In the news: Guangdong factories face an uncertain future, a Chinese company in the U.S. deals with cultural differences and ChemChina offers $43 billion to buy Syngenta

Chinese company in Alabama, U.S.A. deals with labor union

A Chinese company that opened a factory nearly two years ago in a rural town in Alabama, U.S.A. to make pipes used in air conditioning machinery says it has tried hard to please its American workers despite facing growing union troubles. The company, Golden Dragon Precise Copper Tube Group, or GD Copper, created about 290 jobs for locals with the $120 million plant in the county, one of the poorest in the U.S. State and local agencies have provided land, roads, worker-training programs, tax breaks and other incentives to attract the Chinese company. Since the 1980s, many U.S. companies that raced into China have failed – some due to mismatches in local partnerships or selling products that don't cater to Chinese tastes. It's interesting to see that the tables have turned, now that a number of Chinese companies are navigating these challenges and learning how to operate in the U.S., including dealing with active and demanding workforces that their home country has long been notorious for.

Banks line up to fund $43 billion ChemChina-Syngenta deal

State-owned China National Chemical Corporation, or ChemChina, is asking banks for more than $30 billion worth of loans to fund its $43 billion acquisition of Swiss pesticide and seed company Syngenta AG. Although this follows several recent multi-billion outbound deals by Chinese companies, this one is unique in that ChemChina, as a non-publicly traded company, can't issue stock to public shareholders to raise cash for the deal. The result: big checks written by banks. Sources say HSBC, Credit Suisse, Rabobank and UniCredit have underwritten a $20 billion bridge-loan package that they will invite other banks in Europe to join, while China Citic Bank will separately launch a syndicated loan of up to $15 billion or so – depending on how many Chinese entities join the consortium – in Asia this month. This is another big spend for ChemChina, which bought Italian Formula One supplier and maker of tires Pirelli just last year. The financing arrangement for that $7.37 billion acquisition was incredibly vast and complex – in fact, our sibling publication The Asian Lawyer prized it the “Finance Deal of the Year: Banking” in the 2016 Asia Legal Awards held last week. However, the Syngenta deal, which is nearly six times the size, is also subject to what will most likely be a very lengthy – and strict – U.S. national security review, as CFIUS is said to scrutinize whether the takeover will compromise American food security as well as whether the combined firm's locations would be too close to U.S. military bases.

China factories face workforce woes

Millions of migrant workers streaming back to China's industrial hubs after the two-week long Chinese New Year break are facing an uncertain future, as smaller factories in particular struggle to cope with decreasing orders and rising inventories. In the Pearl River Delta in southern Guangdong province, which accounts for around a quarter of China's exports, workers and business owners say production lines have been slower than usual to restart after the holiday. An increasingly active and connected workforce in the country is demanding better salaries, food, accommodation and fair benefits. The relative slowdown in the economy is bad news for China's policymakers, who are scrambling to maintain financial and social stability. An official in Dongguan, a major industrial city near Shenzhen and Guangzhou, said 39,000 enterprises shut down there last year (though he stressed there were more businesses newly registered than those that closed). Several factory owners have suggested the chances of labor disputes or strikes occurring were increasing. Companies need to have effective employee-employer communication systems and emergency plans in place, continue to pay workers their correct wages and all social insurance benefits and monitor social media for any rumblings of discontent or large-scale actions.

Chinese company in Alabama, U.S.A. deals with labor union

A Chinese company that opened a factory nearly two years ago in a rural town in Alabama, U.S.A. to make pipes used in air conditioning machinery says it has tried hard to please its American workers despite facing growing union troubles. The company, Golden Dragon Precise Copper Tube Group, or GD Copper, created about 290 jobs for locals with the $120 million plant in the county, one of the poorest in the U.S. State and local agencies have provided land, roads, worker-training programs, tax breaks and other incentives to attract the Chinese company. Since the 1980s, many U.S. companies that raced into China have failed – some due to mismatches in local partnerships or selling products that don't cater to Chinese tastes. It's interesting to see that the tables have turned, now that a number of Chinese companies are navigating these challenges and learning how to operate in the U.S., including dealing with active and demanding workforces that their home country has long been notorious for.

Banks line up to fund $43 billion ChemChina-Syngenta deal

State-owned China National Chemical Corporation, or ChemChina, is asking banks for more than $30 billion worth of loans to fund its $43 billion acquisition of Swiss pesticide and seed company Syngenta AG. Although this follows several recent multi-billion outbound deals by Chinese companies, this one is unique in that ChemChina, as a non-publicly traded company, can't issue stock to public shareholders to raise cash for the deal. The result: big checks written by banks. Sources say HSBC, Credit Suisse, Rabobank and UniCredit have underwritten a $20 billion bridge-loan package that they will invite other banks in Europe to join, while China Citic Bank will separately launch a syndicated loan of up to $15 billion or so – depending on how many Chinese entities join the consortium – in Asia this month. This is another big spend for ChemChina, which bought Italian Formula One supplier and maker of tires Pirelli just last year. The financing arrangement for that $7.37 billion acquisition was incredibly vast and complex – in fact, our sibling publication The Asian Lawyer prized it the “Finance Deal of the Year: Banking” in the 2016 Asia Legal Awards held last week. However, the Syngenta deal, which is nearly six times the size, is also subject to what will most likely be a very lengthy – and strict – U.S. national security review, as CFIUS is said to scrutinize whether the takeover will compromise American food security as well as whether the combined firm's locations would be too close to U.S. military bases.

In the news: Guangdong factories face an uncertain future, a Chinese company in the U.S. deals with cultural differences and ChemChina offers $43 billion to buy Syngenta

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