A Chinese conglomerate's plans to expand into clean-energy technologies through overseas acquisition is raising innovation concerns in the US.
Wanxiang Group Corp has signed an agreement to invest up to $465 million in the struggling US battery maker A123 Systems Inc., although some fear the move will siphon American innovation for the benefit of China. In an attempt to assuage mounting pressure, Wanxiang's head of US operations, Pin Ni, has said that the conglomerate would only “do what's best for the company” and would behave responsibly with the US firm's intellectual property.
A123 won a $249.1 million federal grant in 2009 and is expecting to receive a further $100 million in tax credits from the state of Michigan. Despite creating hundreds of local jobs in several new factories, the cash-strapped company may have to sell as much as 80% to the opportunistic technology investors if it is to stay afloat.
Although both companies are enthusiastic about the deal, approval from the Obama administration is still pending. The decision will not be an easy one to make, however. If it rejects Wanxiang's investment, the cash-poor A123 could soon go out of business. However, if it approves the deal, the Administration risks drawing criticism from hardliners opposed to handing state-funded business over to Chinese companies.