China's Wanfeng Eyes U.S. Acquisitions Amid Trade TensionsBloomberg News
Chairwoman says in talks to purchase a machinery company
Sees local production removing import tax unpredictability
Rising trade tensions are pushing Chinese car-wheel maker Wanfeng Auto Holding Group to seek further acquisitions in the U.S. to help localize more production and cut its reliance on imports.
The Xinchang-based auto parts supplier is in talks to buy a machinery company in the U.S., and is open to purchasing a business in the financial industry, Wanfeng Chairwoman Chen Ailian, 59, said in an interview. The group has bought U.S. robotic assembly-line maker The Paslin Co. and Canadian magnesium die-castings firm Meridian Lightweight Technologies over the past three years, part of a broader plan to support China’s “One Belt, One Road” initiative to build an intercontinental web of infrastructure and trade links, she said.
“The U.S. is now very eager to revitalize its manufacturing,” Chen said in Beijing on the sidelines of the annual legislature meeting. “Customs taxes can be highly variable and hard to predict. The problem won’t exist after acquisitions because you build where you sell.”
Buying businesses in the U.S. and producing locally could help Chinese companies gain a foothold in the U.S. at a time of rising tensions between the two nations. President Donald Trump has accused China, its biggest trading partner, of unfair trade practices.
Wanfeng, which was set up in 1998 and grew into the world’s biggest maker of aluminum wheel hubs, is looking at buying businesses including in the U.S. and India that have “strong research and profit-generating capabilities,” said Chen. The group counts General Motors Co., Toyota Motor Corp. and BMW AG among its customers and operates 13 production and research facilities overseas.
Shares of Zhejiang Wanfeng Auto Wheel Co., the listed company of the group, surged by as much as 6.3 percent in Shenzhen trading, the biggest intraday gain since Oct. 24. The stock traded at 18.61 yuan at 9:59 a.m.
Chen is scouting for targets in the U.S. even as China’s capital controls have curbed purchases overseas. The number of deals abroad announced by Chinese companies so far in 2017 have declined 74 percent from a year ago.
Chinese acquisitions in the U.S. reached a record $76 billion in 2016, led by the likes of property-to-cinema group Dalian Wanda and airline operator HNA Group Co. Chinese parts makers last year invested a record $1.6 billion in U.S. companies as they sought to gain access to the second-biggest auto market.
The purchases made by Wanfeng over the past few years have helped the group diversify beyond wheel hub manufacturing. While Warren, Michigan-based Paslin gave it capabilities to offer robotic assembly lines to automakers, Ontario, Canada-based Meridian is a leading supplier of lightweight magnesium castings with manufacturing facilities in the U.S., Canada, Mexico, the U.K. and China.
In her latest push, Chen is looking at targets in both the industrial and financial sectors in the U.S. as she sees them supplementing each other and helping Wanfeng grow in the country, without elaborating on the synergies.
“Our acquisitions in the U.S. benefit the local economy there,” said Chen. “The companies have been running very healthily after our acquisition, jobs were secured and tax revenue went up.”
— With assistance by Tian Ying, and Kevin Hamlin