Extending southern hospitality

Updated: 2012-04-13 07:42

By Ariel Tung (China Daily)

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Extending southern hospitality

George Harris and Raymond Cheng are founders of the Alabama China Partnership. [Ariel Tung / China Daily]

Alabama invites 300 Chinese business executives to explain what life is like in rural America

When residents of Monroeville, Alabama, heard that about 300 Chinese people were coming to their city, they lined the street with welcome banners in English and Chinese, and donated homemade cookies and desserts to the symposium that hosted the visitors.

About 40 Chinese companies flew in from China and across the United States to attend a two-day symposium beginning on March 15 to learn about investment opportunities in Alabama. This visit was the first - for most of these 300 business executives - to a state whose economic growth centers around its automotive manufacturing industry.

Alabama is the headquarters for Honda Manufacturing of Alabama, Hyundai Motor Manufacturing Alabama, Mercedes-Benz US International and Toyota Motor Manufacturing Alabama.

Besides having a competitive advantage in aerospace products and car components, the state's industrial outputs include iron and steel products; paper, lumber and wood products; mining (mostly coal); plastic products and apparel.

On the first day of the symposium, The Monroe Journal, a newspaper in Monroeville, printed two double spread editorials in Chinese about the conference, never mind that most of the 7,000 residents can't read Chinese.

The two-day conference was sponsored by Alabama China Partnership (ACP) and supported by the Alabama state government and China's 21st Century Media.

The aim of this symposium was to help Chinese executives understand the American tax system and labor laws, how to finance a project and how to choose a site in the United States.

The governor of Alabama may have signed a bill specifically to attract Chinese investors, but it is the local people that are winning them over.

George Landegger, chairman of ACP, describes the friendliness of Alabamians as "intangible" for choosing an investment site.

Landegger, who is also president of Parson & Whittemore, flew in the Chinese executives from Atlanta to Monroeville using one of his private jets. There is currently no direct commercial flight available between the two cities. There are three private airports in Monroeville.

Landegger says Monroeville was chosen as the venue for the symposium because Chinese entrepreneurs are more likely to put a plant in rural America, and he wants them to see and experience life in rural America.

"I believe that a stronger relationship between Alabama and China would lead to more Chinese businesses here, and eventually jobs in the state," Landegger says.

He believes that the state and city governments, and the local residents, welcome Chinese investment.

According to the US-China Business Council, China was Alabama's second-largest export market in 2010 and worth $1.9 billion. The growth in Alabama's exports to China was 1,106 percent between 2000 and 2010, while the state's exports to the rest of the world was 90 percent for the same period.

In July, Alabama passed a bill to provide Chinese enterprises investing in the state with tax subsidies to offset the costs incurred from anti-dumping duties levied by the US.

Called the Made in Alabama Job Incentives Act, the tariffs subsidy bill will be awarded to any non-US business (excluding non-industrial sectors such as finance) with an investment project of more than $100 million and that creates at least 100 local jobs.

Alabama Governor Robert Bentley told China's 21st Century Media in an earlier interview that the bill was specifically created to attract Golden Dragon Precise Copper Tube Group's investment to the state.

During his opening remarks on March 15 at the symposium, Bentley said that the new legislation "makes it easier to recruit international companies into the state".

Chinese companies who choose to invest in Alabama will also benefit from lower taxes and cheaper energy costs, Bentley says.

Last March, Golden Dragon announced its plan to build a $100 million manufacturing facility in Thomasville, Alabama. Headquartered in Henan province, Golden Dragon is a leading supplier of copper products used by the refrigeration and cooling industry.

Although Golden Dragon is the third Chinese investment in the state, it is the most significant to date. It is estimated that the project will employ up to 500 people in Alabama.

Bentley says this is "just the beginning".

Golden Dragon's North America President Jason Yin said at the symposium that production at its new Alabama plant will begin in about 18 months.

When asked why Alabama was chosen, Yin says the company had received lots of support from the state and city government. Other states such as Oklahoma and Texas were considered, but in the end they decided on Alabama. Personally, Yin has been to Alabama more than 20 times over the past eight years for business, and he has made many friends there.

It is a win-win situation for both as putting a plant in the US would help Golden Dragon offset the extra tariff on its imports from China, Yin says.

Raymond Cheng, founder and CEO of ACP, says the organization was founded because he saw Alabama's potential.

"We were so excited about the Golden Dragon project, and we foresee a lot more of that coming," Cheng tells China Daily.

Cheng is also the CEO of SoZo Group, an advisory firm to the Golden Dragon investment. He says Golden Dragon's CFO Benny Cheng first contacted him in New York to help source a US site.

When Landegger, who has been involved with the Alabamian community for a long time, learned about the Golden Dragon investment, he contacted Cheng, and together they started ACP to help other Chinese companies come to the US.

During a panel discussion, China Telecom, ZTE Corp and Golden Dragon were invited to talk about their experience in investing in the US.

Donald Tan, president of North America China Telecom, says that he still has difficulties understanding the complicated federal and state tax system for telecommunications companies despite being here for six years.

Cheng Lixin, president of North American region at ZTE, says this symposium provides "a very good opportunity for us to understand what Alabama can offer to the high-tech and labor-intensive industry.

He adds that it is his company's goal to be "close to their customers".

Headquartered in Dallas, ZTE USA has 10 offices in the country, three R&D centers and one logistic center. It presently does not have an office in Alabama.

While this is ACP's first symposium, Landegger and Cheng plan to hold another one in May and then in fall. They will invite a different set of speakers each time to share about their experiences of investing in the US.

Landegger says their goal is to facilitate five to six Chinese investments in Alabama in the next 12 to 18 months.

"Economic development doesn't happen overnight. You have to do it over and over again," Cheng says.