It is extremely difficult to find Chinese angel investors looking to make investments in U.S. companies, and the possibilities of finding one are remote, said Brooke Borden, principal with Virchow Krause Capital LLC.
However, with the growing outflow of capital from China, more Chinese interests are interested in acquiring American companies, Borden said.
“There are certain types of businesses that are of extreme interest to the Chinese,” Borden said. “A lot of manufacturers in China want to come to the U.S. and buy a brand or some kind of exclusive distribution channel or some type of product that they can make in China and then own the distribution and the brand in the U.S.”
Borden said he and his colleagues have noted that Chinese manufacturers looking to make acquisitions in the United States have mainly sought after clothing brands or other consumer goods.
“They have been going after the low-hanging fruit like bicycle parts or clothing manufacturers – things along the lines of what they have been manufacturing and importing,” Borden said. “We’ve seen one who has been making bicycle parts who wants to buy a bike company.”
Chinese investors are not paying much attention to Wisconsin firms now because most of the state’s companies are not prominent, national brands, Borden said. However, as Chinese firms make more acquisitions in the United States, they may look at firms that are well-known niche manufacturers for possible purchase, Borden said.
As China relaxes its rules about foreign acquisitions, Chinese investors will be more interested in acquiring American companies in the $10 million to $20 million range, Borden said.
March 18, 2005, Small Business Times, Milwaukee, WI
