Cao Dewang, the founder and chairman of Fuyao Glass, made some contradictory remarks over the past two years by saying on the one hand that the cost of operating a factory in the United States is higher than that in China, on the other hand being fined by administrative fines and blocked by trade unions, He exclaimed, "For the American factory, sometimes I get depressed and fainted."
In October 2016, Fuyao Glass completed and put into operation its $ 1 billion factory in Ohio, US Figure / Reuters
Fuyao Glass Industries Group Co., Ltd. (Fuyao Glass) started to invest in the United States from 1995 until 2014. Fuyao Glass decided to invest USD 1 billion in 2014 in Moirin, Ohio (Moraine) City to set up the world's largest auto glass monomer plant; in October 2016, the plant was completed and put into production.
According to the report, Fuyao Glass America Co., Ltd. reported a net profit of -41.61.05 million in 2016 and a net profit of -10.441 million USD in the first half of 2017. Caode Wang previously set a target of earning 200 million U.S. dollars in 2017 .
Many respondents with global experience say the obvious cost of going to sea is easy to see, but hidden costs are like icebergs going down the ocean.
In November 2017, the Moraeuh plant employees voted against 868 votes, 444 in favor of vetoing the move to set up a trade union, and Cao Dewang once said that once the factory set up a trade union, the customer would cancel the order on the grounds that normal supply could not be guaranteed.
In November 2016, the Occupational Safety and Health Administration (OSHA) imposed a fine of $ 225,000 on the lack of a complete power-lock guard at Fuyao Glass's Morian plant. , The two sides reached an agreement to reduce the fine to 100,000 US dollars.
Although the crisis temporarily eased, Fuyao Glass still faces a series of challenges in the United States such as low production efficiency, difficult recruitment and cultural conflicts.
After Trump dropped taxes, Chinese entrepreneurs have enthusiastically invested in the United States. The experience of Fuyao Glass in the United States is just a mirror lesson.
Visible benefits
In Cao Dewang's cost account, the price of natural gas in the United States is one fifth of that in China, and the price of gasoline and electricity is half that of China .... China is cheaper than the United States, and the others are more expensive than the United States, especially tax revenue. "He said: In the United States to invest 1000000, companies can earn 600000, while in China only get 420000, the tax is 580000. '
According to the semi-annual report of 2017, Fuyao Glass tax payable includes VAT, corporate income tax, personal income tax, urban maintenance and construction tax, education surcharges, land use tax payable and property tax payable. 30 enterprises in mainland China pay taxes The main body, there are three 25% pay income tax, the rest are mostly due to enjoy the high-tech enterprises and 15% pay.Of the six corporate taxpayers in the United States, only Fuyao North American Glass Industry Co., Ltd. pay 38.21% income tax, Others are not required to pay for the loss during the reporting period or the existence of a deductible loss.
Although the income tax rate of the United States looks higher than that of China, the actual tax burden on Chinese enterprises is higher than that of US enterprises, which is related to the differences in the tax systems between the two countries.
The United States is a country that takes the direct tax as the main body, the tax revenue mainly comes from the individual, and the indirect tax in China is the main part in China. The tax revenue mainly comes from the enterprise. In the United States, the enterprise only needs to pay income tax; in China, the enterprise needs to pay income tax, value-added tax, property tax Multiple taxes.
Cao Dewang US investment: foreign water is deeply blind go out there to go back
From 2012 to 2016, taxes and fees payable by Fuyao Glass increased from RMB133 million to RMB558 million with a growth rate of 329.23%. Operating revenue of Fuyao Glass increased from RMB10,247 million to RMB16,621 million for the same period, representing an increase of The ratio is 62.20%.
Corning Incorporated (NYSE: GLW) is a global leader in materials science that specializes in the manufacture and sale of specialty glass and ceramic materials. Ren Zeping, chief economist at Evergrande Group, compared the tax burden of Fuyao Glass and Corning Inc. 2015 In the year, the comprehensive tax rate of Fuyao Glass was 18.72% and that of Corning Incorporated was 11.49%.
