Chinese tycoon says Trump will be ‘practical in absorbing foreign investment’

Yuan Yafei, maker of the first multimillion investment in the US after Donald Trump’s election victory, talks to the Post

PUBLISHED : Sunday, 05 March, 2017, 5:32pm
UPDATED : Sunday, 05 March, 2017, 10:59pm

The chairman of the Chinese buyer of British department store House of Fraser and a US biopharmaceutical unit under a Canadian drugmaker said he would be on watch for more asset purchases in the health care and consumer sectors on overseas markets this year.

Yuan Yafei, chairman of Sanpower Group, said his desire to invest in the United States had not been dampened despite the protectionist sentiments of the latest president of the US, Donald Trump. Yuan spoke to the South China Morning Post on the sidelines of the “Two Sessions” meetings in Beijing on Friday.

Sanpower, based in eastern Nanjing in Jiangsu province, in January took part in the first multimillion-dollar acquisition by China in the US after Trump’s victory, with an agreement to buy cancer unit Dendreon from Canada’s embattled Valeant Pharmaceuticals International for US$819.9 million in cash.

Yuan said Sanpower would soon introduce Dendreon’s products to the mainland market.

“He (Trump) seems to be an aggressive talker, but I think he is practical regarding absorbing overseas investment. He will be glad if money is coming into the States,” he said.

“What Trump is doing now is similar to what China did 10 years ago,” Yuan said, which involved expanding fixed asset investment, and introducing more aggressive fiscal and tax policies.

Chinese acquisitions in the US hit record levels last year, totalling US$51 billion compared with ­US$11.7 billion in 2015, according to Mergermarket.

But worries have been growing that the cross-border buying spree may be put to a halt because of Trump’s anti-globalisation stance, as well as the rising call from Washington to restrict Chinese acquisitions of advanced technology and cultural assets.

On the other hand, China has been imposing stricter capital account rules since late last year, to curb further devaluation of its currency and the decline of the world’s largest foreign currency reserve.

Cross-border merger and acquisitions (M&A) deals are under particular scrutiny by banks.

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However, Yuan said he did not feel his dealings had been affected.

“The central government is still supportive of M&A deals that offer positives to the real economy,” he said.

“I really think as the top two biggest economies, China and the United States should co-exist,” Yuan said.

Given that more Chinese companies are buying assets in the US, the Chinese government should find ways to keep good companies onshore, by creating favourable conditions and learning from the US, including reducing tax pressures, he added.

Yuan, a former government official, established Sanpower in 1993, selling computer devices.

The company grabbed global headlines in 2014, when it bought London-based House of Fraser, with £155 million. Sanpower now owns 89 per cent of stake of the 168-year-old store.

It opened a Nanjing chain store under the brand in December 2016, after reports by foreign media including the Financial Times said former key House of Fraser executives had left the company owing to integration clashes.