Made in America? . . . probably not

WASHINGTON

It’s Saturday night and you want to go see a movie. You fire up your

IBM ThinkPad and check the listings. A nearby theater is showing Iron

Man 3, the Marvel Comics blockbuster partly filmed in China. You hop in your Volvo, fill it up with gasoline, and settle down in your seat with your popcorn.

The latest in the Iron Man series, to be released May 3, represents a new Hollywood wave: Catering to massive Chinese audiences with scenes shot in the Middle Kingdom. But the movie is not the only Chinese element of your Saturday-night scenario.

The IBM ThinkPad you used to check movie times? That’s owned by Chinese company Lenovo, which bought IBM’s PC business for $1.75 billion in 2005. The gasoline that filled up your Volvo? That could come from anywhere, but since Canada is America’s largest supplier of crude oil and China National Offshore Oil Company (CNOOC) completed the purchase of Nexen, one of Canada’s largest oil and gas producers, in 2013, it may have been CNOOC gas filling your tank.

At least you have the Volvo, the very symbol of all things Swedish. Think again. Volvo is owned by Geely, a Chinese state-owned automaker, purchased from Ford Motor Co. for some $1.5 billion in 2010.

Your popcorn is most likely made from American corn kernels. As for the machine that pops it? Probably made in China.

A recent poll found that 94 percent of Americans could not name a single Chinese brand. This caused a minor stir in the circles that stir over such things, but it’s not the real story. The real story involves Chinese companies-and others from emerging markets-making a major push to buy American and Western brands and companies.

Take the recent purchase of H.J. Heinz Company. What could be more American than Heinz ketchup? It sits in refrigerators and restaurants both humble and high-end across the land. Its name adorns the stadium of the Pittsburgh Steelers, one of the NFL’s most storied football franchises. It’s an American icon, standing alongside the likes of GE, McDonald’s, Coca-Cola and Boeing.

It’s no wonder that another American icon, investor Warren Buffett, would seek a piece of the Heinz story. His firm, Berkshire Hathaway, helped finance a $23 billion private equity investment to acquire the company in March. What could be more American than the sage of Omaha making a long-term play on a top American brand?

Not so fast. The company leading the purchase of Heinz is 3G Capital, a Brazilian private equity firm. It also owns Burger King Corp., bought for $3.3 billion in 2010, expanding the franchise’s reach and increasing shareholder value.

The 3G takeover of Heinz, partly financed by Berkshire Hathaway, is not simply a talented group of Brazilian investors who like to buy established brands and wring more profit out of them. It signals a larger trend over the last decade that continues to accelerate: The rise of emerging-market investors and companies acquiring majority stakes in well-known Western brand names and lesser-known Western companies.

Demographically and by all economic indicators, emerging markets will drive future global growth, particularly Asia. By 2025 nearly two out of every three humans will live in Asia. Meanwhile, sub-Saharan Africa’s population could double by 2036, according to a 2008 World Bank report.

While the Eurozone is headed for another year of contraction and advanced economies grow only modestly, emerging markets are expected to see 5.5 percent growth in 2013 and near 6 percent in 2014, according to the International Monetary Fund. The world’s most populous region, East Asia and the Pacific, is also the fastest growing. According to a World Bank report issued in mid-April, the region contributed 40 percent of global growth in 2012 and can expect to see an average of 7.7 percent growth over the next two years.

Sub-Saharan Africa continues its upward growth path. The World Bank expects to see solid 5 percent growth through 2013-15.

But the big story is the rise of emerging market multinationals. As they grow, they are becoming more acquisitive. And they are not just buying well-known Western brands; they are creating powerful brands of their own. The narrative of emerging markets told in the West has been one of investment opportunities-the BRICs (Brazil, Russia, India and China) and the search for the next set of up-and-comers-and shifting economic centers of gravity.

St. Louis-based Anheuser-Busch knows a thing or two about this trend. In 2008 the Belgian-Brazilian brewer Inbev acquired the American beverage giant. Budweiser and Bud Light, the best-selling beers in the United States, are now owned by a consortium headquartered in Leuven, Belgium, and run by a Brazil-born CEO. The deal was engineered by Brazilian billionaire financier Jorge Paulo Lemann, head of 3G Capital. Yes, that 3G Capital, the one who partnered with Warren Buffett to buy H.J. Heinz.

Foreign ownership of American brands is not new. But “foreign” usually meant European. Europe-based multi-nationals and investors already own a bevy of American brands: Gerber, Holiday Inn Hotels, Vaseline, Hellman’s Mayonnaise, Alka-Seltzer, Ray-Ban, LensCrafters, Lysol, Woolite, Motel 6, Trader Joe’s, and on and on. Even the television show American Idol is owned by Germany-based media conglomerate Bertelsmann.

Emerging-market investors are now joining the Europeans. China’s Lenovo led the way when it purchased IBM’s PC business in 2005. Milwaukee-based Miller Brewing Company is owned by SABMiller, a company launched in South Africa in 1895 and now based in London, serving thirsty customers across six continents. While Chrysler Motors is owned by Italy’s Fiat, the Chrysler Building in New York is owned by the Abu Dhabi Investment Council.

Even America’s surging neighbor to the south, Mexico, has joined the tide. Grupo Bimbo, a Mexico-based food conglomerate, bought the North America bakery operations of Sara Lee in 2011. It was rumored to be eyeing bankrupt Hostess Inc., a Mexican company potentially coming to the rescue of the Twinkie. (Hostess was later bought by an American private equity group.)

Perhaps the most honest accounting of this larger trend came from Heinz CEO William Johnson, who told the Wall Street Journal in February, “We’ve been prospecting in the emerging world for a long time, and now they’re prospecting here.” This “prospecting” cost Johnson his job. He will soon be replaced by Bernardo Hees, the Brazilian private equity whiz behind Burger King’s turnaround and a member of the 3G Capital executive team.

Twenty-five years ago, the only non-Europeans buying up Western brands were Japanese. Today, Jaguar and Land Rover, the British auto icons, are owned by India-based Tata Motors in a delicious irony of post-colonial economic rejiggering. Since 2005, emerging markets companies have acquired more than 3,100 companies in developed economies, according to KPMG’s Emerging Markets International Acquisition Tracker. A full third of the targets have been in the United States-and Chinese companies have had the most voracious appetite.

Afshin Molavi is a Washington, D.C.-based senior advisor at Oxford Analytica, the global analysis and advisory firm.