The Georgia Department of Economic Development has once again parted ways with the contractor tasked with recruiting investment from China amid the ongoing U.S.-China trade dispute that has dampened bilateral investment.
John Ling, whom Georgia recruited away from rival South Carolina in 2015, was notified in March that his yearly contract with Georgia would not be renewed.
The move came around the same time news broke that a $530 million tire project in LaGrange, once poised to become the state’s signature Chinese investment, had been postponed indefinitely. Qingdao, China-based Sentury Tire reportedly struggled to finance the massive project after a failed initial public offering in China.
Even so, Mr. Ling echoed earlier assessments by the state that Chinese investors are increasingly seeking production bases here that could help mitigate the risk of tariffs.
President Donald Trump and Chinese President Xi Jinping are set to meet at the G-20 Summit in Osaka, Japan, this month in an attempt to hash out a deal to avert new 25 percent tariffs on the remaining $300 billion in U.S. imports from China.
Even with all this lingering uncertainty, Mr. Ling said, generating interest for Georgia has not been a problem.
“The pipeline has never been this strong; the challenge is that it’s hard to close a deal,” Mr. Ling said, noting that Chinese companies have been watching with great concern the U.S. government’s ban on supplying components to Huawei, a giant private telecom company seen by the U.S. as a security threat.
Though he said he was “surprised” by the state’s decision to cut his contract, Mr. Ling said the split was amicable and that he would continue recruiting Chinese investment to the South through a private consultancy. Georgia, he said, would continue to be on his mind.
Pat Wilson, commissioner of the economic development department, told Global Atlanta in an interview that the state periodically reviews the performance of all of its overseas offices.
“We look at the market and the contractor to make sure what we’re putting into the market is strategic, is producing the results that we need, and that the contractor is meeting our expectation levels,” he said.
Mr. Wilson had nothing but good things to say about Mr. Ling, though some in the community had wondered whether his salary was justified, especially as the years went by without many new Chinese announcements.
After his initial hiring, the state reportedly paid Mr. Ling $275,000. Last fiscal year’s budget figures show a contract payment of $373,306.73, out of which Mr. Ling would have paid travel, marketing and personnel expenses.
Mr. Wilson said it was time to “right-size” the presence in China, given the turbulence of the bilateral relationship and growing opportunity elsewhere. Georgia’s reputation in China is solid and multifaceted, including strong pushes in tourism and education, he said.
“We feel like we’ve done a great job of building a brand in China, specifically with the Shandong province, where a tremendous amount of investment comes out of,” Mr. Wilson said.
Georgia’s bread-and-butter markets are still Western European nations like Germany, the United Kingdom and the Netherlands, as well as other Asian nations like Japan and South Korea. In recent months announcements have been pouring in from South Korea, including the planned $1.7 billion SK Innovation electric vehicle battery factory in Jackson County.
Gov. Brian Kemp is set to visit Korea next week on his first overseas business recruitment mission, which is coming earlier in his term than would generally be expected, Mr. Wilson said. The goal is to thank existing investors and woo new ones.
“Korea is our hottest market for FDI,” Mr. Wilson said. “I think as we looked at all of our contracts we wanted to at least at the short term pivot and look a little bit more into the Korean market and leverage the wins that we’re having.”
One another advantage for Korea: It has moved out of the Trump administration’s crosshairs by renegotiating a free trade agreement and landing quotas to avoid steel tariffs.
Meanwhile, Paul Swenson, the Shanghai-based representative tasked with helping Georgia’s exporters break into the China market, separately gave notice that he would no longer be representing the state in China.
Mr. Swenson’s business, The China Hand LLC, is set to begin helping private companies directly rather than working with states, Mr. Wilson said while praising the trade promoter as one of the best reps Georgia has had in its 11-country repertoire.
“We tried to talk him into keeping us, but he just made a business decision that they think they can do more business focusing on companies,” Mr. Wilson said.
Mr. Swenson is helping the state find a trade replacement.
“That contract is moving separately and we hope to have somebody very soon to announce,” Mr. Wilson said. Mr. Swenson is based in Shanghai and was paid $130,000 a year, according to state records. That puts the tally at over a half-million dollars a year to maintain the two China offices, not including rent paid to Hisense for the Qingdao office.
