Science in the Triangle

A few weeks after being challenged by former Gov. Jim Hunt to go and recruit Chinese companies to North Carolina, Keith Crisco, the state’s new commerce secretary, offered a response at a China business forum Tuesday at Brier Creek Country Club.

Crisco told the several dozen people who attended the forum that he has visited China more than a dozen times since 1980. He called China a leading trader with a $1.8 billion impact on North Carolina’s budget. And he talked about a trip planned later this year to Beijing and Shanghai, where North Carolina opened a trade office in January. Gov. Beverly Perdue has agreed to accompany him on the visit, Crisco said.

The industries North Carolina will focus on include aviation, financial services and life sciences, he added. “International trade is the future for our economy.”

Hosted by the Greater Raleigh Chamber of Commerce, the forum was part of a roadshow put together by the U.S. Department of Commerce to talk about international trade, including international free trade agreements. In Raleigh, the roadshow featured speakers from local companies and organizations doing business in China and out-of-town business consultants looking to score clients.

Despite the challenges of setting up shop in China - “China is not for sissies,” William Zarit of the U.S. Commercial Service, the trade promotion unit of the International Trade Administration, told the forum crowd - several North Carolina companies and organizations have established operations in China. They include the Lord Corp., a Cary-based company that makes chemicals and parts for vehicles and helicopters, and the Hamner Institutes for Health Sciences in Research Triangle Park.

Lenovo, a Chinese company that bought IBM’s personal computing division in 2005, has one of its world headquarters in Morrisville.

North Carolina hasn’t always welcomed the Chinese, said Duane Long, who built the World Trade Park in Raleigh and helped establish the North Carolina China Center. About eight years ago, Long said in his forum presentation, former Gov. Mike Easley turned down a group of Chinese businessmen interested in investing in North Carolina, because so many North Carolina manufacturing jobs were going to China.

The investors went to South Carolina instead, Long said. Today, six Chinese companies have operations in South Carolina.

“Now, the atmosphere [in North Carolina] has changed,” he said, referring to efforts by Crisco and Perdue to improve the state’s trade relations with China.

Cheep Chinese goods, which gained unrestricted access to the U.S. in 2001, cost North Carolina an estimated 80,000 manufacturing jobs over eight years, a 2008 report by the Washington, D.C.-based Economics Policy Institute suggested. Nationwide, the number of jobs lost was about 2.3 million.

China is a fierce, global competitor with an abundant labor force whose low wages can reduce production costs by about 70 percent compared to the U.S., said David Hale, president of New York-based consulting firm International Smart Sourcing.

Corruption, maintaining quality control and protecting intellectual property can be major challenges for U.S. companies doing business in China, Hale said. But China also has a growing middle class with an enormous consumer purchasing power. Chinese consumers bought more than 1 million cars in March alone, he said.

The Lord Corp. first set up operations in China in 1987, Richard McNeel, the Lord Corp.’s chief executive, told the forum. According to its Web site, the company now has two manufacturing sites, a research and development laboratory and a customer service center, all in Shanghai.

Most of the Lord employees in Shanghai are Chinese and the manufacturing plants produce mostly for the Chinese market, McNeel said. Lord’s sales in China are projected to reach $50 million this year, or about 8 percent of the company’s annual sales, he said. But China is the market where Lord’s sales are growing fastest.

Lord employs about 2,600 worldwide, including more than 300 in Cary.

The Hamner Institutes established a drug research and development partnership with China Medical City about two months ago. An initial $5 million investment by a Chinese company that is setting up its U.S. headquarters at the Hamner Institutes is part of the partnership.

Bill Greenlee , CEO of the Hamner Institutes, called China Medical City, a research park under construction about three hours north of Shanghai, “RTP on steriods.” Already, there’s interest in collaborating with the Hamner Institutes on occupational health risks, such as exposure to chemicals on the job, Greenlee said at the forum.