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Small, mid business boosts China’s annual US investment

TE smartphones at a launch press in Malaysia. (Photo/Xinhua)

TE smartphones at a launch press in Malaysia. (Photo/Xinhua)

China’s direct investment stock in the United States during the 2008-2012 period had a yearly average growth of 70.8%, making China the fastest growing foreign direct investor in the US, Shanghai-based First Financial Daily reports, citing an unnamed official with the US Department of Commerce.

The evaluations were made based on the legal definition of ultimate beneficial owner, which refers to the person, or entity, that ultimately owns or controls a US affiliate of a foreign company and that derives the benefits associated with ownership or control.

In 2012, China’s direct investment stock in the US reached US$10.5 billion, including depository institutions at US$1.17 billion, retail and trade at US$482 million, and manufacturing at US$356 million.

In 2011, Chinese enterprises in the US recruited 12,000 US workers, invested US$366 million in research and development and contributed US$471 million to US exports, the US official said.

Though many items, from iPhone to clothes, are foreign branded, they are actually “made in China.” Following the rapid expansion of China’s economy, more and more Chinese enterprises or investors have moved to international markets, including the US. Over the past two years, there have been a rising number of US investments by small and medium private enterprise, as opposed to the dominance of SOEs or large corporate investments, the report said.

Chinese business keep a low profile in the US. Many of their products have been in use by Americans for decades, but very few know the products are made in China. For example, ZTE Corporation has been in the US market for more than 10 years, a surprising fact to many.

If customers search ZTE on Amazon’s website, they can find 32 ZTE handsets, with prices ranging from US$0.01 (tied to a telecom operator two-year contract) to US$749, including more than a few low- to mid-range handsets and a few smartphones. Buyers are mostly people with low budgets who look to ZTE handsets for good quality for the price.

ZTE’s US market share has exceeded 5%, and its investment in the US is growing continuously, said ZTE spokesman Dai Shu.

ZTE purchases more than US$2.5 billion in US products annually, indirectly creating 20,000 jobs for the US, Dai said. The company directly employs more than 300 workers, mostly local, he said.

Last year’s US sales exceeded US$1 billion, and this year the firm plans to reach sales of 10 billion yuan (US$1.6 billion), Dai said.

Just like ZTE, Haier Group has entered the US market for several years, but it only sells products such as washing machines and freezers.

Overall, China’s brands are still positioned in the ‘cheap’ category. When they try to explore the US market, jam-packed with the world’s most advanced brands, Chinese brands are comparatively weaker, said Lyndon Cao, director of Global China Practice at Ogilvy & Mather.


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