‘Committed 100 percent’ to China
Splits with Mr. Ling and Mr. Swenson represent the latest reset in Georgia’s fraught history of Chinese investment recruitment, which started in 2008 with a Beijing office.
After years of hiccups in the Chinese capital, the state relaunched in 2013 with a presence in Qingdao, a tourism and manufacturing hub in the coastal province of Shandong. But the small office rented within the headquarters of television and appliance manufacturer Hisense has remained largely empty since then.
Mr. Ling was brought on to give Georgia’s China presence a jolt. The hope was that he woulrend replicate his successes in South Carolina, where over a decade he had recruited manufacturers investing nearly a billion dollars — not including Chinese-owned Volvo’s new facility.
Thus far, though, only a few Georgia projects have blossomed into job-creating deals. Mr. Ling never relocated from his home in Greenville, S.C., to Georgia.
Despite the rocky recent past, Mr. Wilson said the state remains “committed 100 percent” to the Chinese market, seeing vast potential there in the long term as costs rise and companies mature into global competitors.
Tariffs are prompting more Chinese visits to Georgia, though the decision-making has been slow.
“We have a number of new projects that are specifically related to tariff talk and tariff issues, and these companies know that they need to be in market, and they absolutely can’t take access to this consumer base for granted. Many of them supply companies that are based in the U.S., so being here is very important.”
He sees eventual parallels with the Japanese market, calling all the state’s foreign endeavors a “long-term play.”
“(Japan) wasn’t an immediate market that poured into the U.S. either, but as we stuck out that relationship, Japan has now become one of our most successful offices with more than 500 Japanese facilities here. That’s where I would see this going for the long term.”
Fits and starts are inevitable as companies feel out the market, Mr. Wilson said, agreeing with Mr. Ling that uncertainty is complicating long-term planning for Chinese companies.
“Companies are wary of making that final decision, but that shows that we need to be continuing to grow our relationships and spend time in market so that when there is certainty, those projects are ready to go and ready to announce,” Mr. Wilson said, noting that other Southern states are seeing similar challenges.
On that front, Stella Xu, the state’s director of greater China initiatives and the one constant interfacing with investors on the Georgia side throughout the past decade, will begin to focus more exclusively on business development. In the past she has split time focused on tourism and education.
A new investment professional will be sought in Shanghai, though no timeline has been reached for replacing Mr. Ling, Mr. Wilson said.
In the meantime, Ms. Xu will also work more closely with Charles You, who has represented the Georgia Ports Authority in Shanghai for more than a decade.
Though empty right now, the Qingdao office will be maintained, Mr. Wilson said, citing the importance of Georgia’s ties with the Shandong province.
Hisense, which is based in the coastal city, has its North American headquarters in metro Atlanta. Sentury, the tire company with the delayed LaGrange project, also hails from there. Appliance giant Haier, which announced $130 million in Georgia investments through its GE Appliance unit this week, also has its head office there.
In separate interviews, Mr. Ling and Mr. Wilson agreed that it would be better to have a person permanently on the ground in China than traveling back and forth.
Mr. Ling lived in Shanghai for the first few years after he was appointed to lead trade efforts in China for South Carolina. He ended up recruiting many projects from there, but it took about five years for momentum to pay off.
“I cannot emphasize enough the importance of a physical presence,” Mr. Ling said.
He added that the state should focus heavily on projects with a high level of complexity and that require state intervention on permitting, incentives, training and local government connections. It should also seek companies with many upstream and downstream suppliers to maximize impact of anchor investments, he said. That’s exactly the approach that has worked with Korea.
All told, Mr. Ling said he has “no regrets” working with Georgia. He recommended the state replace him with another native Chinese speaker, fluent in both the language and business culture — which could mean very little sleep, as Chinese companies often have fewer boundaries between work and leisure time. For Chinese executives, decisions to deploy hundreds of millions of dollars can sometimes be made in an instant.
“If you work on a Chinese project, your cell phone better be on 24/7, and when they need you, they need you the next minute.”