China reverses the trend to boost US jobs
Print Edition
BURDENED with Alabama’s highest unemployment rate, long abandoned by textile mills and furniture plants, Wilcox County desperately needs jobs.
They’re coming, and from a most unlikely place— central China’s Henan Province, some 7,600 miles away.
Henan’s Golden Dragon Precise Copper Tube Group opened a plant in the US county in May. It will employ more than 300 people in a place known less for job opportunities than for lakes filled with bass and pine forests rich with wild turkey and boar.
“Jobs that pay US$15 an hour are few and far between,” says Dottie Gaston, an official in nearby Thomasville.
What’s happening in Pine Hill is starting to happen across America with Chinese companies invested a record US$14 billion in the United States last year, the Rhodium Group research firm said. Collectively, they employ more than 70,000 Americans, up from virtually none a decade ago.
Mayors and economic development officials are lining up to welcome Chinese investors.
In the case of the Pine Hill plant, tax breaks, some Southern hospitality and a tray of homemade banana pudding helped, too.
In March, Dothan, Alabama, held a two-day US-China manufacturing symposium, drawing dozens of potential Chinese investors. On sale were T-shirts reading: “Ni hao, y’all” — combining the Chinese greeting with a colloquial Southernism.
Chinese executives wandered around during a street festival, experiencing Americana by snapping photos of vintage ’60s muscle cars. A Chinese company, in a deal negotiated before the symposium, announced it would bring a 3D printing operation to Dothan.
The US and China have long maintained a lop-sided relationship — China makes things. America buys them. The US trade deficit in goods with China last year hit a record US$318 billion. And for three decades, numerous US manufacturers have moved operations to China.
The flow is at least starting to move the other way. One reason is that in the past decade, the cost of labor, adjusted for productivity gains, has surged 187 percent at Chinese factories, compared with just 27 percent in the US, according to Boston Consulting Group. In addition, Chinese electricity costs rose 66 percent, more than twice the US increase. The start of large-scale US shale gas production has helped contain US electricity costs.
Those rising costs have cut China’s competitive edge. In 2004, manufacturing cost 14 percent less in China than in the US. That advantage has narrowed to 5 percent. If the trend toward higher wages, energy costs and a higher currency continues, Boston Consulting predicts, US manufacturing will be less expensive than China’s by 2018.
Cost isn’t the only allure. As Chinese companies build more sophisticated products, they want to work more directly with US customers.
“Being close to the marketplace is good for everybody,” says Loretta Lee, a Hong Kong entrepreneur who just opened a shoe factory in Tennessee.
Officials in southwestern Alabama went out of their way to lure Golden Dragon, which wanted to build a plant to make copper tubing for air conditioners.
A banquet was organized with both traditional Southern fare and Chinese dishes. When the visiting Chinese were seen devouring homemade banana pudding, “we took them the whole tray,” a local official says.
Still, culture and language can remain a barrier. Local officials hastily replaced a black-and-white banner welcoming Golden Dragon after learning that the colors signified a funeral to the Chinese.
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