In a little publicized coup, Chinese martial artists have stormed the White House. The White House Theater, that is.
A Beijing-based performance company purchased the iconic venue in the entertainment mecca of Branson, Mo., for $3.5 million, renovated it and launched
"The Legend of Kung-Fu" in June.
Where once there was gospel, “patriotic tributes” and Sonny and Cher impersonators, now there is a cast and crew of 68 Chinese putting on an action-packed Vegas-paced show featuring a mix of martial artists, actors, singers and drummers. Locals say they are thrilled with the foreign takeover.
“One thing we like is they bought a theater that was vacant,” says the city’s public affairs director, Jerry Adams. “And they gave people one more reason to visit Branson by offering a different variety of show. … They’ve been excellent business partners.”
As Chinese become wealthier, they are seeking investments around the world: mines and oil wells, banks, hotels, real estate, technology, manufacturing and food companies.
The big deals capture the spotlight, especially when they are controversial or are killed by politics. But this week, as Chinese President Hu Jintao visits the United States, he will seek to highlight another type of deal — the deals that don’t merit political furor but are courted by local governments to bolster economies and create jobs.
That includes little-noticed deals such as the White House Theater that become part of the fabric of American towns.
In 2010, the value of the biggest seven Chinese deals—not including bond sales—totaled more than $6.16 billion, roughly the same as in 2009, according to the conservative Heritage Foundation, which compiles a database of Chinese investments that have a value of more than $100 million. The group’s database shows that there were no Chinese investments of more than $100 million as recently as 2005.
“But that’s living in this world that we can see … involving big investments and big companies,” says Derek Scissors, Asia Economics Research Fellow at the Heritage Foundation.
“Public perception in America and China is dominated by the high-profile deals,” says Thilo Hanemann, research director for Rhodium Group, an economic research firm in New York. “The real story is of the small and middle-sized deals that provide jobs in manufacturing and services.”
Smaller deals like the White House Theater are very difficult to track. Many Chinese investments come through intermediary companies or third countries, and some are not counted as foreign investments though they are foreign in all but name.
For instance, Chinese-born tycoon David Liu bought seven distressed apartment complexes in the Phoenix area last year for about $480 million ($133 million in cash plus assumed debt). Liu, now a U.S. citizen, would not be considered a foreign investor, though he reportedly made most of his money through real estate deals in his hometown Beijing.
Hanemann, of Rhodium, points to some of the deals that tend to be overlooked: A $29 million investment in Suntech Power Holdings to make solar panels in Goodyear, Ariz.; a $46 million infusion in Moberly, Mo., to open a plant making a sugar substitute; $10 million invested by China’s sporting goods company Li Ning to open a store in Portland, Ore.
When Hu visits Chicago this week, he reportedly is going to visit a newly opened solar panel plant in Rockford, Ill., built with a $12 million investment by Chinese auto conglomerate Wanxiang through its U.S. operation.
The company that bought the Branson theater, Beijing-based China Heaven Creation International Performing Arts Co., hit just the right chord, to hear locals tell it. The 1,200-seat theater is one of about 45 show venues in the community — part of a tourism industry that is the lifeblood of the small town. Branson, with a population just shy of 8,000, gets 8 million visitors a year, according to the city government.
Infusion of new blood
But the city has been in need of fresh G-rated acts to update its look. Branson gained a reputation in the 1970s as a country music destination after Roy Clark took a shine to it and set up his Roy Clark Celebrity Theater there. Later, it attracted crooner Andy Williams (still performing in Branson at age 83) and big band leader Lawrence Welk, aka Mr. Wunnerful. Welk’s theater finally turned to Broadway musicals and lively fare for baby boomers.
Over the past several years, the city has worked to shed its reputation as a playland for the elderly. With the addition of a Titanic museum, family shows like "Peter Pan," and the town’s first upscale shopping mall, the average age of visitors has dropped to 54 from 58 in 2005.
“(The kung fu) shows are family-oriented, like all shows in Branson,” says Adams, the city official. “We are marketing to a younger demographic. We feel this show fits right in.”
China Heaven also bought a large bed and breakfast in town to house its Chinese cast and crew. There are about 20 American employees.
According to Branson economic development director Garrett Anderson, the investment has prompted other Chinese investors to inquire about the town.
Jim Rader, the Branson Realtor who represented the White House Theater seller — an elderly man who was no longer up to operating the facility — says the Chinese drove a hard bargain. They got the theater on 12 acres for just $3.5 million, down from an asking price of $5.5 million.
Rader exudes enthusiasm about the investors.
“They were the grandest folks I could ever hope to deal with,” he says. “They were just good people. They were business people, but interested in everybody and everything.”
Likewise, China Heaven says it received a warm reception by the chamber of commerce and the community at large.
"Based on our experience, the local city government, peer professional artists (and the) audience, are all friendly to our entertainers and show," the company said in an email reponse to questions. "We did not feel (push-back) within our half year operation."
Deals that end amicably are probably more the rule than the exception — and certainly far outnumber the number of investments that get flayed in Washington for a mix of political reasons and real national security concerns. Hanemann says such problems have an outsized impact on investor confidence.
“The U.S. doesn’t have a defined list of sectors that foreigners can or can’t invest in as China does,” he says. “There’s no clear definition, and there are different domestic groups who want to use the lack of clarity to politicize them.”
“But the failed deals have a lot to do with perception. Chinese investors may not feel welcome.”
Most notable among the deals that have been derailed in the United States was a 2005 bid by Cnooc Ltd., the Hong Kong-listed unit of China’s largest offshore energy explorer, to buy California’s Unocal Corp. for $18.5 billion.
In July, China's Anshan Iron and Steel Group withdrew a bid to buy a 20 percent stake in a small U.S. rebar mill, Steel Development Co., after 50 lawmakers who make up the U.S. Steel Caucus opposed it on grounds of national security.
John Correnti, CEO of the U.S. steel company said the investment would create 1,200 construction jobs, and 200 permanent steel jobs. He called the national security argument "laughable."
Anshan is now is reportedly considering purchasing a smaller stake in the plant, a sign that investor confidence may be improving.
To be sure there have also been Chinese investments in the United States that have churned up frustration while jobs are scarce and anxiety is running high. Many lawmakers and ordinary Americans believe China has been manipulating its currency, keeping it artificially low to boost its exports, consequently causing the U.S. to lose jobs to Chinese companies.
In that kind of atmosphere, politicians want to be sure they don’t end up taking the flak if a deal ends up costing American jobs.
“If they come in and buy one of our hotels and operate it, that’s fine. It keeps running and they still hire staff,” says Bill Stafford, president of the Trade Development Alliance of Greater Seattle. “What you don’t want is to say: ‘Good news! The Chinese are investing $100 million to buy XX company. … Sad to say they are moving the company out of the country.'”
Perhaps the ambivalence helps explain why top brass from China Heaven have gone out of their way to show they are community-minded. They quickly joined the Branson Chamber of Commerce and the local entertainment marketing association.
It may also account for why, before they finalized the White House deal, they showed up at Branson City Hall one day, with no apparent agenda other than to introduce themselves.
“Our first contact with (China Heaven) was not them asking us for incentives,” says Anderson, economic development director for Branson.
“They came to City Hall in almost a formal and ritualistic way. … I think they were coming to ask us for our blessing.”