Santa Clarita On a Mission

Santa Clarita has organized its first-ever trade mission to China, entering a field of competition with nearby cities that have a history courting companies and investors from the world’s most dynamic economy. The Santa Clarita Valley Economic Development Corp. is coordinating the trip that was scheduled for April 5-13 to Shenzhen and Hong Kong. Six area representatives will participate. Other localities that have a head start in establishing Chinese connections not only include San Gabriel Valley cities such as Monterey Park and Walnut that boast large Chinese-American populations and amenities, but even nearby Lancaster where Mayor R. Rex Parris has taken multiple trips to China and succeeded in landing two plants by BYD Auto Co. Ltd., a Shenzhen-based maker of electric cars and buses. Former L.A. Mayor Antonio Villaraigosa made three trips to China during his tenure at City Hall with success. Holly Schroeder, president of the Santa Clarita development agency, has a ready list of reasons why the Chinese should be interested in her city, starting with real estate. She noted the region has three large new developments that will bring state-of-the-art warehouse, manufacturing and office space onto the market later this year. They include the Gateway V project on 38 acres, the Sterling Gateway on 70 acres and Needham Ranch on 161 acres. In addition, Santa Clarita is a federal foreign trade zone and can offer tax advantages to the import-export sector. “We saw this as a good opportunity in terms of timing to increase our profile because we have a number of new industrial and commercial properties coming on the market,” Schroeder said. “So there’s new space if they want to move into manufacturing.” Craig Peters, an executive vice president at Los Angeles real estate brokerage CBRE Inc., who works in the Universal City office, said he has two goals for his visit to China: first, to meet with companies about taking space in Santa Clarita, and second to talk to investment group interested in capitalizing the valley’s development. CBRE is the leasing agency for both the Gateway V and Needham Ranch projects, but Peters said he would also discuss two large projects that won’t break ground for years in the future – the 20,000-home Newhall Ranch residential project and Vista Canyon, a mixed-use retail, office and residential development. “We have 337 offices globally, with 13 in China, so we do a lot of work with our partners there,” he said. “Part of the trip is to meet with larger investment groups that are looking to invest in Southern California. We are working with some large projects and they are looking for investors.” Because the trip was organized in conjunction with L.A. County Supervisor Michael Antonovich, who represents Santa Clarita and has sponsored other trips to China, the group will include three officials, but no business owners, from the Antelope Valley, which also lies in Antonovich’s district. Tony Bell, communications deputy for Antonovich, said that the strategic location of the Los Angeles region makes it a natural connection to China. “We want to encourage foreign investment and job creation,” Bell said. “The supervisor believes strongly that marketing L.A. County in Asia will have long-term economic benefits. That’s why he leads these delegations.” Alternate venues However, Santa Clarita must compete for the attention of the Chinese with Los Angeles-area cities that have established Chinese populations, especially in the San Gabriel Valley. In contrast, Santa Clarita had only 1,419 Chinese residents, or less than 1 percent of the population, according to 2010 Census data. A spokeswoman for the city’s economic development department said she was unaware of any Chinese companies in the city, beyond the usual restaurants and small service firms. A 2012 study by the Los Angeles County Economic Development Corp. found 127 Chinese-owned companies in the county, with most concentrated around the ports and airports. The largest industry sectors were wholesale trade (71 companies) and transportation and warehousing (28). The cities with the most Chinese companies were Los Angeles and City of Industry in the San Gabriel Valley. Katherine Whitman, professor or international business at Mount St. Mary’s College and a partner at Toluca Lake consulting firm Pomegranate International, which specializes in connecting U.S. and Chinese businesses, said Chinese are eager to invest in the United States, but must feel that a region is accommodating to them. That gives areas such as the San Gabriel Valley an advantage given a roster of Mandarin-speaking business people. “There are very few opportunities for individuals to invest their money in China, and they see the U.S. as accommodating to foreign investment,” she said. Schroder believes there are more fundamental reasons the area can attractive Chinese businesses, noting that the city is business friendly with no gross receipt tax, a good school system and workforce development programs, and it’s clean and low-crime. “We have benefits that are appealing to these investors, and in some cases, they may not find them in those other communities,” she said. Kenn Phillips, vice president of the Valley Economic Alliance in Sherman Oaks, said he meets with between five to seven Chinese companies every year looking to relocate, and six years ago he organized a trade mission to China. In all his conversations, comparisons to the San Gabriel Valley never came up. “It’s never been an issue,” he said. “When people want to grow a business, they want to have it close to suppliers, primes or subs (contractors). They might live somewhere else, but they usually want the business in an area that fits their niche, especially when they are new to the country.” Phillips said Chinese companies are fascinated by celebrities and the entertainment industry, and like businesses that feed off it, such as fashion or cosmetics. Whitman, the consultant, agreed that the Chinese love show business, and suggested Santa Clarita emphasize its film ranches and other connections to the industry. ‘Making introductions’ Participants on the trip will include Ken Wiseman, owner of distribution service firm AMS Fulfillment Inc.; Randy Wrage of real estate developer Spirit Holding Inc.; Steve Tannehill from the economic development office at College of the Canyons; Peters at CBRE and Schroeder. The trip will feature an investor conference organized by the China Council to Promote International Trade, and a visit to the headquarters of bus manufacturer BYD. Schroeder said the group will meet with suppliers and vendors to BYD to explore possible relocations to service its Lancaster plant. The cost for the trip is $4,800 per person. After Villaraigosa’s final trip to China as mayor in May 2013, his office issued a press released touting a lease extension he signed with shipping conglomerate Yang Ming, which would bring an estimated $365 million to $525 million in cargo through the Port of Los Angeles. Schroeder has no expectations for such an immediate payoff on this trip, but believes that over time the rewards will come. “This is mostly around making introductions,” she said. “It would be unreasonable to expect to come back with a deal. Business transactions of this scale take longer than that. But we are hoping to introduce them to North L.A. County and the Santa Clarita Valley, and hopefully they will see the possibilities.”