Business

For China, SC is a gateway for reaching US markets

Visitors to Shanghi’s Appliance and Electronics World Expo in March could see the Haier Group’s refrigerators and other appliances. The Chinese company started operating its largest overseas research and development center in Saitama Prefecture Japan. The center will focus on fundamental research, new product planning and key technology designs.
Visitors to Shanghi’s Appliance and Electronics World Expo in March could see the Haier Group’s refrigerators and other appliances. The Chinese company started operating its largest overseas research and development center in Saitama Prefecture Japan. The center will focus on fundamental research, new product planning and key technology designs. The Associated Press

When South Carolinians walk into their kitchens, the name on their refrigerators is much more likely to say Kenmore, Frigidaire or GE than “the Haier Group.”

But China’s biggest appliance maker, which 15 years ago became the first to build a South Carolina plant near Camden, has been striving to achieve just that kind of brand recognition in the United States’ vast, $16 trillion economy.

Haier still is working on its ultimate corporate goal after investing $60 million and employing some 250 workers making appliances in Kershaw County. But the company leads a long and growing list of Chinese firms that have beaten a path to the Palmetto State.

Twenty Chinese companies have put down $669 million in capital investment in South Carolina since Haier’s arrival in 2000, according to the S.C. Department of Commerce. Together, they employ 3,253 workers.

“Given how much China has grown – mostly from internal investment and competent, inexpensive labor, for quite some time – as a maturing economy, it’s about time that they are expanding elsewhere,” said Frank Hefner, a College of Charleston economist. “It’s only natural that would happen.”

The Haier Group (pronounced higher) announced its first overseas plant in Camden in 1999, promising a $30 million initial investment on 110 acres. By 2006, Haier had increased its investment to $60 million, according to Commerce Department figures. In 2009, Haier expanded to add a new refrigerator/freezer line of appliances.

Haier turned down repeated requests last week for an interview or an opportunity to visit the plant.

In a 2009 interview with China Daily, an English-language daily newspaper in China, Haier officials in Camden said their intent was to globalize their brand, which required a presence in the U.S. market.

The company also told the Chinese newspaper it wanted the Camden plant to be the first of many Haier manufacturing plants in the U.S. That would include a research and development center – all within 10 years of that interview.

Other major recent Chinese investments in the state include automotive lift maker Peak Corp. and Chinese textile company Keer Group.

In November 2014, Peak, based in Foshan, China, announced plans to establish its U.S. manufacturing operations in Clarendon County in a 48,000-square-foot building, with a five-year, $6.6 million investment and to hire 59 workers. Peak officials said establishing a facility in South Carolina would give the company an opportunity to create a U.S. presence.

The state’s booming automotive industry, with more than 25,000 jobs in vehicle parts manufacturing, provides Peak’s products “exceptional relevance” in South Carolina, the company said.

In December 2013, Keer Group decided to put its first textile manufacturing outside of China in Lancaster County, citing the state’s workforce, the proximity to cotton producers and the port of Charleston. The Hangzhou, China-based company built a 230,000-square-foot manufacturing plant representing a $218 million investment and plans to create 500 jobs, according to the Commerce Department.

Turning toward the coast

Chinese investors also have turned their attention to other parts of South Carolina.

They have been buying up resort property in Myrtle Beach, spending $50 million to purchase 13 Grand Strand golf courses during the past 18 months; spent $7.5 million to purchase a marquee pottery business the new owners have since turned into a cultural center, a hotel and, according to Myrtle Beach Mayor John Rhodes, they want to invest am additional $200 million.

Chinese investors also bought a $5 million portion of Myrtle Beach’s Grande Dunes and at least 100 houses in the area, according to The (Myrtle Beach) Sun News.

Last week, China-owned Swedish automaker Volvo announced it would spend $500 million to build its first North American manufacturing plant in rural Berkeley County.

Economist Hefner said it took him a moment to adjust to a Chinese holding company’s purchase of Volvo Cars, something of a European cultural commodity. “Once they did that, looking at putting a plant in the United States is a natural. Then the question is, where would you put it?” Hefner said.

South Carolina stands out among competitors because of its port, roads, moderately priced labor and moderately priced land. “The Southeast has always been positioned for that,” he said. “No wonder Savannah and Charleston came up top on the list.” Volvo ultimately chose the Palmetto State over Georgia.

Workforce training capability through the state’s technical college system fills out the Palmetto State’s strengths, Hefner said.

South Carolina also offered a $200 million-plus incentive package to help lure the Swedish automaker, purchased in 2011 by Zhejiang Geely Holding Group.

The S.C.-China link

South Carolina’s business recruiting agency said China ranked fourth in foreign direct investment in the state between 2011 and 2013. Only Germany, Japan and France have more investments here. In 2012, a record export year for the state with $25.3 billion in goods, China ranked third globally in receiving products from South Carolina.

“I think the U.S.-Chinese relationship from a business standpoint is very strong and will continue to grow,” said Rich Fletcher, president and CEO of I-77 Alliance, which works to attract investment along the highway leading into North Carolina. “Over the past couple of years particularly in this corridor, we’ve seen a lot of growth in the Chinese investment, I don’t think there is any evidence that’s going to slow down.”

Other Chinese investments in the state include:

▪  JN Fibers Inc., a Zhejiang, China-based recycled polyester products manufacturer, announced a $45 million plant in 2013 that was to hire 308 workers in Richburg. Giti Tire announced a $560 million plant in Chester County in September 2014.

JN Fibers operates under its subsidiary name, Sun Fibers. It recycles discarded soda and water bottles and transforms them into polyester staple fibers for use in home textiles, furniture, upholstery and automotive industries, according the Commerce Department.

▪  Giti Tire (pronounced G-T), is the 10th largest tire company in the world. It is based in Singapore but has strong ties to China. Giti has not started building the Chester plant that is to become the company’s first North American facility. The company plans a 1.8 million square feet manufacturing and distribution facility hiring 1,700 workers over 10 years, it said.

The South Carolina-China partnership is longstanding and strong, Fletcher said.

Cost pressures in China

China has the No. 2 economy in the world with nearly an $8 trillion annual gross domestic product, though its economy is struggling. Its growing middle class and the higher wages that come with that put pressure on its manufacturing costs, Fletcher said.

“We’ve seen other companies that have an interest in investing in this marketplace,” he said. That’s in part because the gap is closing on cost differentials between producing products in China and getting them to the market quickly and producing goods in the U.S., and specifically, the eastern U.S., where a huge middle class already exists, Fletcher said.

“So, they’re catching up a little bit. It’s still much cheaper there, but when you add in the increased costs and the time and delay in shipping, particularly to the East Coast where 60 percent of the U.S. population still lives, it is very hard to reach this market.”

Reach Burris at (803) 771-8398

Twitter: @RoddieBurris

Top 10 Chinese companies by announced or actual jobs in South Carolina

▪  1,202 jobs: Techtronic Industries North America, Anderson and Pickens counties

▪  501 jobs: Keer Group, Indian Land

▪  380 jobs: Greenfield Industries Inc., Seneca

▪  318 jobs: JN Fibers Inc., Richburg

▪  225 jobs: Haier America, Camden

▪  120 jobs: Au’some LLC, Sumter

▪  100 jobs: Uniscite Inc., Laurens County

▪  83 jobs: Bluestar Silicones USA Corp., York

▪  59 jobs: Peak Corp.

▪  50 jobs: Wellman Plastics Recycling, Florence

3,253: Total S.C. employment by Chinese companies

$669 million: Total S.C. investment by Chinese companies since 2000

Source: S.C. Department of Commerce

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