From 2014 to 2016, the VAT of Fuyao Glass increased from 43,241,900 yuan to 94,389,000 yuan, an increase of 118.28%.
It is another headache for Chinese companies, according to Wind. In 2016, China's non-tax revenue accounted for 18.29% of the national public revenue.
Teng Bin Sheng, a professor of strategic studies at Cheung Kong Graduate School of Business and vice president of European markets, told Caijing that in addition to taxes, fees and high costs for enterprises, it also includes the costs of invisible transactions. From procedures and seals to good relations with various institutions , The cost of which can not be underestimated.
For the U.S. market, Cao Dewang saw the low cost of factors, the small tax burden, and the transparency of transactions. However, it is even more preferential for the U.S. to attract foreign investment.
In October 2016, China Financial News conducted an on-site interview at the Fuyao Glass Morian Plant.According to Wang Junming, an executive director of Fuyao United States, at the time, a U.S. taxpayer At the time, more than 2,000 employees who had been recruited at the very least would receive a subsidy of 30 million U.S. dollars and, in addition, a training grant of 700,000 U.S. dollars in 2016. He said: 'Even if the factory is going to switch to CFLs, the local government will give subsidies '
Cao Dewang has also repeatedly stated publicly that the construction cost of the Moran facility of about 180,000 square meters will be about 40 million U.S. dollars and the government subsidies it receives exceed this amount.
In 2014, Fuyao Glass not only decided to establish the Morain Factory, but also acquired the Mt. Zion plant of PPG Industries of the United States, located in Illinois, USA, Raw material for glass Float glass.
The main reason why PPG Industrial Company relinquished the Mount Zion factory was due to the uncertain trade unions, which took over not only the unions but also the $ 2 increase per hour to pay employees and 401K (old-age insurance ) And an annual salary increase of 1.2%.
At that time, Cao Dewang was full of hopes for the U.S. market and said to the trade unionists at the Zion Hill Plant: 'My request is very low and the Chinese workers can do it, and you do it.' However, this requirement has so far made it difficult for American workers To
Unexpected trouble
As Japan's Asahi Glass, Saint-Gobain, France, shoulder to shoulder world-class automotive glass company, Fuyao Glass in the United States to invest and set up factories starting point is the market rather than cost.
Today, Fuyao glass market share in China has reached 70% or so, to enter the overseas market is a necessary option in Cao Dewang view, as a world-class supplier of automotive companies, 'Where do I build factories where I have to build' , Fuyao Glass needs to enhance its global supply chain capability, and Fuyao Glass overseas market revenue accounted for 33.79% of its operating revenue in 2016.
'The United States on Wheels' is the most important overseas market for Fuyao. As early as 2011, Fuyao Glass signed a strategic cooperation agreement with General Motors Corporation (NYSE: GM), which stipulates that Fuyao Glass is the A major supplier, but the premise is that 2016 must be established in the United States in order to ensure a stable supply.
Fuyao Glass eventually chose to rebuild GM's disused factory in 2008 into the world's largest automotive monolithic plant in Morrington, Ohio, according to Cao Dewang's explanation of site selection: "That place is next to Route 75 , 80% of the car factory in that line. 'In fact, this is a need courage choice.
Ohio is a strong area for auto unions where GM, Ford Motor Co. (NYSE: F) and Fiat-Chrysler (NYSE: FCAU) have relocated production lines because they can not stand the unions' torment. "Asian auto companies such as Toyota, Nissan, Hyundai, etc. In order to avoid this risk, choose to set up factories in the southern United States.
The United States organized trade unions according to industry principles. The main functions of the trade unions are to provide collective bargaining services to local and grass-roots employees as well as lobby legislators to participate in the legislation. The unions are for-profit organizations that employ the United Automobile Workers (UAW) For example, in addition to collecting dues from workers, sources of income include joint training, real estate, fund investment, etc. In recent years, U.S. unions have been facing high-level corruption, failing to work for the interests of the working class and colluding with employers and governments.
