Chinese enterprises favor greenfield investment in US: Survey

NEW YORK - Greenfield investment is the most common initial structure for Chinese investors in the United States, according to a business report released Wednesday.

The report, named 2018 Annual Business Survey Report on Chinese Enterprises in the United States, was released by the China General Chamber of Commerce - USA (CGCC).

A greenfield investment is a type of foreign direct investment where a parent company builds its operations in a foreign country from the ground up.

Nearly 40 percent of the Chinese companies surveyed established their foothold in the United States with new business entities, and another 30 percent began operations through a representative office, according to the report.

Acquisition by direct purchase of an entire corporate entity or of an entity's operating assets was used by only 28 percent of survey respondents to start their business in the United States, said the report.

The report said Chinese companies prefer the greenfield strategy largely because it offers optimal managerial control over the business during its earliest days. By establishing a new business entity, companies are also more likely to receive tax credits, infrastructure improvements, and other inducements from local governments in the United States.

Meanwhile, nearly 60 percent of respondents said headcount rose in 2017. The same percentage expect to increase their workforce in the next two years. The percentage of locally hired employees also rose year over year.

As the largest non-profit organization representing Chinese enterprises in the United States, CGCC has 1,500 member companies. The organization's Chinese member companies have collectively invested over $120 billion and employ more than 200,000 throughout the United States.