2013. Leading the charge are many of China’s 242 billionaires, who made the bulk of their fortunes in the Middle Kingdom but are investing in America’s future.

Much of the action is happening on the Left Coast, with California landing about a quarter of the deals and one-tenth of the total value. All of China’s five richest people, such as tech titan Robin Li and real estate magnet Wang Jianlin, have significant investments across the Golden State, ranging from Baidu ’s new R&D lab in Sunnyvale to Dalian Wanda’s mixed-use real estate project in Beverly Hills. Texas and New York follow with 79 and 70 deals respectively, while Virginia leads all states the highest total transaction value ($8.8 billion), largely thanks to WH Group’s $4.7 billion acquisition of Smithfield Foods .

“Money is flowing into the states with industries that are interesting to Chinese investors,” said Thilo Hanemann, a research director at the New York-based consulting company. “California is a magnet for Chinese investors thanks to its vibrant private sectors, innovation, and lots of Chinese entrepreneurs and universities that create personal ties.”

Members of Forbes’ China’s 400 Richest have recently snapped up tech firms, cinema chains, and trophy properties, listed their companies on the NYSE, and built manufacturing plants. According to Hanemann, real estate has emerged as “the single most important sector,” as China’s leading investors and developers — such as SOHO China ’s Zhang Xin and Fosun International ’s Guo Guangchang — seek to diversify their holdings overseas at a time when domestic investment returns are faltering.

Here is a map outlining Chinese investment and highlighting some bets by the more notable billionaire investors:

Final China investment map in the mag

(Click on the map for a larger version)

Jack Ma
Rank: 1
Net worth: $19.5 billion
Former English teacher listed his e-commerce giant, Alibaba, on NYSE in September, raising $25 billion and setting a record as the world’s largest-ever IPO.

Robin Li
Rank: 2
Net worth: $14.7 billion
In May China’s largest search engine, Baidu, announced a $300 million investment to build a new artificial intelligence R&D center in Google’s  backyard.

Ma Huateng
Rank: 3
Net worth: $14.4 billion
Two years ago Internet giant Tencent plunked down $330 million for Cary, N.C. game developer Epic Games, known for its Unreal line, and another $350 million for Santa Monica’s Riot Games, maker of one of the world’s most popular videogames, League of Legends.

Wang Jianlin
Rank: 4
Net worth: $13.2 billion
In 2012 his Wanda Group swooped in and paid $2.6 billion for AMC Entertainment in Kansas City. It now runs 342 movie theaters, with nearly 5,000 screens across the country, making it the world’s largest cinema operator.

Li Hejun
Rank: 5
Net worth: $13 billion
In the past two years clean-energy giant Hanergy’s American subsidiary has completed a solar power plant in Florida, picked up a project in California and bought four solar tech outfits, including Arizona-based Global Solar Energy, which makes thin-film PV solar panels.

Lu Guanqiu
Rank: 16
Net worth: $5.4 billion
China’s biggest auto parts maker, Wanxiang, paid $250 million in 2013 for bankrupt A123, a maker of lithium-ion batteries for electric vehicles. The deal expands its large U.S. presence, which now includes more than 3,000 employees and its headquarters outside Chicago.

Guo Guangchang
Rank: 25
Net worth: $4.3 billion
Through his Fosun International, China’s Warren Buffett paid $725 million for the 60-story 1 Chase  Manhattan Plaza last year. Fosun also bought a stake in high-end apparel maker St. John Knits International.

Liang Wengen
Rank: 27
Net worth: $4 billion
Ralls, a company with ties to Liang’s construction-equipment maker, Sany, agreed to buy four wind farms in Oregon in March 2012. Months later Barack Obama issued a presidential order demanding, on national security grounds, that it sell them back; the wind farms are near a training facility for naval weapons systems. Ralls sued, and in July it scored a victory when an appeals court ruled that the Administration must explain more fully why it blocked the Chinese-backed company.

Zhang Xin
Rank: 30
Net worth: $3.7 billion
One of China’s most influential real estate developers, known for her stylish buildings, led a reported $1.4 billion deal for a 40% stake in the GM Building in 2013.

Yang Yuanqing
Rank: 179
Net worth: $1.2 billion
Yang is CEO and chairman of Lenovo , which has gone on a $5 billion shopping spree in the U.S. this year, snagging Motorola from Google and acquiring IBM’s  x86 server business.

Wan Long
Rank: 272
Net worth: $900 million
In 2013 Wan-led WH Group paid $4.7 billion for Virginia’s Smithfield Foods, becoming the world’s largest pork processor and hog producer. It was the biggest-ever acquisition of a U.S. firm by a Chinese company.

Follow me on Twitter at @chen_liyan, or email me at lchen@forbes.com

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