A galloping start in US investments

Approved deals

CFIUS - which reviews sensitive deals in particular - has failed past cases of Chinese telecom-equipment maker Huawei Technologies, citing "national security" reasons.

However, last year it approved China's auto-parts maker Wanxiang's purchase of the A123 Systems for $257 million and meat producer Shuanghui (now WH Group) taking over pork giant Smithfield Foods for $4.7 billion were good omens to Chinese investors.

Jonathan Gafni, president of Compass Point Analytics LLC, which advises companies on CFIUS-related issues, said previous failed deals with Huawei and ZTE were on networking infrastructure while the Motorola deal is about a handset company.

Given Lenovo's previous purchase of IBM's PC unit back in 2005, it should be "manageable" because "Lenovo is an established player in the US", said Gafni, who served as deputy national intelligence officer for CFIUS Support within the Office of the Director of National Intelligence. The 2005 deal went through even when IBM devices were widely used in the US government.

Gafni pointed out that one potential concern would be that there is "sensitive information" relating to the customers of Google - which owns Motorola - that the US government doesn't want to share with any foreign companies.

Also, if any part of the transaction that concerns licensing from Google, it can be another potential issue because CFIUS doesn't independently look at licensing transactions. It looks at acquisition of control.

"But if the licensing of the certain intellectual property is something you cannot separate from the rest of the transaction, in this case CFIUS might want to consider these issues and to see if they are 'sensitive technology'," Gafni said, which he adds, might prolong the review process but not necessarily mean it will fail.

Ni Pin, president for Wanxiang America, says CFIUS is just "a process issue".

"As long as you are transparent, you follow the procedure and follow the rules, and address the issue, then it should be OK," Ni said after the deal was closed.

As for 2014, Aaron Brickman, deputy executive director of SelectUSA within the US Department of Commerce, said that it is going to be "exciting" for Chinese investment in the US. He said he based his optimism on "successive years of increased bilateral engagement between companies from our countries."

SelectUSA was established in 2011 by executive order of President Barack Obama. The government-wide program encourages and facilitates foreign direct investment (FDI) in the US and reshoring - the reversing of outsourcing of business operations back to the US - to create jobs and spur economic growth.

China is the 26th largest investor in the US, according to the US Bureau of Economic Analysis.

"There is still a relatively small amount of Chinese investment in the US, but this is growing," Brickman said. "No company is truly global unless it is in the US and we got the job creation here and another global brand here, it's a truly win-win."

Brickman said Chinese investment "learns from one deal at a time" and Chinese companies succeeded in the US "on a case-by-case basis".

"We see that the learning curve getting less steep for Chinese companies in terms of Chinese firms succeeding and finding partners here," Brickman said. "We are seeing a second generation of Chinese companies now who have the luxury of following their peers, of seeing success stories and good case studies about how to engage in the US."