Cao Dewang was also afraid of the auto unions. He had volunteered to advise Honda Motor Co. (NYSE: HMC), also set up a factory in Ohio. Honda Motor Co. did not have a union at the factory. It gave us a piece of paper saying that as long as it did the above There is no problem with this point. "The main content of this piece of paper is environmental protection, working environment, employee compensation and benefits, etc. However, the problem is still coming soon.
In June 2016, workers complained that Fuyao Glass failed to guarantee safety in production and took the initiative to seek help from UAW. In November 2016, UAW announced its support for workers' right to work safety. Subsequently, OSHA imposed on Fuyao Glass A fine of 225,000 U.S. dollars. In April 2017, with the support of the UAW, workers held a rally in a local city hall to protest Fuyao Glass. In May 2017, the UAW asked people to sign a petition in the hope of a joint negotiation between the labor and employers .
To this end, Cao Dewang said: "If the customer (because of trade union reasons) to cancel the order, what do I do, I do not want to close the factory ?! 'In November 2017, Fuyao Glass through various efforts to stop the motion to establish a trade union.
For example, a staff member named Jim Martin started his career with Fuyao Glass beginning in February 2015 and said he often feels a touch of chemical exposure during the manufacturing process Dizzy, nauseous. From March to June, he and his colleagues kept asking their supervisors for masks and viewing safety data sheets, but received no reply.
Teng Bin Sheng believes that Fuyao Glass as a leading global enterprise, to ensure employee safety must have a systematic specification, UAW's statement there will be a certain degree of exaggeration, but it must be admitted that the Chinese blue-collar workers and the United States blue-collar workers to treat the work environment Different demands, equality, rights awareness are not the same.
In June 2017, CCTV interviewed David Michaels, the former head of OSHA, about the fines for Fuyao Glass, saying: "The $ 200,000 fine is a huge figure, and now only a handful of companies are out of OSHA A huge amount of tickets.A new factory was established, there is no security management system, which is alarming.
Is slightly Jun policy international consulting chief partner, former Liugong International Business Unit General Manager Huang Zhaohua in Europe, Latin America, North America has many years of work experience.He told the "Financial" reporter, Fuyao Glass encountered "normal" Because the U.S. factories are designed by Chinese people, the safety norms between China and the United States themselves are different. Even if the units of measurement between the two countries are to be converted, it is enough to toss them up.
Wang Junming also mentioned this: "Whether it is a civil construction supplier or an electrical installation class, some of the blueprints we design in China are not very accurate and can be changed on site in the Mainland, but the United States does not have to change the sheet again. '
Cao Dewang the most troublesome is the efficiency of American enterprises, and the key lies in the effectiveness of team stability and staff management.
The difference in labor costs is not only reflected in the fact that the wages of white-collar workers in the United States are more than double those in China, but the wages of blue-collar workers in the United States are eight times those of China and also reflected in the quality of the workforce. From the "deindustrialization" of the 1970s to the present Industrialization ', there was a breakdown in the labor force in the manufacturing industry in the United States. On the one hand, it is difficult to recruit workers. On the other hand, it is also mostly older people who are also poorly skilled.
In this regard, Cao Dewang laments: 'It is difficult to find workers under the age of 50.'
Although the Moraing factory is the best and most automated factory of Fuyao glass equipment, but there are also problems.Fuyao Group Jiang Bingming, director of product technology, said: 'Many domestic production lines are disconnected, the United States due to the degree of automation plant High, the production line is connected .When you debug in one place, the entire line all stopped, are waiting for this debugging. 'At present, in order to improve efficiency as soon as possible, Moran factory' on the means' That is, sending Chinese workers to factories in the United States to teach local workers.
