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Seems like everywhere you turn these days, someone’s talking about Chinese manufacturing in South Carolina – including heralding the Upstate’s allure as a hub for Chinese investment. In the last six months alone, national and international media outlets from The New York Times to The Motley Fool  to China News Service’s website Ecns.cn have highlighted the success of Chinese corporations that have chosen South Carolina for their U.S. manufacturing operations.

In May, The State’s Roddie Burris profiled The Haier Group, China’s biggest appliance maker, which built a plant in Kershaw County 15 years ago and has since invested $60 million in the facility. Haier is just one of more than 20 Chinese employers who are responsible for $669 million in capital investment in South Carolina over the last 15 years. Among them are Upstate companies Techtronic Industries, Ltd of Hong Kong, operating as Techtronic Industries North America in Anderson & Pickens Counties; Dalian Top-Eastern Group, Ltd of Dalian, operating as Greenfield Industries in Seneca, and Uniscite Ltd of Taiyuan, operating as Uniscite, Inc. in Laurens County.

But while this current turn in the media spotlight could be seen as the Upstate’s 15 minutes of fame, Upstate Alliance President and CEO John Lummus believes the activity level we’re seeing now is due in great part to the decades spent cultivating these current investors and proving our commitment to their long-term success. “I think Chinese manufacturers are seeing what kind of success companies are having in the Upstate, and to a larger extent, in South Carolina, and that is definitely sparking more interest.”

In addition to a statewide focus on developing the gating factors for any manufacturing facility – infrastructure, workforce, an international business community and cultural support – he notes that “here in the Upstate, we have made a strong effort to make sure the Chinese are comfortable being here in the U.S. We work for extremely long periods of time to build personal relationships with decision makers; that’s why you see us working on so many levels to actively foster those relationships. Culturally, it’s a part of who we are – and it’s just as important for business leaders considering this region, having that reassurance that they’re coming into a genuinely welcoming environment.”  

Lummus notes that many of Chinese manufacturers looking at the U.S. are in the textile industry, which adds to the Upstate’s appeal. With our long, successful history in that sector – and now, as a global hub for automotive manufacturing – the Upstate is drawing particular interest from Chinese textile companies who are suppliers to the automotive industry.

Insiders believe this recent media and investment attention is just the beginning of great things to come, citing a number of factors: The Upstate’s economy is booming, which is attractive to all international investors. With China’s rising energy costs, it increasingly makes sense to consider South Carolina’s highly competitive position as one of the five lowest-cost states for energy. Finally, logistics are key to the decision-making process. With both the S.C Port in Charleston and the Inland Port here in the Upstate – which handled 58,000 containers in 2014 alone – this region has a huge advantage with Chinese and other international manufacturers who are so dependent upon exports.

Today, more than 500 international companies from 34 countries call South Carolina home. The strength of the Upstate’s longstanding relationships with these companies continues to build a legacy that will pay dividends, both for this region and for the companies who choose to call it home, for decades to come.

Those interested in learning more about Upstate South Carolina can contact Aimee Redick, director of global engagement at Upstate SC Alliance, at aredick@upstatealliance.com.

Home to global leaders such as BMW, Bosch, Magna, Michelin and ZF, Upstate South Carolina has become one of the nation’s most dynamic regions for automotive production and research. While our region’s progressive business climate and quality of life play a significant role in Upstate S.C.’s success in the automotive industry, perhaps the biggest asset the area has is its available workforce.

The Upstate’s population has grown at a rate of 10% since 2000 and the region’s educational pipeline of schools, colleges and universities, and apprenticeship programs feeds a workforce that features employees with specialized skills, including a high concentration of engineering talent, mechatronic specialists, team assemblers, metal workers, machinists and fabricators.

A shining example of the region’s unique position as workforce development and research leader is Clemson University’s International Center for Automotive Research (CU-ICAR) which operates as a unique nexus of academia, the automotive industry and government. CU-ICAR is home to the nation’s first PhD in Automotive Engineering and is leading the way in cutting edge research to solve some of the most challenging problems of the automotive industry.

