China's High-Tech Surge - Investing in America and Innovation

In April 2014, Asia Society and the Rhodium Group launched a report on Chinese high technology investment in the United States. The study surveys the state of play and is intended to provide common ground for the ongoing debate, often ideological and acrimonious, over U.S-China high tech trade and investment in sectors such as information technology, life sciences, and clean technology.

Key topics include drivers of Chinese high-tech investment, current trends, and risks and opportunities for the U.S. posed by the investment boom. The report also offers a series of recommendations to policymakers and business leaders in both the U.S. and China.

Drawing from the Rhodium Group’s proprietary database of Chinese investment in the U.S., the report’s scope is national, but given the industry’s distribution, it is the most relevant to audiences in California, New York, and other high-tech clusters in the U.S. The report is co-authored by Daniel H. Rosen and Thilo Hanemann of the Rhodium Group.

The new study builds on two previous Asia Society-Rhodium Group efforts, An American Open Door? Maximizing the Benefits of Chinese Foreign Direct Investment (April 2011), which looked at Chinese direct investment into the U.S.; and Chinese Direct Investment in California (October 2012), which focused on investments in California.

As Chinese outbound investment shifts from natural resources into more advanced, innovation-intensive industries, a rapidly increasing share is going into U.S. IT, cleantech, biotech, advanced transportation, and more. What are the hottest sectors drawing the most Chinese investment? Which Chinese firms are leading the surge and what is driving them? What are the economic and political factors behind these investments, and what are the most serious challenges they face? What is the impact on U.S. jobs, the tax base, and national security?

Welcoming Remarks

Jonathan Karp
Executive Director, Asia Society Southern California

Jonathan Karp joined the Asia Society as executive director of the Southern California center in January, after a distinguished career in journalism, including nearly a decade in Asia. Most recently, he served as Senior Editor at Marketplace radio, leading the business and finance coverage for their family of public radio shows. Karp began his career in journalism in Israel in 1986 and continued as a foreign correspondent based in Hong Kong, New Delhi and Sao Paulo, the last two posts as a staff writer for The Wall Street Journal. In 2004, he moved with the Journal to Los Angeles, where he has lived since with his wife and twin daughter and son.

Bruce Pickering
Vice President of Global Programs, Asia Society

Dr. N. Bruce Pickering was appointed Asia Society Vice President for Global Programs in July 2012. He continues to serve as Executive Director of the Asia Society’s Northern California Center. He has an extensive background in government, nonprofit organizations and academia. He served as the Director of Public Affairs and Development at the Graduate School of Journalism and Special Assistant to the
Director of the Institute of East Asian Studies at UC Berkeley and as Program Director of the World Affairs Council from 1997-1999. From 1981 to 1993, Pickering was a Foreign Service Officer with the U.S. Department of State, specializing in Political and Arms Control issues, and was Deputy Political Counsel on the U.S. Delegation to the Conference on Security and Cooperation in Vienna during the collapse of the Soviet Union and the creation of the “New Europe” from 1988 to 1992.

Mike Margolis
Partner, Blank Rome LLP

This video is also available on the USCI YouTube Channel.

Report Findings

Thilo Hanemann
Research Director, Rhodium Group

Thilo Hanemann is research director at RHG and leads the firm’s cross-border investment work. He coordinates RHG’s research across different practice areas and supports the investment management, strategic planning and policy analysis requirements of RHG clients within his fields of expertise. Hanemann’s research on cross-border investment assesses new trends in global capital flows, related policy developments and the political and commercial dynamics of specific transactions. One of his areas of expertise is the rise of emerging economies as global investors and the implications for host economies and the global economy. His most recent work focuses on the evolution of China’s international investment position and the economic and policy implications from this new trend.

This video is also available on the USCI YouTube Channel.

Panel 1 - Trends in Chinese High Tech Investment

Speakers:
Lixin Cheng
Chairman and CEO of ZTE (USA) and President of North American Region

Lixin Cheng joined ZTE, a Shenzhen, China, based telecommunications company, in June 2010. He currently serves as Senior Vice President of ZTE Corporation, President of ZTE North America Mobile Devices Business Unit and Chairman and CEO of ZTE USA. Cheng
has built ZTE’s North America handset business into the fourth-largest smartphone vendor, from a market share of nearly zero in 2010. Before moving to the United States in 2001, Cheng was the Vice President of Sales and Supply at Ericsson Panda, where, in three years, he grew annual sales tenfold to $1.6 billion and localized the supply chain in China. In the U.S., he helped Ericsson Wireless develop its CDMA business in various international markets. As the President of Axesstel, he increased the startup’s sales from $4 million to $95 million. He also founded the ALA Group, a consulting service for technology companies that want to increase their penetration in the U.S. and Asia. Cheng also serves on the Board of Directors of CommNexus, a San Diego-based nonprofit technology-industry association, which works to accelerate the formation, growth and success of technology.

