Trade and Currency

Factory owner wants a piece of US action

By Wang Chao (China Daily)
Updated: 2011-01-23 14:51
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BEIJING - Visiting the United States for the first time recently, Zheng Jiansheng lined up outside an Apple store in San Francisco to buy an iPad.

But after fighting the crowd and getting his trophy, Zheng was surprised to find that the machine was not manufactured in the US. On the back of the packaging was the label "Designed in San Francisco, made in China".

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"Everything is made in China, even the sophisticated iPad," Zheng said. "But Chinese factories are earning less and less, although we are exporting more."

Zheng is the owner and general manager of Beijing Jinchuang Combined Gas Meter Co Ltd, a private company that produces meters. In 2009 it produced 1.8 million sets.

Zheng's US trip was not to shop for iPads. The thin and energetic businessman from Wenzhou, in East China, went to the US to find a place to build his factory. With the appreciation of the yuan and increased labor costs, Zheng began to find his profit margins from exports shrinking sharply. Moreover, with hundreds of factories that produce gas meters, competition in the Chinese market is fierce.

"Moreover, to export to the US markets, we need to wait longer. It takes a US company only six months to pass the qualification authentication, but we need two years," Zheng said.

This year Zheng saw an opportunity in the US: The Obama administration decided to invest $50 billion in the smart grid and $40 billion in updating the tap-water system. In both projects, new meters will be needed.

Before Zheng left for the US, he talked with managers of PG&E Corp and the Southern Co, two power companies in the US that are participants in the projects.

"They suggested that I produce spare parts for GE, then export them to the US under the GE brand name. But I want my brand to be sold there, so I would have to set up my factory in the US," he said.

After visiting several states, Zheng put Georgia and California on his short list.

Zheng doesn't speak any English, nor does he have any American social pleasantries. However, he impressed everyone with his warm smile and manners, as well as his frequent invitations - through an interpreter - to be photographed with local officials. In San Francisco, government officials even raised the Chinese national flag to greet him.

Zheng's company was among the first Chinese companies to pass the international meter quality authentication. Once the factory is open perhaps in one or two years, he said, about 200 local jobs will be created.

"We will build a factory in a small county, either near San Francisco or in the state of Georgia," Zheng said. The size of the factory has yet to be decided, but since about 30 million meters will be needed for the projects, it won't be small.

"It seems that local governments care more about job opportunities than the tax revenue we can bring," Zheng said. Georgia, for example, has offered Zheng tax cuts and promises to treat his company as a local company "so long as we create enough jobs".

Georgia even promised to buy meters directly from Zheng's company, should it decide to build the factory there.

Zheng is considering hiring a Georgian to manage the factory. "Previously, even Haier, the pioneer Chinese company to build factories in the US, didn't dare to hire local labor because of the higher costs. But now, a lot of local labor is being hired because they are very efficient and worth the money."

Although this is Zheng's first time to the US, it is not his first foray overseas.

Recently, the company invested $50 million to build a factory in Bangladesh with an output of 60,000 meters a year.

China Daily