A piece last week in the Wall Street Journal gave us reason - again - to question the ownership of Chinese companies buying assets in the U.S. The line I liked the best was a quote by Bruno Rashchle, vice chair of private-equity firm Schroeder Adveq - no stranger to these kinds of deals - “You never know who is really behind a company - an individual or the government - or somethings the government using individuals or making use of individuals.”
This particular case is that of XIO, the purchaser of J.D. Powers. That company we know as the one that regularly publishes quality surveys about cars, among their other businesses. Apparently, it is a little difficult to find the funding stream that allows the billion dollar sale, which had already gone through before it was questioned.
The rest of the article sounds like it was written by a Chinese news outlet, focusing on all the potential cultural differences that make the Chinese financing appear to be suspect. Maybe it is suspect because it is so hidden, mixes Goverment financing with private equities, and denies any government involvement in companies we know are being financed by the central government.
The Chinese have a long history of adapting to changes in global policies. They know that government involvement in businesses buying on the commercial market is a bad thing. We have lately questioned the purchases of several businesses in the US because China was subsidizing an industry, or had large stakes in firms. These are foreign influence over businesses that in the US would be independent of such influence. We stop sales by some of them. The Chinese have adapted and hide the source of their funding, pretending they are independent companies with no ties to the government. I think Mr. Rashchle is right. We should be suspicious of any Chinese company buying anything in the US. We don’t know if the Chinese government is buying, or someone else.
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