A closer look at what drives the success of the automotive industry in Upstate South Carolina:

 

To learn more about the automotive industry in Upstate South Carolina, visit http://www.automotiveinupstatesc.com or contact Business Recruitment Officer, Aimee Redick by email at aredick@upstatealliance.com

Read more about what's happening in the automotive industry at:

 

Around the world, advances in technology and communications are quickly leveling the global economic playing field, and increasing prosperity abroad is driving the demand for high-quality, American-made goods. However, despite the fact that 95% of the world’s consumers live outside of the U.S., and that data indicates that the most profitable U.S. companies are typically those that export, only 5% of U.S. firms currently export—and 58% of those that do sell to only one foreign market, according to the International Trade Administration.
 


(Download the Upstate SC Regional Export Plan)

 

These findings, paired with the projection that nearly 80% of the global economic growth will occur outside of the U.S. over the next five years, have led to the call for action. The ability to access and gain market share in global markets will ultimately determine the sustainability and competitiveness of local firms, including those located here in Upstate South Carolina.

With that understanding, we are proud to introduce the Upstate SC Regional Export Plan. The plan, which assess our region’s current export climate, sets market-based goals for increasing exports and lays out specific strategies for supporting local businesses in increasing exports, is the culmination of a year-long process conducted under the region’s participation in the Global Cities Initiative, a five-year joint project of the Brookings Institution and JPMorgan Chase. Launched in 2012, the Global Cities Initiative helps business and civic leaders grow their metropolitan economies by strengthening international connections and competitiveness.

To address the critical need for growing exports in Upstate South Carolina, the Upstate SC Regional Export Plan Core Team conducted a detailed market assessment, which determined that the facts that support the positive performance of the region’s export climate also mask underlying weaknesses in the existing export system that must be addressed.

STRENGTHS & OPPORTUNITIES

First, looking at the current strengths, the market assessment demonstrated that the region does perform especially well in export intensity, which measures exports as a share of total output. Approximately 22.7% of all outputs in the Upstate are exports which is almost twice the national rate of 11.7%.

We are also particularly strong in jobs supported by Foreign Owned Enterprises (FOEs) at 10.6%, which is also nearly double the national average.

 

 

 

Along with our strengths, the market assessment helped us identify a number of areas of opportunity to grow in exports.

The top industry clusters, including automotive, aerospace, advanced materials, biosciences and energy, represent the Upstate’s best opportunity for world-class competitiveness, but we also can improve upon a lack of service exports, which represent 50% of our regional economy, but only 13% of our export value (compared to 34% nationally).

We also must leverage our existing networks, particularly those that already have access to resources outside of the U.S. Most foreign owned enterprises are already benefiting from exports, but tend to rely on trade within their family network—which may or may not include U.S. based firms. Domestic companies must build their own international networks from the Upstate region outward to be competitive with those FOEs.

Perhaps most importantly, leadership in the Upstate, state of South Carolina and nationally needs to be focused on local and global growth, particularly with issues surrounding trade. Issues such as the Trans-Pacific Partnership (TPP), Transatlantic Trade and Investment Partnership (TTIP), currency fluctuations economic downturn in Europe, Mexico’s trade agreements, among others have a significant impact on the economy and it’s critical for leadership to provide support needed for growth.

For example, a study by the Atlantic Council estimates that if a strong TTIP is adopted, South Carolina will be the state that benefits most from the agreement, projecting a 187% increase in state exports.  Growth like that would affect our region at every level. We need to ensure that our public officials are championing exports, and in return, we need to build support for their efforts to build bridges around the world for Upstate companies to grow.

OBJECTIVES

Based on our strengths and opportunities, we have developed a number of objectives, with supporting strategies and tactics, and established our ultimate goal of moving the Upstate South Carolina region from one of many players to being a well-recognized global leader in the world economy.

We will achieve this goal by working to successfully achieve objectives focused on enhancing our current export support system, diversifying our export base by driving participation in exports and heightening global awareness about the capabilities of our region.

To be successful in this initiative, we also understand that economic development in the global marketplace is truly a team sport. There is a key role for everyone in our region, from students and teachers to elected officials; utility providers to company decision-makers. Everyone has to contribute.