Although the United States is the world's number one technology innovation powerhouse, Fuyao Glass has transferred its research and development to China since its inception.Jiang Bingming explained that the manufacturing industry chain in the United States is not complete, for example, there is no place for mold repair around the U.S. factories In addition, the development cost in China is also relatively low, which costs about 100,000 yuan to develop a piece of glass, but it needs 100,000 dollars in the United States.
In Huang Zhaohua view, the problem Fuyao Glass encountered today is a necessary process, 'tuition is a must pay' to enter a new environment for enterprises, is to continue to explore, to solve one by one to gradually adapt to the problem, Foreign-funded enterprises in China is still not painful.
Combined with his work experience in the United States, he lamented: 'Blue collar workers in this group is actually the most difficult to control, the United States culture is so diverse, you think you can communicate in English, slang people are talking about the best solution Is to find the right locals to manage.
Stay in awe
On December 22, President Trump officially signed the tax reform bill, which is considered the largest tax adjustment in the United States in 30 years. It includes about 1.5 trillion U.S. dollars of tax reduction measures. For instance, the corporate tax rate has dropped from 35% to 20 %, Temporarily reduce personal income tax, and adjust taxation of multinational corporations.
Tao Jingzhou, managing partner of US De Jie Law Firm, told Caijing that 'This bill will attract a large amount of international investment to the United States, and Chinese enterprises are no exception unless they are not willing to make money.' In his view, in recent years, Gradually aware of the risks of investing in developing countries: Although the cost of entry is low, the cost of maintenance is high due to factors such as the weak rule of law, etc. In contrast, the United States, despite its high cost of entry, censorship and complicated legal procedures, is One of the safest countries in the world to invest, tax reform has further strengthened the attractiveness of the investment.
According to the "Report on the Overseas Sustainability of Chinese Enterprises 2017" released by the United Nations Development Program, in 2016, Chinese investors conducted a total of 7961 enterprises in 164 countries and regions in the world in non-financial direct investment with a total realized investment of 170.110 billion U.S. dollars , An increase of 44.1% over the same period of last year.
The report's recommendations for Chinese enterprises to "go global" include: strengthening the analysis and control over the social and environmental risks of investment destinations in addition to economic feasibility; finding out the compatibility between the development needs of investment destinations and their own products and services ; Strengthen the communication with all stakeholders; and gradually realize the localization and internationalization of talents.
When talking about Fuyao's overseas investment, Cao Dewang once said: 'Foreign water is very deep and if we go out blindly just because we have money, it definitely will not go back.' Prior to investing in the United States in 2014, Fuyao Glass Already has a globally recognized brand, know-how and loyal customers.
The president of Weili Tao Yue Greater China and the head of China Enterprise Globalization Project Yuan Lingzi told Caijing that at present, the main way for Chinese enterprises to invest overseas is mergers and acquisitions. The advantage is that the scale expansion is fast but the integration is very difficult. In many cases, it is both and not.
In contrast, Greenfield Investment is slow and requires step-by-step deep plowing, but the benefits are that companies have strong control, business is easier to connect, and risk is more manageable, and companies must look at the industry landscape and their own Happening.
Teng Bin Sheng believes that the main purpose of overseas expansion of Chinese enterprises are three: the first is the output of excess capacity, such as some steel, cement production capacity in the country can not digest, turn off the business there will be problems, so choose to go out; the second is Considering business growth, domestic market share has reached the ceiling. Enterprises need to increase sales volume through overseas markets to form economies of scale such as millet marching into the Indian market. Third, high-tech companies such as Baidu and Huawei set up overseas R & D centers, The aim is to enhance technological advantages and feed back the domestic market.
All of the respondents said that Chinese enterprises must be in awe of overseas investment. After all, there are very few successful cases. Several enterprises have also counted Huawei, Lenovo, Haier and Fuyao Glass.
Chinese entrepreneurs are highly sensitive to the business and are easy to focus on the obvious gains and opportunities in the international market. They are risky and ignore the hidden costs of law, culture and management effectiveness. In fact, it is very unusual to go global Easy. 'Yuan Lingzi said.