Capitalizing on growth
Few states have been as aggressive in reaching out to China as South Carolina. In recent years, 10 Chinese businesses, including appliance maker Haier, have expanded there and created about 2,000 jobs, said John Ling, managing director of South Carolina's China office. That's a fraction of the textile jobs the state has lost to Asia, but it's a start, he said.
Shanxi Yuncheng is Ling's latest catch -- but it took two years.
The company's owner, Liu, was reluctant. He had built his printing-equipment business from the ground up in Yuncheng, an industrial city of 5 million in central China.
In the early 1980s, Liu traveled to Germany and, with a $250,000 loan from a state bank, bought a world-class machine that would make the copper cylinders for the gravure method of printing. Within a decade, Liu's company dominated this niche for commercial printing in China.
Today, Liu owns more than 80 gravure cylinder-making plants in China and 20 more in a dozen countries, including Mexico, Brazil and Vietnam. He has more than 10,000 employees, and sales last year surpassed $250 million. Why, he asked himself, should he take the risk of setting up a factory in the U.S.?
Besides higher labor costs, Liu worried that his company and managers would not be welcomed and feel a backlash from the bad publicity about cheap and unsafe Chinese goods.
But the more he thought it over, the more it made sense. Shanxi Yuncheng wasn't going to grow much faster at home. Its expansion into Mexico four years ago showed him he could succeed outside Asia.
Although Shanxi Yuncheng's labor costs in Mexico are about double China's, managers said, the company undercut rivals by offering quicker delivery and better quality and prices. The company now controls about 30% of the gravure printing market in Mexico, and its Mexico operations are its most profitable.
"Being a Chinese company, customers in the U.S. may associate us with low-tech," said Liu. "It will take time. People's perception can only change little by little with hard work."
Liu, the son of farmers, has never been to South Carolina but sees his company's move into the U.S. as a source of pride.
"It's a lot of pressure going to the largest market in the world," Liu said. But he thinks it's certain to help his business become more competitive. "That's one of the real benefits from this expansion."
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don.lee@latimes.com
