The head of a Chinese textile company says he is bringing a new yarn factory and 500 jobs to Indian Land, part of what officials call a growing trend of Chinese firms setting up shop in the Charlotte region.
Shang Qing Zhu, chairman of the Keer Group, a manufacturing company about two hours from Shanghai, told the Observer in a telephone interview that he is pleased to bring his company’s first overseas operation to the area.
Speaking through an interpreter, he said he plans to start construction in February. He was drawn to the area for the low labor costs, particularly in Lancaster County, and the fact that he found a good parcel of land close to Charleston’s port.
The company will invest $218 million to construct and operate a 230,000-square-foot manufacturing facility at S.C. 160 and Old Bailes Road, according to the S.C. Department of Commerce. The industrial yarn-making operation six miles south of Ballantyne is expected to produce 501 jobs within five years.
Zhu is also opening an office in uptown Charlotte to house engineering, financial and upper management functions. He said proximity to Charlotte’s financial sector bodes well for the company’s future growth in the region.
“We are going to continue the relationship for a long time,” he said.
South Carolina Gov. Nikki Haley joined Lancaster County officials in trumpeting the announcement as one of the largest in the county’s history. Lancaster lost thousands of textile jobs in recent decades as Springs Global downsized its operations in Lancaster and Chester counties, said Keith Tunnell, president of the Lancaster County Economic Development Corporation.
“This is one of the largest onshorings back to the U.S. of a textile operation in recent memory, and we are grateful for the opportunity to partner with the company,” he said.
Zhu’s decision to build in Indian Land represents the latest example of a wider trend in which manufacturing jobs that left the U.S. in droves for lower-cost Chinese locations are increasingly coming back.
With labor costs rising in China by 15 to 20 percent annually, experts say growing Chinese firms see less financial advantage in staying home. Low American energy costs and high-tech, highly-efficient modern plants help level the playing field.
“That advantage China has enjoyed is narrowing,” said Mike Zinser, a partner with the Boston Consulting Group who has studied the issue. “We are starting to see signs of textile manufacturers considering the United States. … It’s an industry we hadn’t expected to see” returning jobs to America.
Chinese firms generally have been stepping up their presence in the U.S. in recent years, buying everything from real estate to billion-dollar corporations such as the Smithfield pork producing firm in Eastern North Carolina.
Chinese companies spent a record $12.2 billion in the first nine months of this year on projects and acquisitions in the U.S., according to the Rhodium Group, a firm that tracks Chinese investments.
Zhu said that in his experience, most Chinese manufacturing firms looking to go outside of China head to other Asian countries. His company, he said, is one of the first Chinese textile firms to come to America.
Heavy competition for firm
The firm’s announcement capped what Tunnell, the Lancaster economic developer, has described as a fierce competition between the two Carolinas and several Northeastern states.
Eileen Cai, the Charlotte Chamber’s Mandarin-speaking corporate recruiting specialist for Asia, worked for about two years with Keer, but the company found a plant site more suitable to its needs in Lancaster County. Tunnell said he hired a Chinese-speaking translator from a local law firm to compete.
The Charlotte Regional Partnership, an economic development agency covering Mecklenburg, Lancaster and 14 other counties, said it also supplied Keer Group with research on the area.
Lancaster County offered the company a 30-year fee in lieu of property taxes agreement, as well as $7.7 million in revenue bonds to defray project costs. The South Carolina Coordinating Council for Economic Development approved a $4 million grant, as well as job development credits.
Tunnell said the jobs – mostly high-tech production posts paying $13-$15 an hour – will provide a welcome jolt to Lancaster’s economy. Springs Global employed more than 11,000 textile workers in Lancaster and Chester counties in the late 1970s and 1980s, but Tunnell said that presence has dropped to a few hundred as jobs moved to South America.
Lancaster’s jobless rate rose above 18 percent during the recession but has fallen to 9.1 percent.
“Even though we welcome textiles,” Tunnell said, “we don’t want it to dominate again. But this is a good group of people (at Keer) to work with. We’re very excited about this.”
Chinese presence grows locally
Cai said even though Charlotte didn’t get the factory, the Queen City’s airport and financial sector provided a strong part of the attraction for Keer officials. She said the project will help attract other Chinese companies to the Charlotte area.
“We see this as a win-win for the region,” said Cai, who interpreted for Zhu during his telephone interview with the Observer.
South Carolina officials said Chinese firms represent a growing part of their business community, citing research showing the Palmetto State leads the U.S. in foreign-affiliated job recruitment per capita.
Some 23 Chinese companies have operations in Charlotte, said Jeff Edge, senior vice president for economic development with the Charlotte Chamber.
That’s fewer than Germany, which had 127 firms in Charlotte as of 2012; but this year, more potential relocation or expansion projects have come out of China than Germany.
Chinese textile firms especially know the Carolinas “are famous for the textile industry,” said Cai, a Shanghai native. “When they look for U.S. operations, they automatically think about this region.”
The Keer Group says on its website that it employs more than 2,000 people in China and has total assets of 2.2 billion yuan, or $370 million.
Zhu said he expects to come to the area in February and hopes to someday buy a house here.