Historic Chinese Acquisition of U.S. Company Indicates New Opportunities for Foreign Direct Investment

Shuanghui International Holdings Ltd.recently acquired Virginia-based Smithfield Foods for $4.7 billion. The transaction marked the largest commercial purchase of a U.S. company by a Chinese firm. But it also marked a turning point for China-U.S. trade relations. In short, both countries stand to benefit from new opportunities for foreign direct investment (FDI).

In September, the Shuanghi-Smithfield deal was approved by the Committee on Foreign Investment in the United States (CFIUS), which is required to review transactions involving foreign purchases of U.S. assets to evaluate national security risks. While some Chinese businesses and investors have historically considered the CFIUS approval process symbolic of the difficulties involved when seeking direct investment into the U.S. market, this recent approval marks a new paradigm for economic opportunities between the two countries.

Supporters of the approval included large and small businesses across a range of industries that understand the importance of broadening trade between the Chinese and American economies. In Arizona, business and government leaders continue to seekChinese direct investment in the state’s commercial ecosystem.

According to the Organisation for Economic Co-operation and Development (OECD), China’s 2012 FDI in the U.S. totaled $5.15 billion, while U.S investment in China was 10 times greater, at more than $51 billion. Overall, the U.S. is only receiving eight percent of China’s more than $62 billion in global investments. This disparity however, highlights extraordinary opportunity for both nations.

In particular, Chinese businesses and investors should consider Arizona, and the Greater Phoenix region, as a key location for their business transactions and ventures. Assets in Greater Phoenix include:

  • Talented workforce
  • Attractive and low-cost business environment
  • Significant growth opportunities
  • Streamlined tax and regulatory system
  • Property rights stability
  • Entrepreneurial spirit

With encouraging signs of economic opportunity, like the recent Smithfield deal, both China and the U.S. can work together to develop prosperous trade and economic growth opportunities.

For more information about investing in the U.S., contact Ryan Morgan with the China-Arizona Alliance – a joint partnership between the state’s premier economic development groups, Arizona State University and Green Card Fund. He can be reached at rmorgan@gpec.org. There is also an international toolkit, which provides a blueprint for foreign direct investment in the U.S. and, specifically, Arizona.

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