International brand acquisition by Chinese companies
In recent years, Chinese investors have significantly increased their foreign investment activities especially in the form of cross-border mergers and acquisitions (M&As). Chinese companies now own part or all of a number of international companies that might not be immediately apparent. Whether you’re going to the movies, washing your clothes or going for a drive there’s a good chance you're trading with a Chinese company.
For many Chinese firms, foreign acquisitions are also a way to ensure access to customers or key suppliers, in particular of raw materials. The debate on Chinese foreign M&A activities, however, is mostly based on speculations and anecdotes. Despite a growing number of studies on Chinese overseas investment, there is surprisingly little systematic evidence on whether Chinese cross-border M&As differ from investment coming from other countries
Here’s a look at some of the bigger business names that are owned by Chinese companies:
In 1982, General Electric got its start as a pretty small brand. It has since grown at an exponential rate, however. It now dabbles in many other industries from healthcare to aviation to venture capital to power. This is one of those brands that feel very homegrown, partly thanks to the “Made in America” stamp on the products. But the truth is that it has been owned by a Chinese company called Haier ever since 2016. GE was purchased for $5.4 billion, which is definitely on the high end of things. Even though the products continue to be made in the United States, the decisions are ultimately made in China.
For about an entire century, AMC cinemas have been giving movie lovers relaxing and fun moviegoing experiences. This company made a name for itself in this industry and even went on to be the biggest movie theatre chain on the planet. Even though the initials stand for American Multi-Cinema, the truth is that a Chinese company called Dalian Wanda Group had been the majority stakeholder from 2012 to 2018. In 2018, however, this changed a bit after Silver Lake Partners bought a $600 million stake in it. Despite this, Wanda Group is still the one who gets to call the shots in terms of executive-level decisions.
Best known for its tech products, Motorola started in Schaumburg, Illinois a long time before we were even introduced to the concept of mobile phones. After it was launched in 1928, it saw steady growth until it reached the peak of its success with flip phones and the like. Google eventually bought it, only to sell it to a Chinese company called Lenovo in 2014. This did not prove to be a profitable move for Google since it bought the company for $12.billion two years before it sold it for $2.9 billion. Even today, people are still puzzled why Google seemed to be comfortable losing $10 billion with this deal.
IBM (PC Division)
Ever since it was founded in IBM, this company has helped the United States stay on top when it comes to tech. In those days, it was more involved in business machines more than computers. IBM has a truly fascinating past, to say the least. In 2004, Lenovo bought its PC division for $1.75 billion. “As Lenovo’s founder, I am excited by this breakthrough in Lenovo’s journey towards becoming an international company,” shared Chuanzhi Liu, who was the CEO of Lenovo back then. On the other hand, IBM CEO Sam Palmisano shared his thoughts by saying, “Today’s announcement further strengthens IBM’s ability to capture the highest-value opportunities in a rapidly changing information technology industry.”
Legendary Entertainment Group
After Dalian Wanda Group bought AMC and saw great success in the movie industry, it decided to go all in by buying a movie studio in 2016. Legendary Entertainment Group turned over its ownership to the Chinese company in a deal worth $3.5 billion. At the time, Dalian Wanda Group wanted to absorb it into its existing portfolio. However, it eventually reached the decision to just operate it as it was. It has been four years since the purchase, so let us take a look at how things are going for LEG. Ever since the acquisition, it has produced movies such as Jurassic World: Fallen Kingdom, Pacific Rim: Uprising, Kong: Skull Island, and Skyscraper!
Ever since it opened its doors in 1908, Hoover has made a name for itself as a trusted American appliance brand. Named after founder William Henry Hoover, the company is now considered to be an iconic brand. Even though things remained local for the longest time, things changed after Techtronic Industries bought it for $107 million in 2006. You will still find the HQ in North Carolina, but the central office is now in Hong Kong. The Chinese company is huge with a staff of more than 30,000 members and yearly sales of more than $7.7 billion. While it is no longer an American company, it is in good hands.
