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For China, First the Waldorf, Then the World [Copy link] 中文

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Post time 2014-10-8 08:32:11 |Display all floors

Bloomberg


Last month, while holidaying in New York City, I happened upon the glare of a dozen live television cameras while walking past the Waldorf Astoria. The fuss was over Alibaba's investment roadshow, then unfolding inside the hotel's famed ballroom.


The chaotic scene now strikes me as ironic given that the venue Jack Ma chose to stage China's big coming-out party will soon be in Chinese hands. In a head-turning deal, Anbang Insurance Group shelled out $1.95 billion for the 1,232-room Park Avenue landmark. The purchase immediately brings to mind Japan's vanity shopping spree in the 1980s, which included California’s Pebble Beach golf course, New York’s Rockefeller Center and loads of Renoirs and Picassos. The U.S. survived that round of acquisitions, and its economy is far more vibrant than Japan's today. A Chinese wave of overseas investment, however, is likely to be far more disruptive and unsettling.


Part of the problem involves America's own China policies. For years, the U.S. has demanded that the mainland let its currency appreciate. Since the day Lehman Brothers collapsed in September 2008, the yuan has risen 11.4 percent. Obviously, a stronger yuan means a cheaper America. Already, Americans living in cities from Seattle to Queens, New York, have seen their neighborhoods transformed by Chinese demand (some of it from Communist Party officials stashing ill-gotten gains in overseas real estate, no doubt). In Hong Kong, Sydney and Vancouver, such house-buying sprees have led to rising prices and increasing resentment among locals.


Exchange rates are hardly the only issue, however. Japan's 1980s land grabs reflected little more than bubble-era hubris: high-profile transactions that led to more publicity than profit. China has even deeper pockets -- as well as a Beijing-led desire to dominate new markets. The nation is brimming with $4 trillion of currency reserves, untold numbers of newly-minted billionaires and a vast array of government-loyal entrepreneurs ready to sign checks for the good of the motherland.


Any Chinese buying spree will almost surely involve more than cherry-picking this property or that one. Despite official rhetoric, the Beijing regime shows little patience for building the country's roster of global corporate powerhouses. China figures it's easier to buy established overseas names -- IBM's personal computer business, for example -- than to build its own. No doubt Hewlett-Packard, which is spinning off its personal-computer division, will see the prefix "+86” -- China’s country code -- on some incoming calls soon.


China hopes to buy its way into a dominating positions in markets from technology to agriculture to aerospace to biotechnology to retail to entertainment to education. The breadth of Tokyo's corporate assault had lawmakers buzzing about a Japan Inc. colonizing the U.S. in the 1980s. China's may feel like an all-out invasion to Wall Street and Main Street alike.


Needless to say, this will not go down easily. Political concerns have scotched deals in the past, such as Chinese oil giant CNOOC's attempted purchase of Unocal in 2005. But Washington couldn't kill last year's bid by Shuanghui International Holdings for hog producer Smithfield Foods on national-security grounds, and no one's suggesting there's any reason to block the Waldorf sale. More and more of these deals are inevitably going to go through.


Washington must resist the urge to indulge in the protectionism it abhors in less-developed nations. Nevertheless, it's time to craft clearer laws on which companies can and can’t be bought and why. That includes more precise definitions of what constitutes "national interests" and "national security" concerns, to ensure legal certainty. The U.S. also should demand greater detail on where funds are coming from. Part of the exercise, of course, will be discerning where balance sheets of state-connected Chinese companies begin and the Communist Party ends.


Like it or not, China's outward expansion could eventually reach all sectors and facets of Americana as we know it. Is the U.S. ready? I see no evidence it is.


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Post time 2014-10-8 15:53:41 |Display all floors
I for one welcome Chinese money and Chinese investment everywhere. Just as long as Chinese investors respect the laws and develop the business to maximize all shareholder's profit no one should oppose the investment.

When can foreign investors do the same in China?

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Post time 2014-10-8 21:32:59 |Display all floors
Thanks for posting this. Nice to see Bloomberg articles make it back into China, since their website has been blocked.

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Post time 2014-10-8 23:58:43 |Display all floors
MrMao Post time: 2014-10-8 21:32
Thanks for posting this. Nice to see Bloomberg articles make it back into China, since their website ...

Yes, CPC didn't appriciate Bloomberg's story about top leaders stolen assets. The craziest part of the report was that Wen Jiaobao's mother is a big owner of Ping An insurance company. A woman who has been house wife her whole life

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Post time 2014-10-9 00:10:23 |Display all floors
mixamixa Post time: 2014-10-8 23:58
Yes, CPC didn't appriciate Bloomberg's story about top leaders stolen assets. The craziest part of ...

It was the New York Times that got blocked for the Wen story. Bloomberg got the axe for its piece on Xi's extended family. When the NYT article came out, there was talk of a lawsuit but that never happened. Both stand by their stories.

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Post time 2014-10-9 00:15:41 |Display all floors
not a smart move by china to purchased such a landmark property especially not from or by an individual but a company...'cause in the near future if anythin sour 'tween dem  nations it will retaliation by its people  
a man who uses his hands is a laborer. one who uses his hands and his mind is a craftsman. but he who uses his hands, his mind, and his heart, is an artist...

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Post time 2014-10-9 00:18:36 |Display all floors
youknowhat Post time: 2014-10-9 00:15
not a smart move by china to purchased such a landmark property especially not from or by an individ ...

The hotel was not bought by China, but Chinese insurance company Anbang. I'm sure they will make a lot of money from Chinese tourists visiting NYC.

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