News Column

Jerry Brown Heads to China to Get 'Billions' in Investment

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For Brown, said Schell, "The real thing is to clinch some big-ticket deals."

According to an October report for the Asia Society by the research firm Rhodium Group, California attracted about $1.3 billion in investment deals from China from 2000 to 2011, with the largest investments in the software and information technology, leisure and entertainment and communications industries.

The analysts said the state has the potential to attract $10 billion to $60 billion in direct investment from China by 2020.

Brown has spoken only generally about the type of investment he is seeking from the world's second-largest economy. When he announced the trade mission last year, he said only that potential investments could involve "agriculture, technology, infrastructure and any other area that makes sense for both California and Chinese investors."

James McGregor, a longtime China observer and a senior counselor at the public affairs firm APCO Worldwide in Beijing, said "there are a lot of Chinese private investors who are going around buying wineries, buying golf courses."

The country is "chock-full of cash," McGregor said, and investors are yearning "to get some of it out."

In a report last month, Brown's Office of Business and Economic Development, or GO-Biz, called China-related opportunities "enormous."

Yet the direct effect of any one trade mission or trade office is difficult to measure -- even for an administration promoting the effort.

The GO-Biz report said Brown's trade mission, trade office and related activities "are intended to assist at least 60 California enterprises and investment projects with business development with Chinese partners," but it acknowledged "it is not possible to forecast a specific dollar goal."

Jock O'Connell, international trade adviser for the economics consulting firm Beacon Economics, said excitement about a trade office often suggests a "really superficial understanding of the complexity of doing business internationally."

However, O'Connell said, "Unlike the past, where the focus has been on export promotion ... they're actually more interested in using the office to try to attract investment to California, which makes an awful lot of sense."

O'Connell said Brown's statements "indicate he is aware that there's a much bigger payoff to be had in trying to get the Chinese to invest here."

Initial skepticism on trip

The foreign trade office has a budget of about $1 million annually. State and Bay Area Council officials expect to use the office to help California companies gain access to Chinese officials and business leaders and promote opportunities in California to business interests in China.

Though the office will be funded by private donations, the state is not without a financial stake. The administration plans to dedicate the equivalent of three full-time employees to international affairs and business development, at a cost of about $344,000 a year. About one-third of those employees' time will be dedicated to China-related initiatives, according to the state.

The business leaders accompanying Brown to China paid a participation fee of $10,000 each, which is to cover expenses while in China. They were promised meetings with "high-ranking officials" and a series of promotional events.

Delegate fees are covering the cost of Brown's travel, organizers said.

China is a common destination for U.S. governors, and at least three other governors are expected to be in China while Brown is in the country.

Last year, at the meeting in Berkeley, Schwartz said Brown was initially "somewhat skeptical" about the trip, "not because he didn't think it could be important, but was this really going to lead anywhere."

When the governor became convinced that it could, Schwartz said, "we went ahead and pursued the meeting (with Xi), and the meeting went well."

"From an economic point of view," Schwartz said, "there's no more interesting game in the world today than China."



Source: (c)2013 The Sacramento Bee (Sacramento, Calif.). Distributed by MCT Information Services.


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