The Austrian signed yesterday for £2.6 million.
"Mark (Hughes) has been out to see (Arnautovic) in Germany and likes him," said Coates to The Sentinel.
"He's got a bit of a chequered history on the personal side, but he is coming to a club with a squad of good professionals and that should be good for him.
"Certain clubs work for certain players and we are hoping he's going to be the striker who can score the goals for us because that has been one of our deficiencies.
"Friends of mine at Manchester City remember Ireland coming through the system there and he has since had his moments.
"His career seems to have gone in the wrong direction of late, but Mark knows the guy well and he certainly has a good pedigree as a player."
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