Mark S. Greenfield
Partner, Blank Rome LLP

Mark S. Greenfield represents U.S. and international clients in a broad range of industries including energy, healthcare, medical devices, technology, biotechnology, software, pharmaceutical, manufacturing, gaming, hospitality, media and entertainment, and financial
services. Greenfield has done a considerable amount of work in Asia and with Asia-based clients. He also regularly provides expert testimony in the areas of corporate governance and healthcare, and he has served on numerous corporate boards, including audit committee assignments. He is an active member of the World Presidents Organization and a former member of the Young Presidents’ Organization. Greenfield also has substantial business leadership and executive experience. His executive experience includes serving
as the President and CEO of an independent oil and gas exploration company, Chairman of a hospitality company operating upscale restaurants and the Interim President and CEO of a software developer and distributor.

Mark Horn
Senior Managing Director, Technology Banking, East West Bank

Mark L. Horn has nearly 35 years of commercial banking experience working with startup entrepreneurs, small and medium-sized businesses through Fortune 1000 multinational corporations. For the past 16 years, he has focused almost exclusively on technology-based companies and the private-equity sponsors that fund these rapidly evolving businesses. Prior to joining East West Bank, Horn co-managed the Equity Fund Services Group at Comerica Bank, where he contributed to the rapid growth of that business segment during one of the most challenging commercial banking environments. Originally from Chicago, Horn studied finance and economics at the University of Illinois. He also received an MBA from the University of California at Berkeley in Finance and Organizational behavior/Industrial Relations.

Kenneth Petrilla
Executive Vice President, Head of China Desk, Wells Fargo International Group

Kenneth J. Petrilla manages a country desk that facilitates China-related opportunities involving Chinese companies doing business in the U.S. and wholesale customers doing business in China. The China Desk acts as the central coordinator for China initiatives and inquiries within Wells Fargo and manages relations with Chinese government representatives in the U.S. and a variety of influential external organizations. Petrilla is a longtime Wells Fargo executive and has held many positions within the bank, including regional head of Europe, the Middle East and Africa.

Ken Wilcox
Chairman, Silicon Valley Bank

Ken Wilcox currently serves as President of SPD Silicon Valley Bank and Chairman of Silicon Valley Bank. He was previously CEO of SVB Financial Group. In that role, he successfully pursued a strategy of expansion and diversification, while remaining focused on the group’s core niches of technology, life sciences, venture capital and premium wineries. Wilcox is the member of the Asia Society, the Equilibrium Capital Group, and the Young Adult and Family Center at University of California, San Francisco. He is also an executive committee and board member of the Bay Area Council and an adjunct professor at Fudan University in Shanghai. Wilcox was a member of the board
of directors of the Federal Reserve Bank of San Francisco from 2006 to 2012. In 2008, he was named “Banker of the Year” by American Banker. He earned the distinction of “Entrepreneur of the Year” by Ernst & Young in 2009, and in 2010 the Yangpu District of Shanghai honored him with an “Innovation Contributor Award”. In 2013, the Shanghai Municipal Government presented Wilcox the “Magnolia Silver Award,” which is a municipal honor given to expatriates for their outstanding contribution to the city's economic, social or cultural development. Wilcox earned a master’s of business administration from Harvard Business School.

Moderator:

Clayton Dube
Executive Director, USC US-China Institute

Clayton Dube has headed the U.S.-China Institute at the University of Southern California since it was established in 2006. Dube first lived and worked in China from 1982 to 1985. He has won teaching awards at three universities and received the 2012 Perryman Fund Social Studies Educator of the Year Award. Trained as a socio-economic historian, Dube’s work focuses on the impact of economic and political change on Chinese society and on the multifaceted and evolving U.S.-China relationship. Dube serves on the editorial board of Education about Asia, was associate editor of the academic quarterly Modern China, and has produced or consulted on several documentary films, including the institute’s Assignment: China series about American media coverage of China from the 1940s to today. Dube is co-moderator of Chinapol, a fellow of the USC Center on Public Diplomacy, and a director of the National Consortium for Teaching about Asia. He’s frequently cited by the American and Chinese media.

This video is also available on the USCI YouTube Channel.

Panel 2 - Drivers and Barriers to Investment

Speakers
Lixin Cheng
Chairman and CEO of ZTE (USA) and President of North American Region

Ivan Schlager
Partner, Skadden, Arps, Slate, Meagher & Flom

Ivan A. Schlager is a partner in Skadden’s Washington, D.C., office and head of the firm’s CFIUS, National Security and Cross-Border Transactions practice. He represents a diverse group of clients ranging from defense companies, major telecommunication providers, and media and technology companies to private equity firms. Schlager provides counsel on structuring, negotiating and documenting transactions to address regulatory issues including approval by CFIUS, the Committee on Foreign Investment in the United States. He also has assisted in the development of successful regulatory and legislative strategies for major M&A transactions. Schlager has been involved with a series of landmark transactions including representing Alcatel in its merger-of-equals with Lucent Technologies, one of the largest and most complex Exon/Florio cases filed with CFIUS. Other representative transactions include: China Three Gorges Corporation in its
acquisition of a stake in Energias de Portugal S.A. and China Huaneng Group in its acquisition of a 50 percent stake in InterGen N.V.

Thilo Hanemann
Research Director, Rhodium Group

Moderator
Jonathan Karp
Executive Director, Asia Society Southern California

This video is also available on the USCI YouTube Channel.

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