Pathway aims to make a mark with unique approach
Updated: 2012-03-23 07:46
By David Lariviere (China Daily)
Pathway's Bob Kraft sees the importance of building relationships with Chinese investors. [Provided to China Daily]
Successful business alliances help Wisconsin, China forge lasting bonds of friendship
Despite making 40 trips to China and trying a Rosetta Stone course, Bob Kraft knows only a handful of Mandarin words.
However, the language barrier has not prevented the chairman and CEO of First Pathway Partners LLC to become one of the most successful businessmen in attracting Chinese investment to the United States. His regional center in seven southeastern Wisconsin counties has raised $200 million, which puts it among the top five in the country, and created approximately 4,000 jobs and about 400 green cards since getting federal approval through the EB-5 program in 2007.
EB-5 is a visa the US government grants to those who invest $1 million, or $500,000 in some regions, and create or preserve more than 10 jobs. Green cards are available to qualified investors.
The US Citizenship and Immigration Services said last year 2,969 Chinese applied to the program and 934 were approved to proceed with their investments. Chinese accounted for three quarters out of the total EB-5 applicants, according to the Xinhua News Agency.
"I didn't know anything about EB-5," Kraft admits. "I just happened to be on the board of directors of the local chamber of commerce."
But Kraft, now 60, came at the project from a different approach than most EB-5 project companies.
"I am not a developer or an attorney, which is the normal profile of people in the EB-5 business, and there's nothing wrong with that by the way," he explains.
"I am a business executive who has worked over a 38-year career for large international publicly traded companies to mid-sized privately owned businesses to my own start-ups. First Pathway Partners is focused on the immigrant investor employing large company business practices to assist them with their objectives," Kraft says.
One of the major projects First Pathway got behind was the restoration of the historic Marriott Hotel in downtown Milwaukee.
Kraft listed a number of assets, including great agriculture, strong biomedical facilities, the University of Wisconsin and advanced water technology, which drew the Chinese to invest in Wisconsin. "We raised our hand and it's been a really good thing for the state," Kraft says.
The University of Wisconsin (UW) was one of the three universities to recognize China after relations were normalized, so boasts one of the largest alumni in China of any US university.
"The Chinese knew UW and had respect for it. There was a lot of back and forth between both," he says.
An announcement of an agreement between a division of China's Ministry of Education and the University of Wisconsin-Milwaukee to increase the enrollment of Chinese students received 80 million hits on Sohu.com, a large web portal in the country. Former governor Jim Doyle and Milwaukee Mayor Tom Barrett went to China for the signing last year.
Another asset for Wisconsin was the large number of Fortune 500 firms in the area, says Kraft. They include Rockwell, Caterpillar Inc, Johnson Controls, Northwestern Mutual Life Insurance, Manpower, Harley Davidson and Oshkosh Truck.
When Kraft first got involved in 2004 with the idea of a regional center, he jokingly says he thought it would take "20 years to get it rolling, and it took seven".
Currently, Kraft is looking to expand again. He plans to apply for a regional center that will cover the entire state of Wisconsin by the end of the year and then spread to Nevada.
"There's a great opportunity there and there's a need," Kraft says. "It will be a unique program, the Chinese know Las Vegas very well, so we will be applying for a statewide regional center for the whole state of Nevada within six months."
What separates First Pathway from the others, according to Kraft, is the ability to continue working with the same clients through multiple projects to satisfy a variety of investment needs. "If they like what they experience with us the first time, we can help them or their relatives with something else," Kraft says.
But Kraft's innovative approach goes beyond just his business model.
"It's about building relationships," Kraft says. "They were 'rightfully wary' of Americans. Some people go in there and think it's going to be a really easy deal just because they have a lot of money to spend. But they don't invest the time needed."
Over the past seven years, Kraft has gained a lot of respect for the Chinese people. "They're incredibly smart, very meticulous, they're great people. I really enjoy the Chinese people, they're really, really patient," Kraft describes. "Demanding is not the right word, but they're very smart, and are very drilled into this, and are great negotiators."
Kraft views the so-called China bashing that politicians engage in for various reasons as "counterproductive". "They need somebody to blame so they go after the boogeyman," Kraft says.
"Politicians are disconnected with the real world anyway. Many of them never had to run companies and make a payroll. I have zero confidence in them," Kraft explains. "To go after China is naive and shows a total lack of understanding. We are in this together. What's best for world stability is what's best for the world economy."