Lin Xinwei is the former Chief Representative of the former South Carolina State in the United States. He is currently the Chief Investment Representative of the Georgia Department of Economic Development in the United States and the President of the American States' Association in China.
In January 2000, he served as Director of the Asia Department of the South Carolina Department of Commerce in the United States. In 2005, he was sent to Shanghai to serve as a civil servant in the United States. He assisted Haier, Sen Lunlin Tire, Jiangnan Chemical Fiber, Cole, Yuncheng Plate, and Boulder. , Giti tires and other Chinese enterprises have invested and built factories in the United States and have become representatives of the U.S. states. They have helped China's manufacturing industry invest in U.S. to complete the highest amount of senior professionals.
In May 2016, the reporter met with two investment promotion consultants from the southern states of the United States at a summit in Shanghai and listened to the investment strategies of some states in the southern United States.
One is interviewed guest Lin Xinwei of this article. The other was Ms. Springna, an investment advisor to the State of Alabama in the United States, who preached the investment policy of the southern US state, free land and electricity, etc., at the conference, and provided incentives for local investment in China in the 1990s. The strength is not equal.
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What is more, in order to create jobs, some southern American state governments have vigorously introduced China's excellent manufacturing companies to set up factories in the United States. Even textiles, printing, dyeing, and chemical industries have been described as three highs in China (high energy consumption, high pollution, high Emissions companies have also valued them and become the sweet spot in their eyes: high-energy-consuming companies are the major service companies of power companies, and high-emission companies do not have to build their own sewerage systems and can arrange them directly.
However, at home, China’s local strategy is similar to attracting foreign investment, and the three high industries are being rejected by Chinese public opinion...
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Looking for a printing and dyeing industry company...
reporter:
Georgia is the center of the traditional textile industry in the United States. When you met you in Shanghai last year, you were looking for a printing and dyeing industry company. You said that the US needs a supporting upstream and downstream printing and dyeing industry. How is the current progress?
Lin Xinwei:
Yes, Georgia and the neighboring states are all very developed places in the textile industry in the United States. Georgia counts as one of the largest number of people employed in the textile industry. Printing and dyeing companies are still doing preliminary research and feasibility analysis and are in progress. Some projects are faster and some are slower.
Textile, chemical fiber and other highly polluting industries have set up factories?
reporter:
In September 2013, Jiangnan Chemical Fiber Co., Ltd. invested US$45 million to open a branch in South Carolina, and you are also the introducer of this project. The cost list of a Jiangnan Chemical Fiber Co., Ltd. circulated online spreads widely. Can you elaborate on this? In particular, chemical fiber, printing and dyeing are already the focus of pollution control industry in China, and are not the industries that the Chinese government wants to support. Such a company went to the United States, giving us some feeling of subversion.
Lin Xinwei:
It's not just that you think so. I thought about it when I first touched on these projects.
I have already invested in three textile-related companies in the United States: Jiangnan Chemical Fiber invested 45 million U.S. dollars and employed more than 300 people. Zhejiang Kohl is another textile company I made, investing more than 200 million U.S. dollars and 500 jobs. Now they are expanding the second phase. The third project is an enterprise in Suzhou that is preparing to become a textile related item in the automotive industry, with an investment of about US$26 million.
Cole Textile's US factory
I remember that when we first met with Jiangnan Chemical Fiber President Sun, it was around March 2012. At about the same time, the inspection and negotiation of the Kohl project and Jiangnan Chemical Fiber started almost simultaneously. Now that the project has been in operation for about a year, Mr. Sun and his husband have also gone to the local area to manage the project.
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I see the cost data of a Jiangnan chemical fiber circulating on the Internet. Some are accurate and some are inaccurate. Sun Zukang, the father of Sun Zong’s father, recently accepted an interview with Xinhua News Agency. He said that he was relatively well-placed: the United States (a considerable number of places in the United States can not speak all parts of the U.S.), and the cost of land, electricity, logistics, etc. compared with China. Cheaper. However, the cost of spare parts and the cost of building a factory are much higher than those in China. The labor cost is also much higher in the United States; the situation in financing and taxation is similar in both countries.
Companies set up factories in the United States will certainly consider the total cost. Plant construction is a one-time cost, and the key is the expenditure that needs to be spent every day.
Over the past 10 years in China, manufacturing costs have been rising for many reasons. In particular, since the accession to the WTO, China has been the main beneficiary of globalization, and many companies have developed rapidly. In addition to Chinese diligence, government support, and so on, an important reason why China can grow quickly is that labor costs are much lower than in other countries, but now China's labor cost advantage is getting smaller and smaller.
In 2009, I made a calculation that the hourly cost of a worker in the United States was 13 times that of China. It is 5-6 times in 2012 and it is only about 4 times now.
At present, China’s labor cost advantage has been lost very quickly, and it will have a considerable impact on the competitiveness of Chinese manufacturing.
Large energy-consuming consumers in the United States are savory, and the more energy they use, the cheaper they are.
reporter:
In addition to labor costs, you just mentioned the advantages of energy and land. Please talk about it.
Lin Xinwei:
The U.S. power energy industry is free to compete. Everyone can participate and operate in accordance with the market. For example, in Georgia, I have a more obvious advantage compared to other states. Electricity is fully liberalized. If you come to Georgia to establish a new factory, there may be three power plants that offer you quotations at the same time to negotiate. You can choose the best electricity service. Business, there is definitely a cheaper price.
Now that the United States is a big country for energy exports, its energy reserves are very abundant. The United States is currently restricting production because the price of shale gas and shale oil in the market is too low. If you let go, the price will be cheaper.
In contrast to the Georgia and China I represent, the more energy you use, the cheaper the price. A large energy consumer comes here, from the point of view of investment promotion, it is definitely a key service target.
