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On a spotless factory floor, workers wearing hair nets snap together metal frames, cables, and photovoltaic cells to produce metallic-blue solar panels. This sort of work could be done just about anywhere, yet since October, China's Suntech Power Holdings Co has been making the panels in a 36,500-square-meter plant in the Arizona desert.
The sand-colored factory, about 12 kilometers west of Phoenix in the town of Goodyear, brings the company closer to its American customers and into compliance with the "Buy American" requirements in some government contracts. The strategy seems to be working: Suntech plans to double its 75-person payroll by the end of next year.
For 20 years, US manufacturers have decamped to China in search of cheaper labor and parts. Now Chinese companies increasingly are setting up shop in the US to escape trade barriers, capitalize on the US government's alternative-energy push, and learn lessons that could help them in their home market. "It's a little unusual to see it coming the other way," said Wei Tai Kwok, Suntech's vice-president for marketing.
Chinese companies through September2010 invested $2.81billion in US projects or acquisitions, up from $1.73billion in the whole of 2009, according to Rhodium Group, an economic research firm in New York.
It's no longer just State-owned enterprises buying up natural resources to fuel China's ravenous industries. "Now the Chinese are investing more broadly in retail, utilities, and especially new manufacturing," said Thilo Hanemann, Rhodium's research director.
With domestic unemployment hovering near 10percent, US officials have put aside concerns over unfair Chinese competition.
Near Corpus Christi, Texas, the State-owned Tianjin Pipe Group Corp plans to build a $1billion steel pipe mill next year that will employ 500 to 600 people and circumvent 63percent US tariffs.
On Nov 30, Pacific Century Motors, formed by an affiliate of Beijing's municipal government, acquired General Motors Corp's Saginaw, Michigan-based Nexteer Automotive, which makes steering and driveline systems and employs more than 3,600 workers.
China absorbed $7 of outside investment for every $1 it sent to other countries as late as 2005, according to the International Monetary Fund (IMF). Next year the IMF expects Chinese outward investment for the first time to exceed the incoming flow.
The yuan's steady rise could be a further spur, making US assets more affordable for Chinese buyers.
"The yuan is going to continue to rise," said Donald Straszheim, senior managing director for ISI Group in the investment management firm's Los Angeles office.
For Suntech, the world's largest producer of solar panels, with headquarters in Wuxi, China, about 135 kilometers west of Shanghai, a US assembly line means big savings on shipping costs and a foothold in a growing market.
The company says it received a $2.1million manufacturing tax credit through the economic stimulus package on an investment of about $10million, and became eligible to supply solar panels to installers that win government contracts with "Buy American" clauses.
Barry Broome, chief executive officer of the Greater Phoenix Economic Council, spent more than two years courting Suntech Chairman Shi Zhengrong, ultimately selling Shi on his vision of Phoenix as the world's solar capital. Goodyear officials chipped in three months' use of office space in city hall for a nominal $10 fee. The deputy-mayor even baked a chocolate cake for Martin Guo, the plant's general manager.
More than 1,000 people, including numerous victims of Arizona's housing implosion, turned up at a recent Suntech job fair.
"All eyes are on the US market at this moment," said Shi. "We have very high expectations and we believe the US market will grow substantially."
Bloomberg News |
