Louisiana vies to attract Chinese investment
Among the effects on Louisiana of Hurricane Katrina 10 years ago was the state dropping its laid-back approach to attracting outside business. Now it’s aggressively seeking investments, especially from China reports May Zhou in New Orleans.
investment made by Yuhuang Chemical, the footprints of Chinese investment in Louisiana are relatively small compared with the neighboring state of Texas. On LED’s website, the number of companies investing in the state is only six.
This makes the Yuhuang project very significant for the state beyond being the largest Chinese FDI project in the Gulf Coast because it helps to raise the awareness of Louisiana in China.
“Going back to about 2010, we didn’t see tremendous Chinese investment coming to the Gulf Coast. Today there is a tremendous shift, especially in the petrochemical and chemical refining industry,’’ said Adam Knapp, president and CEO of the Baton Rouge Area. “Yuhuang has come, and many others have started to express interest. From my own perspective, far more than what we anticipated.”
Louisiana’s economic connection to China can be seen beyond direct investment. For example, a sizeable order of the Bell 505 Jet Ranger X comes from China at the newly established Bell Helicopter assembly plant in Lafayette, Louisiana.
According to Texas-based Bell Helicopter, of more than 350 letters of intent for the new 505 model, 79 were from customers in China.
“Bell Helicopter continues to see a lot of potential in the helicopter market in China. The installed fleet of civil helicopters in China has more than doubled in the past five years from 300 to more than 650, and we expect that trend to continue,” said Chris Jaran, vicepresident for Bell Helicopter in China.
In Baton Rouge, Eugene Ji, a Chinese American originally from southwest China, has been brokering business between the US and China. He operates two golf courses under G2 Golf Club in Shreveport, offering golf camps and sessions to wealthy Chinese. “This provides a networking opportunity for Chinese and American business people,” said Ji.
Earlier this year, Ji’s film company, 1885 Media, formed a partnership with the Beijing Film Academy and Hunan TV to take advantage of Louisiana’s motion picture investor tax credit, which provides up to a 30 percent transferable tax credit on eligible in-state expenditures. This has led to a booming filming industry in Louisiana over the last decade and earned it the reputation of “Hollywood South”.
Ji said 1885 Media and the Beijing Film Academy established a film training center in Baton Rouge this year. 1885 Media also will shoot TV programs with Hunan TV, known for producing popular programs in China.
Ji is also involved in an upcoming liquefied natural gas (LNG) project. Baton Rouge-based G2 LNG LLC announced in October 2015 that it plans to construct an $11 billion LNG facility on the ship channel in Cameron Parish. It would be one of the largest capital investments in Louisiana’s history, according to the company’s announcement.
According to Ji, the executive vice-president of G2 LNG LLC, there is some Chinese investment involved in the project, but he declined to provide details. The company, chaired by former Louisiana governor Charles “Buddy” Roemer, was granted a license to export LNG to FTA (Free Trade Agreement) nations by the US Energy department in July 2015, and is applying for a license to export LNG to non-FTA countries such as China.
Also in Baton Rouge, Louisianan State University (LSU) not only works with the FastStart program to train workers, but also has an emerging markets initiative that evolved from a China initiative started in 2007 by Dr. Ye-Sho Chen at the Ourso College of Business.
According to Chen, director of the emerging markets initiative, the program is a collaboration of LSU, the University of São Paulo (USP) in Brazil, the Central University of Finance and Economics in Beijing and other entities in China.
Chen, along with others including LSU professors Edward Watson and Edgard Cornacchione, had developed a curriculum tailored for Chinese small- and mediumsized enterprises (SMEs) going abroad. Named Flying High, Landing Soft, the curriculum enables US and Brazilian students to help Chinese SMEs explore business opportunities and develop new global ventures.
In addition, LSU’s Innovation Park is an incubator for entrepreneurship. Its soft-landing program specifically helps international businesses by offering market research, helping companies to adapt products and services to the US market, and providing other assistance at very low costs, said Chen.
“A solar company in Wuxi, China, was interested in selling their products in the US. The owners sent their kid here to study at LSU,” said Chen. “We taught the kid how to access the US market and understand the dynamics of doing business in the US through our courses and incubator. Now the company is doing very well.”
The “kid” is Li Yi, founder and CEO of Renogy, a company specializing in renewable and green energy. Li went to LSU in 2008 to eventually sell products from her parents’ company, HQ ST, in the US market.
“At first I did not know how to start. The incubator provided me with a lot of marketing resources and helped me to get started. I am very grateful for that,” said Li.
Under the soft-landing program at the incubator, Renogy’s business had first-year sales of $1.3 million in 2010. Annual revenue grew to $15 million in 2014 and $20 million in 2015. Renogy now markets products not only from Li’s parents, but also from other countries and regions. “Currently only 40 percent of our products come from HQ ST,” said Li.
However, though it landed softly in Baton Rouge, Renogy eventually moved to California in 2013.
“Louisiana’s policy is not that supportive when it comes to renewable energy. The state requires green-energy products to be made in the US to get any tax credit. Also, container shipping from China is more cost-effective to Long Beach, California, than to Baton Rouge. Another factor is, it’s hard to recruit talent in Baton Rouge when we wanted to scale up,” explained Li.
Contact the writer at mayzhou@ chinadailyusa.com
Panamax gantry cranes by the bank of the Mississippi River at the Port of New Orleans, which has been essential to Louisiana’s economy and attracted Chinese shipping giant COSCO to the area.
Conrad Appel, Louisiana state senator