Contact us to learn how you can be part of the team that will drive the region forward toward stronger global connectivity. Additionally, we will be making presentations across the region on the significance of exporting to our economy. Please contact me if you are interested in having us speak to your group or association.

To read more about the Upstate SC Regional Export Plan, visit http://www.upstatescalliance.com/global-cities/regional-export-plan.

Elizabeth Feather is the Director of Research for Upstate SC Alliance. She is responsible for directing and executing the research efforts for the Upstate SC Alliance team and positioning the organization as the go-to resource for information, which includes compiling data and reports for prospects and investors as well as working with industry partners to provide the most up to date information about the Upstate. Feather is also an integral part of the Upstate's participation with the Global Cities Exchange.

In January, Vapor Apparel, a performance apparel manufacturer and digital print-on-demand service provider, announced it would invest $1.3 million to open a 30,000-square-foot manufacturing facility in Union County, creating 114 new jobs in Upstate South Carolina. The facility will house the company’s domestic cut and sew division, which is a rapidly expanding part of the company's product line.  Beyond a reason for celebration in the Upstate, the announcement marked yet another victory for the U.S. textile industry, as yet another manufacturer chose to keep operations at home.
 


(“Made by China in America” turns a cinematic lens on the interconnected narratives of everyday workers, leaders and business executives, and local community members in Upstate South Carolina, providing a nuanced perspective on China’s economic boom, version 2.0, and its promising impact on the U.S. economy.)
 

As the U.S., and specifically the Carolinas, works to regain market share in the global textiles industry, manufacturers need to understand the impact of foreign trade agreements that would significantly impact their business. Among those include the Trans-Pacific Partnership (TPP), a free trade agreement between the U.S., Canada and a dozen countries throughout the Asia-Pacific region, including Vietnam. The agreement is designed to break down non-tariff barriers and eliminate tariffs on goods and services, but not without concern throughout the industry. To gain a better understanding of the current state of the U.S. textile industry and implications of the TPP, we spoke with Augustine “Auggie” Tantillo, president and CEO of the National Council of Textile Organizations (NCTO).

Can you give us a quick overview of the U.S. textile industry?

“The U.S. textile industry is a major contributor to the U.S. economy. In 2013, U.S. textile shipments totaled $56.6 billion, an increase of more than 5% over 2012. As the third largest exporter of textile products in the world, exports of U.S. textile products were nearly 18 billion in 2013, an increase of nearly 5% over the previous year (Q4 data for 2014 has not yet been released). A substantial employer of American workers, the U.S. fiber, textile, and apparel production chain supplied nearly 499,000 jobs in 2013. Additionally, the U.S. government estimates that every textile job in this country supports and creates three additional jobs.”

For those who don’t know, what is the function of the National Council of Textile Organizations?

“The NCTO is a unique association representing the entire spectrum of the U.S. textile industry in Washington, DC. From fibers to finished products, machinery manufacturers to power suppliers, NCTO is the voice of the U.S. textile industry in the Federal policy area.”

“NCTO's mission is focused on creating powerful national and international alliances to advance the interests of the U.S. textile sector.  As a lobbying group, NCTO is harnessing the influence of an array of associations and business groups that have a stake in the survival and prosperity of the U.S. textile sector to leverage our impact in the halls of our nation's capital.”

What impact could the TPP have on other trade areas (NAFTA/CAFTA)?

“The TPP will be the most significant free trade agreement (FTA) developed in over 20 years in terms of how it impacts U.S. textile and apparel manufacturing jobs, production, and exports. The TPP could also have a major impact on existing U.S. free trade partners such as those that produce apparel in the Western Hemisphere.  This is mainly due to the inclusion of Vietnam in this arrangement and the potential impact Vietnam poses to manufacturers that make up the textile and apparel supply chain in the Western Hemisphere.  These concerns are principally driven by the size of Vietnam’s apparel industry, extensive government subsidies, and the government’s ownership of VINATEX, the largest apparel exporter in Vietnam.” 

