China's state-owned suppliers seek U.S. acquisitions, panel told
Photo credit: Joe Wilssens
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DETROIT -- It might be going too far to call it a buying spree, but China's state-owned automotive suppliers are looking for U.S. acquisitions this year.
Last May, China's central government earmarked $60 billion to acquire U.S. industrial assets, Tim Leuliette, managing director of FINNEA Group, an investment banking firm in suburban Detroit, said today.
"The Chinese did that because they need access to expertise to grow their economy," Leuliette said during a panel discussion about China at the Automotive News World Congress. "They want to convert their [trade surplus] into hard assets."
Chinese investors want to acquire U.S. technology to feed China's fast-growing market. That's the case with Boston-Power Inc., a Westborough, Mass., producer of lithium ion batteries.
Last year, Boston-Power attracted a $125 million investment from GSR Ventures, an investment firm with offices in Beijing and Silicon Valley. Sonny Wu, co-founder of GSR, was named chairman of Boston-Power's board. Now Boston-Power is building a battery factory near Shanghai and a technical center in Beijing.
Supplying Beijing fleets
During her presentation, company founder Christina Lampe-Onnerud said she is working with six customers in China and hopes to supply batteries to electric-vehicle fleets in Beijing. That city's municipal government wants to build an EV fleet of 30,000 vehicles, Lampe-Onnerud said.
"China will take the lead" in the EV industry, she said. "The industry is moving very quickly."
Chinese investors also want to gain access to markets in North America and Europe. By acquiring a U.S. or European subsidiary, they have an opportunity to win global contracts with U.S., European and Japanese automakers.
In 2010, Pacific Century Motors acquired Nexteer Automotive, the former in-house supplier of steering systems to General Motors. Pacific Century Motors is a subsidiary of a state-owned automotive supplier.
Competing for business
Now Nexteer is spending $150 million to upgrade its manufacturing plants at its headquarters in Saginaw, Mich. Nexteer CEO Bob Remenar said his Chinese owners want the company to compete for business in North America and Europe -- not just in China.
That's the only way for Nexteer to win global contracts with international automakers, Remenar said.
"There was a perception that the Chinese just wanted our intellectual property," Remenar said. "But we haven't moved our blueprints to China.
"The Chinese are not mysterious. They want the same things that we want," he said. "They are multinational investors, and they are here to stay."
Offsetting higher wages
Panelist Jack Perkowski, founder of diesel component supplier ASIMCO Technologies Ltd. in Beijing, said higher wages are driving up the cost of manufacturing. Suppliers are responding by upgrading their technology, quality and productivity.
"Over the next five years, China wants to transform itself into an innovation leader," said Perkowski, who left ASIMCO in 2009 and then founded JFP Holdings. "The suppliers want to be global. That's a very clear objective."
You can reach David Sedgwick at dsedgwick@crain.com.
