On July 26, local time, special agents from the U.S. Department of Homeland Security Investigations and personnel from other government agencies conducted searches at the factories of Fuyao Glass America Inc. (“Fuyao America”) and 27 other locations.
In a statement provided to local media, Fuyao America said that federal government agents and local law enforcement officials visited the company, and some suppliers were also within the scope of the investigation. Fuyao America intends to fully cooperate with the investigation. The company also stated that on July 26, two shifts of the production line were partially suspended due to the investigation, but the third shift production has returned to normal, and factory production and delivery will not be affected.
It is currently unclear whether the investigation is targeted specifically at Fuyao America. According to local media reports, personnel from the Department of Homeland Security Investigations informed workers at Fuyao America that the company is not currently the subject of the investigation, and they had no intention of arresting anyone at the factory on that day.
Officials from the U.S. Department of Homeland Security stated that the investigation relates to allegations of financial crimes and labor exploitation. They urged the public to avoid the areas where law enforcement activities are taking place and emphasized that the investigation poses no threat to the public.
Fuyao Group was established in Fuzhou, China in 1987, as a Sino-foreign joint venture specializing in the production of automotive safety glass and industrial technical glass. Fuyao Glass (600660.SH) is currently the world’s largest producer of automotive glass.
Fuyao America is the subsidiary of Fuyao Glass in the United States, with its main assets being factories located in Ohio and Illinois. The Ohio factory was acquired from General Motors and transformed by Fuyao Glass into an automotive glass factory.
Fuyao Glass focuses on the development of its global business. Its 2023 annual report shows that half of the company’s revenue comes from domestic operations and the other half from overseas. Its overseas assets account for 37.8% of the total assets.
Fuyao America has faced challenges in its development, experiencing losses at one point. The 2023 financial report of Fuyao Glass shows that Fuyao America generated approximately 5.57 billion yuan in revenue that year, with a net profit of around 494 million yuan. Fuyao Glass had a total revenue of 33.16 billion yuan and a net profit of 5.63 billion yuan in 2023.
In 2022, Fuyao Glass made additional investments of 650 million dollars in Fuyao America, with 300 million dollars allocated for projects such as coating automotive glass production lines and tempered laminated side window production lines, and the remaining 350 million dollars for investments in several production lines of Fuyao America’s subsidiary in Illinois.
In the first quarter of 2024, Fuyao Glass reported revenue of 8.84 billion yuan, a year-on-year increase of 25.3%, with a net profit of 1.39 billion yuan, a year-on-year increase of 51.8%. As of the end of the first quarter of 2024, Fuyao Glass had a cash and cash equivalents balance of 13.54 billion yuan.
On July 26, Fuyao Glass closed at 47.26 yuan per share, a decrease of 0.71%.