The U.S. Homeland Security and other agencies raided the world’s biggest auto glass maker—China’s Fuyao glass factory in Ohio on July 26.
Hundreds of special agents from Homeland Security, Internal Revenue Service Criminal Investigations Division, and the Federal Bureau of Investigations searched the Fuyao factory in Moraine and 27 other locations in the Dayton area in Ohio.
U.S. Homeland Security stated the reason for the operation was “allegations of financial crimes and labour exploitation,” adding the investigation is active and ongoing.
On July 26, Fuyao Glass Group closed at 47.26 yuan per share, down 0.71 percent.
Fuyao Group was established in Fuzhou, China in 1987. It produces automotive safety glass and industrial technical glass. Fuyao Glass (600660.SH) is currently the world’s largest manufacturer of automotive glass.
In a statement issued on July 29, Fuyao Group confirmed the search of Fuyao Glass America—its wholly-owned subsidiary in Ohio—by U.S. federal agencies and local law enforcement. The on-site investigation was completed and the U.S. agents left at around 5 p.m. on July 26, according to the statement.
Fuyao said in the statement that Fuyao Glass America “is not the target of the investigation” as they were told by the U.S. federal agencies, and was mainly “cooperating with the investigation into a third-party labour service company.”
The announcement also stated that during the search, some production operations of Fuyao America were suspended, but resumed on the same day after the search.
The automotive glass production plant located in Dayton, Ohio, is the core of Fuyao Glass’s investment in the United States and is currently the world’s largest automotive glass factory. It currently has a production capacity of 4.5 million sets of automotive glass and 4 million pieces of automotive accessories, accounting for 30 percent of the U.S. market, according to public data.
The Dayton area was once centered on traditional manufacturing and automobile manufacturing, but it gradually declined after the 2008 financial crisis and became part of the “Rust Belt,” with a large number of unemployed workers. Fuyao Glass’s investment has brought a number of new job opportunities and tax revenue to the local area.
Fuyao Glass America’s customers include GM, BMW, Ford, Chrysler, and other vehicle manufacturers from the United States and Europe. In 2022, Fuyao Glass increased its investment in the United States by $650 million.
Fuyao Group’s 2023 annual report shows that half of the company’s revenue comes from domestic sources and half from overseas. Its overseas assets also account for 37.8 percent of its total assets.
Fuyao has become a symbol of Chinese investment in the United States amid the escalating trade war between the Chinese communist regime and the West, led by the United States. The Netflix documentary American Factory, co-presented by the production company of former President Barack Obama and his wife Michelle Obama, has brought much spotlight to the Chinese-invested factory in Ohio.
The documentary revealed the life of U.S. workers at Fuyao’s plant in Ohio and how the Chinese company brought new jobs to the region, along with the employers’ high expectations and harsh management style common in communist China to the United States.
Meanwhile, Xie Feng, the CCP’s ambassador to the United States, delivered a speech the next day of the raid, emphasizing “China’s development and trade with the U.S. contribute to the latter’s economic growth, broaden the market prospects to American companies and bring high-quality and inexpensive goods to American households.”
Different Labor Relations, Company Cultures
Experts pointed out that the recent raid reflects the fundamental difference in how business are conducted in a civil society and in a communist state, as well as the heated trade war between the United States and China.Chung Chih-tung, assistant research fellow at Taiwan’s Institute for National Defense and Security Research told The Epoch Times on July 30, “Fuyao is now the world’s largest manufacturer of automotive glass. It can be regarded as an iconic company. It has gradually invested overseas in the past few years. Its overseas investment now reaches 37.8 percent. So we can actually see Fuyao’s ambition.”
Chung pointed out, “It attracts attention because it’s a Chinese-owned enterprise, especially in Ohio at the time of the U.S. election. Everyone knows that Ohio is a so-called key swing state.”
He added: “The United States is a country governed by the rule of law, especially since the raid was led by Homeland Security. I think there should be considerable evidence for the possible violations of the law stated.”
Regarding the allegation of labor exploitation, Wang Shiow-wen, an assistant researcher at Taiwan’s Institute for National Defense and Security Research, told The Epoch Times on July 30, “This may have been reported by internal American employees, because it’s difficult for American workers to accept the extended working hours and other labor practices of Asian companies.”
Chung also believes that different business practices and cultures also play a role. “Since Fuyao started to fully invest in the United States in 2010, it often had problems with labor and management, and was fined by local U.S. governments for it, which were also reported in the media,” he said.
Therefore, considering that it has had labor issues before, it would not be too surprising if it’s investigated for labor exploitation and labor issues this time.
US–Sino Trade War
Chung added that while the U.S. government is reflecting on the situation of the U.S.-China trade war, naturally, such iconic Chinese companies will definitely receive increased attention and investigation by the United States. “To a considerable extent, it reflects the negative impression that today’s American political and business circles have on communist China and Chinese companies, especially the unfair competition and practice of Chinese companies. Even if it now goes to the United States to invest and to change its company location, hoping to avoid being sanctioned due to being “made in China,” I think it will inevitably attract special attention.”Wang concurred that the raids might have something to do with the U.S.-Sino trade war.
“This may be because the United States has begun various investigations into China’s companies with the largest market share in the world, and it is related to the U.S.-China trade war.”
She predicted: “China will not give in quietly. Soon, there may be some kind of on-the-spot investigation targeting U.S. companies in China. U.S.-China relations are deteriorating, and trade is also shrinking. It may have to wait until after the U.S. presidential election for things to become clearer and more stable. However, the CCP’s recent Third Plenary Session was considered Xi Jinping preparation for U.S.–Sino decoupling. Perhaps the CCP also sees that U.S.–Sino decoupling and reduced economic and trade dependence will become a major trend in the future.”
