1. The Intelligence Collaborative
http://IntelCollab.com #IntelCollab
Powered by
How Chinese Companies
Make Investment Decisions
in the U.S.
A Complimentary Webinar from Aurora WDC
12:00 Noon Eastern /// Wednesday 1 July 2015
~ featuring ~
Qingjiu (Tom) Tao, Ph.D. Arik Johnson

2. The Intelligence Collaborative
http://IntelCollab.com #IntelCollab
Powered by
Dr. Tom Tao
Dr. Qingjiu (Tom) Tao is an assistant professor of management in the college of business at
James Madison University, Harrisonburg, VA. He received his Ph.D. in Strategic Management
and International Business from University of Pittsburgh in 2004. He served on the editorial
board of JCIM (Journal of Competitive Intelligence and Management) from 2003 to 2009. His
research on alliance portfolio and competitive intelligence has been published in Strategic
Management Journal and Competitive Intelligence Review. He was one of the pioneers in
introducing the concept of Competitive Intelligence into China at mid 1990s. His groundbreaking
work on a survey of competitive intelligence practices has been cited by many CI researchers.
He is also a founding member of SCIC (society of competitive intelligence of China). He has
spoken at the Wharton School, Dartmouth, University of Tokyo, University of Michigan,
AutoUni-VW and testified as an expert before the congressional US.-China Economic and
Security Review Commission on China’s auto industry.
He founded Madison Green Growth Group in 2011 to provide competitive intelligence
consulting and training service to corporations in the U.S. and China. The usual topics and
subject areas offered by him are: Introduction to CI, establishing CI function, operation/IP due
diligence, analytical tools in CI, technology scouting/evaluation. He is also a senior advisor to
Aurora WDC on Chinese market issues.
Email: taoqx@jmu.edu
The Intelligence Collaborative is the online learning and networking
community powered by Aurora WDC, our clients, partners and other friends
and dedicated to exploring how to apply intelligence methods to solve real-
world business problems.
Apply for a free 30-day trial membership at http://IntelCollab.com or learn
more about Aurora at http://AuroraWDC.com – see you next time!

3. The Intelligence Collaborative
http://IntelCollab.com #IntelCollab
Powered by
α Use the Questions pane on your
GoToWebinar control panel and all questions
will be answered in the second half of the
hour.
α You are welcome to tweet any comments on
Twitter where we are monitoring the
hashtag #IntelCollab or eavesdrop via
http://tweetchat.com/room/IntelCollab
α Slides will be available after the webinar for
embedding and sharing via
http://slideshare.net/IntelCollab
α To view the recording and download the PPT
file, please register for a trial membership at
http://IntelCollab.com.
Questions, Commentary & Content

4. Agenda
• Chinese Outward Foreign Direct Investment
– Why OFDI?
– Global Footprint
• China’s Investment in the U.S.
– Who are they?
– Where are they now?
– Their entry modes
– Corporate Governance and Decision Making
• How to research them?
– Existing Sources
– Sources in China, in Chinese

5. Chinese Outward Foreign Direct
Investment
• Why OFDI?
– Macro Economic Factors
• The “new normal”
• Excessive build up of foreign reserve
• Loss of population dividend
– Firm level factors
• Access to global market
• Intense competition at home
• Resource acquisition

6. Chinese Outward Foreign Direct
Investment
• Global Footprint
• Hong Kong 58%
• Latin America 13%
• Offshore financial centers 12%
• Europe 6%
• North America 4%
• Southeast Asia 4%
• Australia 3%
• Africa 3%
• Source: National Bureau of Statistics
– Heritage Foundation

7. Chinese Outward Foreign Direct
Investment
(One belt and one road Strategy)

8. China’s Investment in the U.S.
• Who are they and Why invest here?
• Motivations for investing
• To access the U.S. market 88%
• To enhance corporate image 43%
• To acquire advance technology 37%
• To obtain international well-know brand 23%
• To meet the demand of existing customers 22%
• To reduce dependence on the Chinese market21%
Source: Chinese General Chamber of Commerce-USA

9. China’s Investment in the U.S.
Where are they now?
Source: Forbes 11/05/2014

10. China’s Investment in the U.S.
• Their entry modes
• M&A using mainly assets 34%
• Greenfield Investment 22%
• Joint Venture 11%
• M&A using stock shares 8%
• Major Risks Chinese Firms Face in the US
• Higher Labor Costs 57%
• Slow Economic Growth 46%
• Cultural Differences 45%
• Heavy Tax Burden 41%
• Unfavorable Federal Government Policies 31%
• Motivations of M&A
• Expanding market Share 74%
• Acquiring Technology 45%
• Enlarging Business Scale 45%
• Acquiring Good Assets 42%
• Building a Global Brand 40%
• Source: CGCC US business environment survey 2014

11. China’s Investment in the U.S.
• Corporate Governance and Decision Making
• State Owned Enterprises V.S. Private Firms
Ownership Types State Owned
Enterprises
Private Firms
Ultimate Decision
Maker
Central or Local
Government
Owner/Majority
Shareholder
Investment Style Long term/Strategic
and Aligned with
National Strategies
Market Oriented and
Short term
Market Power Medium to Large
firms with major
resource support
Small to medium
sized firms with more
flexibility

12. How to research them?
• Existing Sources
• American Enterprise Institute and Heritage Foundation
– China Investment Tracker
• The Rhodium Group
– China Investment Monitor
– Issues with these sources:
» Macro economic data oriented
» No longitudinal tracking of firm level actions
» There is room for CI contribution
• Online monitoring (Firstlight, Bottlenose, innography,
etc.)

13. How to research them?
• Conducting Due Diligence in China
• Great information asymmetry between China and U.S.
• Sources in China, in Chinese
– Secondary sources
• Firm credit information system—basic firm info
• Trade mark check
• Patent check
• IPO documents, annual report, press report, website, etc
– Primary approaches
• Local Partners—on the ground, know the terrain
• Onsite visit, phone interviews, pictures, recordings.

14. The Intelligence Collaborative
http://IntelCollab.com #IntelCollab
Powered by
Thank you! Now how about a little Q&A?
Dr. Tom Tao
Email: taoqx@jmu.edu
tomtao1@madisonggg.com
https://www.linkedin.com/in/qingjiutao
The Intelligence Collaborative is the online learning and networking
community powered by Aurora WDC, our clients, partners and other friends
and dedicated to exploring how to apply intelligence methods to solve real-
world business problems.
Apply for a free 30-day trial membership at http://IntelCollab.com or learn
more about Aurora at http://AuroraWDC.com – see you next time!