The United States welcomes this large energy consumer, and generally this type of company operates for 24 hours. It is certainly the best customer for the power company and the price is the cheapest for them. It also helps the government because he has high taxes.
These projects are just a few of the projects that I have done because the U.S. energy is too rich.
The factory sewage can be discharged directly, and the payment of the sewage treatment fee is more cost-effective than the self-built sewage treatment system.
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reporter:
China's energy is scarce, so we often restrict such high-energy-consuming enterprises. One of the goals of the Government's five-year plan is to reduce energy consumption.
Lin Xinwei:
This is a misunderstanding. In the past few years in the summer, power shortages frequently occurred, and power cuts were restricted. I went to Zhejiang to see it. However, as far as I know, China’s power in the last two or three years is rich.
Moreover, there are few new power plants. The reason is that the power supply has been in short supply in previous years and many power projects have been put on. In some places, electricity is no longer in short supply.
In addition, not all high-energy-consuming industries must be large polluters. Human beings can send themselves to the moon. There are such wonderful innovations and environmental protection can be solved. The key needs input and needs to be implemented carefully. In fact, many of China’s current environmental standards are definitely higher than the United States currently. However, China's problem is that there are standards, and early environmental impact assessments are strict. However, in the course of operations, the inspection may not be very strict.
The United States is the opposite and pollution does not matter. When you come in, you need to tell the management department what chemical substances your company will emit and how much it will be. The government will tell them that it must be limited to certain standards. When the factory is in operation, the government will evaluate it. He will check and check the company without informing you. If you speak with the data, you will be penalized if you exceed the limit, and you will stop the plant if it is serious.
For example, the boulder project I previously introduced was a glass fiber company under China National Building Materials. At that time, everyone thought that there would be very serious pollution. It was a bit worried.
However, the government did not require factories to build sewage treatment facilities. They could directly discharge the waste. The municipal government allowed the factory to directly discharge the waste water to the city's sewage treatment system. The government would handle the treatment, as long as the sewage treatment fee was paid per ton. Boulders did the accounting and gave the government sewage treatment, which was more cost-effective than building a sewage treatment system.
But in China, now you only have to build chemical or similar high-pollution projects. Even if the environmental protection controls are very good projects, the people's absurd movement will happen from time to time, and the government will be under great pressure to do nothing. I think this can't be done in one go.
Of course, China has developed so fast in these 30 years that environmental protection has become the primary concern of the people from the government to the people. When they hear the sewage, they are very nervous. In fact, environmental protection can be solved.
When tax returns, tax incentives will be taken on a proactive basis. Large-scale projects will have various subsidies and deductions.
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reporter:
The rise in the cost of land in China is a pain point for companies and even ordinary home buyers. The last time, Springna, a Chinese investment representative from Alabama in the US, mentioned that they can provide free land to enterprises. We are more curious about the land in those states in the southern United States. The policy concessions are so great. Would you please tell us what specific policies will be available?
Lin Xinwei:
My state usually asks companies for the production materials they need to invest for five years, such as hired employees, utilities, and land. Each project is different. The larger the scale, the more employees are hired, the higher the energy consumption and the more benefits.
And when the tax returns, the government will take the initiative to make tax deductions. Large-scale projects also include cash subsidies, free land, infrastructure construction, and state-level income tax deductions. And if the factory loses money, the loss share can be deducted later. Finally, the property tax will be reduced (this tax is unique to the United States, generally levied by the counties of the United States on businesses for domestic public services, education, and infrastructure, etc.). The reduction may be as high as 20 years and tens of millions of US dollars.
The land in the United States is private. The government provides free land for large-scale projects. In fact, there are still costs. The government pays the compensation to the family, which is free to the company.
It is not easy for a company to invest in the United States. It should be based on its own strategy and should not blindly follow suit.
reporter:
Trump proposed to make the United States great once again, and it is ambitious to create returns for jobs and manufacturing. How much do you think his goals can be achieved?
Lin Xinwei:
All U.S. presidents will emphasize employment, and Trump particularly emphasized this point during the campaign. At the level of the federal government, the United States will not directly come up with real money. However, the President has repeatedly emphasized this issue and will certainly arouse media attention. Global companies attach importance. Therefore, the US government's tax cuts are the biggest red envelope for companies.
Trump asked for a tax reduction of 15%, which I personally think is impossible. The current federal tax is 35%, but most of my projects use various means to maintain the tax rate at around 28%. If Trump can reduce the tax rate to, say, 20%. By way of tax deductions, etc., then taxes are comparable to Hong Kong and Singapore.
Large US companies have complained about high taxes, and Trump responded. One thing is certain that Trump will definitely lower the income tax of American companies.
If tax revenues fall, combined with US education, energy, and other advantages, the competitiveness of US manufacturing will also increase.
However, as we discussed earlier, the manufacturing industry in the United States only accounts for more than 10% of GDP. To rejuvenate the U.S. economy, it is certainly not a small challenge.
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What I want to emphasize is that China's manufacturing companies are already very strong and very good. Whether setting up factories in China or setting up plants in the United States, it must be based on their own strategic deployment and do a good job of examining feasibility.
I personally witnessed so many Chinese enterprises’ overseas projects going from scratch. It is not easy for every project to go out. When I introduced projects, I was often the last one to delay. After all, the market, culture, and legal environment in China and the United States are very different. Domestic companies pay attention to efficiency and must be vigorous and resolute. In fact, the previous research spent the most time.
As Sun Zukang, father of Jiangnan Chemical Fiber’s Sun Zongkang, told Xinhua News Agency, some companies want to invest in the United States under the advantage of cost advantage and immigration impulse. However, I suggest that we should focus on our own strategy and do not blindly follow suit.
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