General Motors holds the title of the largest automobile manufacturer in the United States. It is one of the largest companies in the industry in the whole world, so it is a very appealing and profitable business. Even though it is not completely owned by Shanghai Automotive Industry Corp, it still relies on the Chinese company to keep money coming in. The two companies started a joint venture back in 1998. Customers might not know it, but SAIC sells cars by using the General Motors name. At any rate, they are two separate companies as the SAIC HQ is in Shanghai, whereas the GM one is in Detroit.
MG Motor UK Limited (MG Motor) is a British automotive company headquartered in London, United Kingdom, and a subsidiary of SAIC Motor UK, which in turn is owned by the Shanghai-based Chinese state-owned company, SAIC Motor. MG Motor designs, develops and markets cars sold under the MG marque, while vehicle manufacturing takes place at its plants in China, Thailand, and India. Its fourth factory in China, in Ningde, Fujian Province, specialise in producing electric vehicles, with the new all-electric production sports car being produced at the factory. The design of new cars has been retained at Longbridge where Research and Development is currently undertaken
The Waldorf Astoria Hotel
When it comes to luxury accommodation, the Waldorf Astoria Hotel is a great choice. It is not just an institution in New York, but it is also a part of history in the United States. While Hilton Worldwide manages the hotel, Anbang Insurance Group bought it for $1.95 billion in 2014. This unbelievable price makes it the most expensive hotel in history. The Chinese company made huge changes to the hotel and turned a chunk of its rooms into condos. The insurance company is also interested in buying even more American businesses. One of the properties that it had been looking at would be Starwood Resorts.
This $7.1-billion-dollar deal, completed in 2013, remains the largest purchase of an American firm by a Chinese company. Virginia-based Smithfield Foods has been an icon of the American food industry and is best known for its hams (especially its holiday ham). The deal spurred controversy and concern at the time, but Smithfield has thrived, adding jobs and hitting a sales records.
WeWork took advantage of the rapid growth in shared work spaces when it was launched a decade ago. It now manages more than 4 million sq. m. of space! However, it went through a pretty rough patch and needed more capital in 2016. That was when a Beijing-based company called Legend Holdings Corp. became a “new partner” and poured more than $430 million into the company. John Zhao of Legend Holdings Corp. even went as far as to say, “Our investment in WeWork is both strategic and obvious.”
A few decades ago, people would have thought that the idea of whizzing around on two wheels was something straight out of a sci-fi film. Segway Inc. has proven to us that this can be done in real life as well. A Beijing-based company called Ninebot bought the transportation company for $80 million in 2015. Things have only gotten better for Segway since then because the Chinese company helped it attain a larger foothold in the world of tech and robotics. In 2018, the company announced that it was planning to move its production sector from New Hampshire to China. However, it eventually took it back to say that the majority of production was going to remain in Bedford.
Riot Games Inc
Anyone who plays the multiplayer online gaming phenomenon League of Legends will be familiar with Riot Games. Released in 2009, the game went on to accumulate a large following and became the best-known product of the company. Even though Riot Games has been working with Tencent for a long time already, their partnership reached its peak in 2015. The Chinese company purchased the rest of the stakes and became the parent company of Riot Games. Before this happened, it already owned 93% of the gaming company. With this in mind, we are under the impression that the new development was already a given. The value of Riot Games is said to be $6 billion.
And In a reverse of ownership
Volvo Cars has struck a deal to buy out parent company Zhejiang Geely Holding (GEELY.UL) from their joint ventures in China. Taking full control of the Chinese joint ventures could help smooth the way for a Volvo Cars IPO as the country's requirement for auto manufacturing to be carried out with a local joint venture partner is lifted next year.
Volvo Cars has grown significantly faster than the average market in China in recent years and will continue to invest in the country to maintain the strong growth trend. Following the transactions, Volvo Cars will have full ownership of its manufacturing plants in Chengdu and Daqing, its national sales company in China and its R&D facility in Shanghai.
Volvo Cars has seen strong growth in the Chinese market in recent years. In 2020, it sold 166,617 cars in China, an increase of 7.5 per cent versus 2019 and its eighth consecutive sales record in the market.