Chinese firms are increasingly finding it cheaper to build factories in America.
In a strange sort of role reversal, Chinese companies are looking at setting up factories in America. With rising land costs, unreliable electricity and a stronger currency, it has started becoming cheaper for some Chinese companies to set up plants in America instead of back home. Chinese company Yuncheng’s American Yuncheng Gravure Cylinder plant in South Carolina is a case in point. The company bought land in Spartanburg for one fourth the cost of a similar sized property in Shanghai. Even with the more expensive American workers they have to hire, Chinese companies are finding US to be a better and less expensive place to set up shop, with several American states offering tax credits and other incentives to lure Chinese manufacturers.
From an average $500 million a year, direct investments from Chinese companies in the US have grown up to $5 billion in the last year alone.
Chinese firms last year acquired or announced they were starting more than 50 U.S. companies. And when China finally allows the value of its currency, the yuan, to appreciate — and it’s just a question of when — Americans can expect to see Chinese projects, small today, really take off and have an impact on the U.S. economy. This could be a good thing for relations between the two countries.