China beckons investors to follow Warren Buffett into solar (LDK, YGE, JASO)

In a recent joint statement issued by the Ministry of Commerce and the National Development and Reform Commission, Beijing is encouraging foreign investment in designated sectors, including alternative energy, biotechnology, information technology and advanced materials. 

According to an article in China Daily, “China will cut down restrictions on foreign investment by allowing them to invest in more sectors while lifting caps on the proportion of foreign capital in some sectors, according to the new guideline.”

The “alternative energy” side of the story means that Beijing is essentially asking foreign investors to follow in Warren Buffett’s shoes and buy into solar opportunities. Chinese solar names like LDK Solar (LDKquote), Yingli Green Energy (YGEquote) and JA Solar Holdings (JASOquote) have taken a beating and are hungry for new capital.

As detailed in “Yuan bonds heat up as China beckons foreign investors (CHLC, DSUM, CAT, VLKAY),” a previous article on, China has become more open to foreign investment and direct acquisitions of businesses. 

Companies increasing operations in China include Volkswagen (VLKAY, quote), Caterpillar (CAT, quote) and Yum! Brands (YUM, quote).  Currencies strong against the yuan — primarily the Japanese yen — will increase the buying power of investors from that country.

The China Daily article, “China to open more sectors to foreign investors,” stated that foreign investment was up almost 15% from a year ago, to over $100 billion in new investments. 

Of note is that China will no longer support foreign investment in auto manufacturing. As detailed on in the article, “China wants its own Big Three auto makers (BYDDY, TM, VLKAY,” Beijing wants to consolidate and augment its domestic car industry as foreign sales are rising. 

Volkswagen (VLKAY), the No. 1 seller of vehicles in the world for 2011, is very strong in China.



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