Rogue Valley may lure deep Chinese pockets

Rob Fraser is an economic matchmaker of sorts, finding opportunities for investors from another hemisphere.

Fraser is the business development director for the North American Representative Office of Shenzhen, a city of 12 million on the South China Sea near Hong Kong.

He sees lots of possibilities for Southern Oregon, as do other members of a delegation that toured the area last weekend, led by the Chinese consul general in San Francisco.

"Investment is coming from Shenzhen," Fraser said.

Shenzhen investors and companies are looking for distressed commercial properties, established companies with cash-flow needs or looking to expand, and companies with a brand that could be used to sell Chinese products, Fraser said.

Chinese investors have cash and aren't being bashful.

For example, Fraser said, Shenzhen New World Group Co. — the city's largest commercial real estate firm — purchased the Los Angeles Marriott Downtown from GE Capital after foreclosure earlier this year. The reported price, according to the Los Angeles Times, was $60 million — half its previous purchase price.

"But they don't have to be distressed," Fraser said. "They are looking for good investment opportunities, to take advantage of the recession, and good companies — manufacturers or producers of branded products — they can acquire."

Medical device companies, with $100 million to $500 million in annual sales, "would be good targets," he said. "As could smaller companies with good technology or proprietary products with $10 million to $15 million in annual sales."

In recent decades, China has been the dominant manufacturer of U.S. goods, but with the American economy flagging, the Asian giant's business leaders see new opportunity.

Instead of making components for a bicycle sold by an American firm, Chinese companies want to sell the product.

"China is a low-margin player right now, but would like higher margins," Fraser said. "Instead of making the wheels for these guys, they would like to sell the bicycle. If you own the bicycle, you're going to make more money than selling the wheels."

Ashland biologist and filmmaker Jim Mau remembers a time when bicycles were the dominant form of transportation in China.

"I've seen China go from bicycles to automobiles and watched the market grow," said Mau, who first visited China as part of a medical delegation dealing with pathogenic organisms in 1994.

Mau has since shifted his attention to wine and has observed China's growing role as a consumer and producer.

"Today, China is one of the biggest markets for wine, even to the point of telling people their prices are too low," Mau said. "There is a glut of wine on the market and a lot of wineries and vineyards are struggling. The Chinese are not only buying wine, they are also buying up some of the world's best vineyards. Foster's (of beer fame) has a wine division and Chinese companies are bidding on it."

After an article in Sunset Magazine touted Southern Oregon as the next great wine region of the world earlier this year, he wouldn't be surprised to see dollars flowing across the Pacific.

"For (the Chinese) to come to Southern Oregon and invest in our wine industry would be a big plus for both of us," Mau said. "It would give them great wine and provide us a market."

Tian Deyou, counselor and consul director for the economic and commercial section of the Chinese Consul in San Francisco, said there are 1,000 companies with representatives in the U.S., primarily in New York, Los Angeles, San Francisco and Chicago.

There are about 60 Chinese companies, employing 2,000 people, operating in the Bay Area. Most are in the information technology industry, trading companies and tourism with a smattering in bio-science.

"Most are big in China, but comparatively smaller in America," Deyou said.

With tourism doors swinging open to the region, Deyou anticipates Chinese investment will follow.

"If one company comes and gets a successful start, there will be others following," he said, noting one appliance manufacturer began building refrigerators in South Carolina and others came.

BYD, the Chinese battery, mobile phone and electric car company that counts Warren Buffet among its investors, has announced it will produce automobiles in Los Angeles.

"If their business expands in the next few years," Deyou said, "they will look around for a second or third location — that's where Southern Oregon might come in. We've seen the beauty of Southern Oregon, the friendly people. It's a good environment for the Chinese people to get to know and make direct investment in the area."

Reach reporter Greg Stiles at 541-776-4463 or e-mail

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