The Georgia Department of Economic Development is in the process of hiring a new representative for its investment office in Qingdao, China, as the state seeks to up its game in wooing Chinese investment.
The department decided not to renew the contract of Seth Jacobs, its most recent China rep, nearly two years after Mr. Jacobs made arrangements to open the office and paved the way for a high-level delegation led by Gov. Nathan Deal in August 2013.
Pat Wilson, chief operating officer, who handles staffing of Georgia’s 11 overseas offices, commended Mr. Jacobs for his work in helping set up the Qingdao office but said it was not producing enough leads.
“As with all our international contracts, we review them at the end of every year to make sure they are providing the return we expect. After our yearly review process, we decided to move in a different direction in China and are currently in the process of filling the position,” Mr. Wilson told Global Atlanta. The new hire is expected to be announced before the end of the current fiscal year June 30.
The change comes as regional rivals have announced successes in Chinese recruitment, including Alabama‘s $100 million investment from a Chinese copper tubing manufacturer and South Carolina‘s $218 million textile company win, among others. Georgia’s last major manufacturing announcement from China was in 2007, when Sany Group decided to put a $60 million factory in Peachtree City.
Mr. Wilson, who has traveled to China more than 10 times in the last five years, said the new hire will have had a “track record” in successfully recruiting Chinese projects.
“The long-term strategy is that China is too important to not be there, and we are committed to that market,” said Mr. Wilson. In the past week, two Chinese companies announced new locations or expansions in Gwinnett County. The state worked on both of those projects.
But given its consistent success in attracting foreign firms and No. 1 ranking for business climate, some have questioned whether Georgia’s China strategy needs to be fixed.
Many raised their eyebrows about Georgia’s decision to locate its investment office in Qingdao, away from more traditional centers of economic influence in China like Shanghai, where the state now has a trade office that Mr. Wilson said has been very successful in helping Georgia exporters boost sales in the state’s No. 2 export market.
Mr. Wilson said the state has built strong ties with Qingdao and the Shandong province, with which it also partners through the Regional Leaders alliance, a global group of state and provincial leaders which Georgia hosted last year for its biennial forum. Shandong is one of China’s top provinces for outbound investment, but Georgia is the only U.S. state with an office there. Officials say that gives them a leg up in a less crowded part of China.
Before laying down roots in Qingdao, the state’s office faced a rocky start. Two years after the launch in 2008 in Beijing, the state decided not to renew the contract of Lindsay Liu, its inaugural investment representative. While a trade rep held down the fort in a small office within a towering Beijing office tower, the investment position remained open for nearly three years until the hiring of Mr. Jacobs in advance of the Qingdao move.
Meanwhile, John Ling, South Carolina’s officer for China, has been working with his state since 2000. Mr. Ling spoke in Atlanta at a seminar Monday and talked about the importance of patience in attracting Chinese investment, according to people who attended. Volvo, the Swedish-born but Chinese-owned car manufacturer, picked South Carolina over Georgia and other state this week for a $500 million U.S. factory that will lead to 4,000 jobs.
Even Gov. Nathan Deal conceded in an AJC article on the Volvo announcement that “it’s pretty obvious that states like South Carolina have had more success with Chinese companies like Volvo than the state of Georgia has.”
Reached by email Tuesday, Mr. Jacobs said it was “unfortunate that the state decided to move in another direction.” He said there are only “several” Chinese companies that open up factories in the U.S. each year and that Georgia is not falling behind other states, which sometimes make announcements before land is purchased and people are hired. That also happened to Georgia in 2014, when a Chinese phosphate factory was announced but never materialized.
Mr. Jacobs said he was asked to add leads to the database based on any level of interest by the Chinese company, while he elected only to submit those on which he had performed due diligence.
“We only wanted to bring real and high-quality manufacturing, assembly and logistics projects to Georgia, but some people wanted quantity over quality,” he said. “There are still four quality Chinese manufacturing projects that we found for Georgia that haven’t made a decision about their investments in the U.S yet, we hope that at least one of those companies will invest in Georgia in the future.”
Stella Xu, the state’s manager for China initiatives, is continuing to handle its relationships in the country while Mr. Wilson finishes the hiring process. On May 7, Ms. Xu was on hand to welcome U.S. Goal Go Cabinets Inc., a Chinese subsidiary, to its new showroom and warehouse in Gwinnett County. The company pledged to hire 20 and open three new warehouse locations in the coming years. That adds to the more than 600 international companies in the county, including about a dozen Chinese-owned firms.
The Pendleton Group is the presenting sponsor of Global Atlanta's Economic Development Channel. Subscribe here for monthly Economic Development newsletters.