DETROIT -- Auto suppliers owned by the Chinese government are buying stakes in U.S. and European suppliers that give them access to global markets and cutting-edge technology. And their budget is huge.
Last May, China's 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 during a panel discussing China at the Automotive News World Congress.
Now the Chinese seek acquisitions. This month, three state-owned enterprises were scheduled to hold talks with FINNEA Group about possible U.S. deals, Leuliette said.
"The Chinese need access to expertise to grow their economy," he said. "They want to convert their [trade surplus] into hard assets."
Chinese investors also want access to markets. In 2010, Pacific Century Motors acquired Nexteer Automotive, General Motors' former steering-systems unit. Pacific Century is a subsidiary of AVIC Automobile Industry Co., a state-owned Chinese supplier.
Now Nexteer is spending $150 million to upgrade plants at its headquarters in Saginaw, Mich. Nexteer CEO Bob Remenar says the Chinese owners want to compete in North America and Europe, not just in China.
"There was a perception that the Chinese just wanted our intellectual property," he said. "But we haven't moved our blueprints to China.
"They want the same things that we want," he said. "They are multinational investors, and they are here to stay."
Jack Perkowski, former managing partner of diesel parts supplier ASIMCO Technologies Ltd. in Beijing, said higher wages are driving up costs. Suppliers are responding by boosting 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 founded JFP Holdings. "The suppliers want to be global."