About FDI Gateway

If all politics is local, then investment, too, is often subject to the same principleLocation matters.

Unlike trade, which takes place at a country’s border, investment is tied directly to the specific location where an investor chooses to build a factory, hire a worker, or acquire an asset. Investors of any type need to operate within the confines of the local environment and must work with or hire local workers.

Chinese investors in America are no exception. While this topic is now subject to contentious political debate, especially in Washington, aspects of this debate can be confounding because Chinese investment in the United States is increasingly diverse and thus difficult to paint with a single brush.

As an institute based in the US heartland, we have a unique perch from which to observe how distinctively local businesses, state governors, city mayors, and local economic development agencies across the United States are on the frontlines of adapting to the arrival of Chinese money. And we have focused in particular on how they can help to ensure that this money benefits local American economies.

Attracting even domestic investors can be challenging for a US state; it is tougher still when a foreign investor is involved. For their part, all but the most sophisticated Chinese investors lack sufficient understanding or knowledge of individual US states and cities, or how to scope opportunities and places where they might seek to deploy their capital.

For the US side, many states and municipalities have minimal knowledge, at best, of actual Chinese firms and potential investors, their corporate structures, or how their capital and investment ideas may or may not complement local American economic needs.

These persistent problems of information asymmetry can raise market entry barriers. To address that asymmetry, we have leveraged our perspective and insight, as well as extensive research on investment, to offer some solutions in our new FDI Gateway.

With the launch of FDI Gateway, a free and accessible knowledge hub, we aim to offer something to both US communities and companies and would-be Chinese investors. The product has two components because investment requires personal interactions between companies and local-level stakeholders.

First, the China-facing component aims to provide Chinese investors with a better understanding of the local conditions and communities in which they might invest. Second, and more important, as a nonprofit American institution serving the public interest, we have an obligation to help US states and other interested parties scope out potential Chinese investors they probably have never heard of or even considered as possible partners.

Knowledge and transparency are essential if productive, job-creating cross-border investment is to become sustainable and enduring. Through this interactive and rich knowledge hub, new connections between US stakeholders and Chinese investors can be established, opportunity scoping can be narrowed, and pipelines may be built.

Key Features

Know the States

Many Chinese investors, particularly smaller private players, simply will not be able to point to Illinois or Wisconsin on a map, just as many American businesses may not be able to tell Hubei from Hebei, or Hunan from Henan, even though these provinces are, in fact, the size of some European countries.

But when it comes to investment, location matters a lot. For Chinese investors, the first step is to acquire some understanding of the place (i.e., the state) in which to invest, as well as how one state compares to any other across key metrics.

Our FDI Gateway goes beyond a simple “fact sheet” to provide potential Chinese investors with what they must know about a particular state. This includes, but is not limited to, a state’s economic health, key industrial strengths, labor conditions, general business costs, and experiences as a recipient of foreign investment—all easily accessible through interactive maps.

We are initially focusing on the Greater Midwest because it is a region that has punched below its weight in terms of receiving Chinese investment—and because we are headquartered in Chicago. Over time, we will scale up to cover all 50 states.

Chinese Firms Database

Whether searching for capital or just seeking strategic partnerships, for the uninitiated American firm, scoping out Chinese companies can be daunting. The sheer volume of firms, all of them eager to hand out business cards or WeChat handles, is overwhelming.

So the core purpose of our database feature is to help solve this initial “discovery” problem for US states and firms—to initiate a “virtual handshake”—when it comes to scoping out Chinese investors and firms.

This feature is designed to help narrow the range of opportunities and facilitate a more targeted approach to the discovery of partners. In other words, we do the curating, and we do this diligently.

First, we have established specific sectors that we believe offer complementarities between US and Chinese economic needs and present sizable opportunities for participants in both markets. We then ensure that all Chinese firms in the database, at the outset, are publicly listed and private firms that have been subject to our “Minimum Level of Vetting” (MLV) process.

This database, to our knowledge, is the only one of its kind that is publicly available and free for users. The number of sectors and firms in the database will be scaled up and maintained regularly until all key business sectors are covered.

Users in both the public and private sectors may wish to return frequently to find an ever-expanding roster of Chinese firms and a valuable resource for discovering and getting to know potential Chinese investors.

Data Sources and Disclaimer

The Chinese Firms Database has been created from a wide array of sources that include, but are not limited to, the firms’ financial reports, corporate information, financial databases, equity research, legal filings, media coverage, and direct contacts. As noted above, our team conducts an MLV process that includes a close examination of the firm’s core businesses, financial performance, past and existing litigation issues, and global market experience.

We strive only to include firms with sensible business track records and outbound investment potential, according to our best assessment. We cannot guarantee the quality of every single Chinese firm in our database, since it is solely based on open source information and meant to be generally useful to interested parties.

The state profiles have been created from open sources that include, but are not limited to, Bureau of Economic Analysis, World Bank, Bureau of Labor Statistics, US Census Bureau, Department of Labor, Department of Transportation, and other federal agencies.

We have also consulted resources from independent research institutes such as the Carnegie Classification of Institutions of Higher Education and the Tax Foundation. State governments and related state-level investment and economic development agencies also contributed to this product as our partners.

MacroPolo is strictly a nonprofit, thus this product is not intended to serve as professional investment advice in any way.

We hope you find FDI Gateway useful, and we welcome your feedback and suggestions on how to improve this product. For all inquiries please write to jma@paulsoninstitute.org.