- The Washington Times - Thursday, June 23, 2005

Chinese companies, which already own the companies that make IBM personal computers and RCA televisions, are trying to add more familiar brands to their arsenal, as seen in offers this week to buy Maytag Corp. and energy company Unocal Corp.

The Chinese government has been urging China’s largest companies to be more aggressive in their overseas acquisitions. China is transitioning to capitalism, and government leaders are betting it will be easier for companies to become global corporations if they focus on purchasing well-known brand names instead of trying to build them from scratch.

But analysts said China’s expansion in the United States could trigger the kind of political and public backlash not seen since the 1980s, when the Japanese began gobbling up American businesses.

Capitol Hill lawmakers and other Washington officials are already citing concerns about the Chinese expansion here because China is emerging as an economic and military rival to the United States.

Overall, the level of Chinese investment in the United States pales in comparison to what European and other nations own, analysts said.

China is a minor investor in corporate stocks in the United States, although it overshadows other Asian investors in Treasury bonds.

China traded $361.4 billion in Treasury bonds last year, the second-biggest Asian dealer behind Japan, which traded $1.2 trillion.

Chinese companies are pursuing American businesses more aggressively, picking up the Asian subsidiary of telecommunications giant Global Crossing, IBM’s PC unit and the RCA brand in recent years.

Similar deals are likely in the future, as Chinese companies chase companies that make established global brands, said Donald H. Straszheim, chairman and chief executive of the Straszheim Global Advisors, a Santa Monica, Calif., research firm.

“This is the beginning,” he said.

It is not clear if Unocal will join the Chinese fold, though.

The top officials at the U.S.-China Economic and Security Review Commission, a federal panel that monitors the economic relationship between the United States and China, wrote Senate lawmakers yesterday to call for a “thorough assessment” of the Unocal offer.

The China National Offshore Oil Corp., China’s third-largest oil producer and a state-owned company, offered to buy Unocal for $18.5 billion in cash Wednesday, topping the price Chevron Corp. agreed to pay for the 115-year-old California gas exploration and production company.

China is seeking overseas oil and gas fields to help fuel its $1.65 trillion economy, which is the world’s fastest-growing. The U.S.-China Commission has deep misgivings about a Chinese government-owned company taking control of a major American oil business, said C. Richard D’Amato, the panel’s chairman.

“This is a national security issue for the United States,” said Mr. D’Amato, who signed the letter to the Senate leaders with Roger W. Robinson Jr., the panel’s vice chairman.

Mr. D’Amato said the scope of the Unocal deal should trigger a review by the Committee on Foreign Investment in the United States, a Treasury Department panel that is responsible for scrutinizing foreign purchases.

Treasury Secretary John W. Snow told the Senate Finance Committee yesterday he expected the Chinese company would voluntarily submit its plan for review.

“I would fully contemplate that the parties to a transaction would want to avail themselves of that process,” Mr. Snow said, adding that such a review is still hypothetical because no transaction has occurred.

“If you don’t review this one, the law is meaningless,” Sen. Ron Wyden, Oregon Democrat, told Mr. Snow.

Earlier this week, two California Republicans — Rep. Richard W. Pombo, chairman of the House Resources Committee, and Rep. Duncan Hunter, chairman of the Armed Services Committee — wrote President Bush to urge the administration to review the Chinese offer for Unocal.

The Haier Group, a Chinese manufacturing giant, and a group of other investors earlier this week offered about $1.3 billion to buy Maytag Corp., the troubled company that makes home appliances and Hoover vacuum cleaners.

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