Global General

US southern states woo China investment

By Tan Yingzi (China Daily)
Updated: 2010-09-02 07:26
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US southern states woo China investment

BIRMINGHAM, Ala - When Alabama Governor Bob Riley took over as chairman of the Southern Governors' Association (SGA) last year, he set a simple but far-reaching goal: to boost economic development in the US South by attracting international investment.

But before this could be achieved an important question had to be answered. Which country could help us meet our aim?

"Since we cannot travel to countries simultaneously, which country should we start our initiative with first?" Riley told China Daily during the association's recent annual meeting. "It was our unanimous opinion that since China is such a vibrant, growing and strong market, we would start this initiative in China."

The SGA, founded in 1934, is the oldest and largest regional governors association in the US with governors from 16 states, the Virgin Islands and Puerto Rico. It is also the first regional association in the US that has mapped out a comprehensive strategy to attract investment from and boost exports to China. The strategy works in tandem with the Obama administration's exports initiative - to double US exports in five years to boost American jobs.

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Several Chinese companies, such as PC maker Lenovo Group and home appliance producer Haier, have already invested in the South.

The South, a region that makes up nearly one quarter of the US landmass with almost 40 percent of its population, boasts lower taxes and cheaper energy costs than other US regions. Crucially, it has about 700 colleges and universities.

Since it was difficult for each individual state to reach out to China, Riley's strategy was to promote the region as a whole to Chinese investors.

"We want people in China to understand there is a special geographic region which should be considered first when making an investment," he said. "Then we will compete with each other for the specific projects with the understanding that whatever happens in the region benefits the entire South."

To support his initiative, 39 representatives from nine states and territories representing the South held a two-day meeting in June with officials from Beijing to discuss business opportunities.

Representatives from 11 Chinese provinces, many from the less-developed areas in central and western parts of China, attended the conference. Building on the meeting's success, two months later, a Chinese business delegation, led by China's former ambassador to the US, Zhou Wenzhong, flew to Alabama to participate in the SGA's annual meeting. While there, they continued talks on expanding US exports to China, as well as increasing Chinese investment in the South and identifying potential partnerships between Chinese companies and firms in the South.

There is already a solid foundation to build on as over the past decade many Southern states have increased their trade with China.

In 2009, exports to China from the South amounted to $26 billion, a 37 percent increase from 2008, according to the SGA.

The South's major exports include chemicals, crops, paper products, machinery, transportation equipment, computers and electronics.

With the exception of Florida and the Virgin Islands, the South has witnessed export growth to China, according to the SGA. China is the top export destination for Louisiana and the second biggest export destination for Georgia, Maryland, North Carolina and Virginia.

Alabama, Missouri, Tennessee and Texas have seen China emerge as their third biggest export market.

"There are many success stories of doing business with China here," said Riley.

Riley has been a frequent visitor to China and has led many small and medium business delegations during four trade trips to the country. Each time, he said, opportunities were discovered.

"If there were 100 businessmen from Alabama, at least 80 percent of them came back with an order or business opportunity," he said.

Encouraged by China's more open policy, Chinese enterprises, either State-owned or private, are seeking investment overseas. Riley believes that the South enjoys numerous advantages for Chinese investors.

"The most productive part of this country is the South."

At the SGA forum for business ventures in China, several state officials introduced industries with Chinese investment potential. They included, among others, the automobile, logistics, renewable energy, high tech and agriculture industries.

Business development presentations from the Southern states have impressed Yu Xihua, council member of the China-US People's Friendship Association and vice-president of the Zhejiang's provincial people's association for friendship with foreign countries.

"In Zhejiang, there is a great deal of interest among private companies to invest in the US," he told China Daily.

Due to increasingly stringent rules in the China real estate industry, many businessmen with cash are looking for other investment options, he said.

"But they cannot find good access to US business opportunities. Both sides should try to get to know each other. We really hope local business officials from the US states can come to Zhejiang to promote their business opportunities," Yu added.