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US-China Joint
Venture Radar


About the radar

The US-China Joint Venture Radar is a research initiative that provides transparency on US investments in China. It aims at highlighting trends in US outbound investments in China. The interactive map covers over 9000 American Joint Ventures in China and American Wholly-Foreign-Owned Entities (WFOE) analysing stake proportion, decision making power, and business sector in which these companies are active.


Main findings

In-depth research reveals that most outbound foreign investments by the US in China are done in key sectors that are considered of great importance in China. These sectors are part of major national plans such as Made in China 2025, which aims to reduce China’s reliance on foreign technology imports and to invest heavily in its own innovations, and the Military Civil-Fusion strategy, aiming to develop the most technologically advanced military in the world with as few barriers as possible between civilian research and military-industrial sectors.

These investments by the United States can contribute to China’s strategic national policies and development. However, it might also lead to adverse consequences. According to further results, in the majority of the joint ventures, the US party is considered a minority shareholder due to its ownership stake of less than 50% of the shares.

This lack of control for the US in the joint venture can lead to the transfer of potentially sensitive US-owned technologies, the outsourcing of critical manufacturing, as well as a decrease in visibility in the supply chains, since these are often shared between the two countries in the product development process.

As joint ventures do not fall under existing inbound investment screening mechanisms nor export control mechanisms, such risks often go unnoticed. No appropriate regulation or screening procedures are in place, meaning, key US assets are jeopardised. This makes accurate data on US Joint Ventures and WFOEs in China, as provided by this Radar, critical.

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SectorsAnalysing all the established entities (Sino-American and Wholly-Foreign Owned), the top sector is ICT followed by Services and Consumer products and services. The top 500 largest joint ventures showcase the Chemical and basic material sector as the most prominent, followed by Biotechnology and Electronics. This implies that these sectors received a great amount of investments. Furthermore, there are also differences between the jointly established joint ventures and the entities that are wholly owned by the United States party. Findings reveal that the Biotechnology sector has the largest number of joint ventures, while the most investments are made in ICT when examining wholly foreign-owned entities. Above mentioned industries are considered as highly strategic in China’s economic and industrial landscape. Within the ICT sector, advanced techniques and tools are constantly developed; many of these deal with access, storage, transmission and manipulation of information - making the control of this market highly relevant. Likewise, it is considered as one of the most dynamic and fundamental sectors in China. The further listed sectors also contribute to China's national strategic plans, particularly the Biotech industry and the Chemicals and materials industry. The technologies, products, and information utilized in these sectors are supporting China's further pursuit of self-sufficiency. Investments in these sectors therefore contribute to this goal.

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Minority Share versus Majority ShareA large part of these companies is under full control of the Chinese shareholder, resulting in less control for the US partner and significant Chinese influence on the decision-making. In 68% of all the jointly established US joint ventures in China, our research reveals that the US shareholder holds less than 50% of the shares, meaning it is considered as the minority shareholder. Moreover, in 48% of the joint venture, the US shareholder holds less than 1/3 of the shares (33.3%). As these companies are subjected to the new Chinese company law, it implies that these US-Chinese joint ventures are ultimately under full control of the Chinese partner. This, in turn, may lead to technology transfer of potentially sensitive technologies, as well as outsourcing of key activities and reduced supply chain transparency.

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Risk of Chinese State InfluenceFurther research covers the risk of state influence in the top 500 largest US joint ventures in China based on their registered capital. A joint venture with a high risk level of state influence indicates that the ultimate controlling shareholder of the Chinese company is part of the Chinese government, hence, has a controlling share in the joint venture. When the joint venture is considered to have a medium risk of state influence, the Chinese company in the agreement is part of the Chinese government but might not possess a controlling stake in the joint venture. According to our research, 13% of the 500 largest joint ventures have a significant (medium or high) risk of influence by the Chinese government, the remaining joint ventures have a low risk level.

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Risk of Joint Ventures in ChinaOur research showcases some relevant joint venture cases whereby various risks were identified, such as possible technology transfer in strategic sectors, minority stakes leading to less control, undetected links to China’s defence industry, and manoeuvres around US blacklists. Examples of this are the joint ventures that were set up with subsidiaries of Aviation Industry Corporation of China (AVIC). An example here is the American company Collins Aerospace Systems, United Technologies Corporation, now Eldridge Holdings LLC (50%) which has a joint venture with the Chinese AVIC Shaanxi Aero Electric Company Ltd. (SAEC) (50%). AVIC is one of the military-industrial conglomerates that form the backbone of China's national defence industry. After concerns were raised, AVIC and its subsidiaries got blacklisted by the US, meaning stricter export regulations and an investment ban. However, the joint ventures are still operating.