“Over the past 25 years, U.S. trade policies have developed large — and growing — export markets with nations around the world and have established important supply chains.  These supply chains have allowed developing nations to build manufacturing platforms that were granted duty free access to the U.S. market.  These export markets have been sustained by thousands of small and medium-sized companies in the free trade areas that have used private capital to invest and to create nearly two million jobs.  It is critical that the provisions of any new trade agreement, such as the TPP, not undermine the valuable and growing U.S. and Western Hemisphere textile and apparel production chains.”

“The U.S. textile industry has supported free trade agreements, such as NAFTA, CAFTA, and Andean Trade Preferences Act, as well as the Colombia, Chile, Peru, and Panama agreements. These agreements have created $25 billion in two-way textile trade which is due, in large part, to the strong textile rules included in these agreements.  U.S. textile and apparel exports hit an all-time record of $23.7 billion in 2013.” 

What rules and regulations would you consider necessary for the TPP to be successful for the US textile industry?

“NCTO believes there are three key components to a fair and successful TPP agreement: Yarn-Forward Rule of Origin; Fair Market Access Rules and Tariff Elimination Formulas; and Strong and Effective Customs Enforcement Rules”

Why is it necessary for the TPP to include a yarn-forward rule of origin?

“Over the past 25 years, the U.S. completed a series of free-trade agreements that include a yarn forward rule-of-origin for textile and apparel products. This rule has served as a catalyst for the record breaking exports of U.S. yarns and fabrics that we are seeing today.  In fact, over the past 10 years textile exports have grown dramatically from $12.7 billion in 2003 to $17.9 billion in 2013, a 40% increase during that period.”

“As the name implies, the yarn forward rule requires that yarn, fabric, and assembly production steps be completed in a free trade region in order to qualify for duty-free preference into the U.S. This rule has created an integrated Western Hemisphere production chain between the U.S. and its NAFTA and CAFTA trade partners. The U.S. is exporting record levels of yarns and fabrics to these partners, which are then processed into finished apparel and textile home furnishings products that are shipped back to U.S. duty-free for purchase by consumers. Nearly two-thirds of U.S. textile exports during 2013 went to our Western Hemisphere free-trade partners.” 

“The charts below demonstrate the dramatic growth of two way trade between the U.S. and our NAFTA/CAFTA trading partners since the yarn forward rule was first introduced.”

“As exemplified in the charts above, due to positive U.S. trade policy, the U.S. and its Western Hemisphere trading partners have created a prosperous and sustainable integrated manufacturing platform.  This partnership provides millions of manufacturing jobs throughout the Western Hemisphere and billions of dollars in two way trade. “

Why should fair market access rules apply to the TPP?

“Market access rules define how quickly tariffs under a TPP agreement will phase-out.  In past agreements, tariff phase-outs have been extended for longer periods of time if products like textiles were import-sensitive, either because of significant production or due to foreign government subsidies.  The ability of Vietnam to rapidly surge into the U.S. market along with the depth and range of the Government of Vietnam’s support for its textile and apparel sector are primary reasons that reasonable phase-out terms for sensitive textile and apparel products are necessary. “

Do you see any concerns about the ability to enforce the rules of a potential TPP agreement?

“The U.S. textile industry depends on strong customs enforcement for its livelihood.  The industry is the third largest exporter of textile products in the world with over $22 billion in exports in 2013.  Three quarters of the industry’s exports go to trade preference countries, notably CAFTA, NAFTA and the ANDEAN regions.  Due to the high-risk nature and the prevalence of fraud, CBP designated the textile industry as a Priority Trade Issue — yet the industry continues to witness serious fraud.”

“As is the case with any trade agreement, there are serious concerns about the ability to enforce the negotiated principles of the agreement regarding the treatment of textile products.  U.S. Customs and Border Protection (CBP) has identified instances of illegal transshipment of Chinese origin textile products through the majority of the participating countries.”

“Negotiators should include an electronic customs enforcement system that tracks textile components and which eliminates potential for fraud and errors that accompany paper-based record keeping systems.  In addition, TPP partners should provide sufficient resources for enforcement of the textile and apparel chapter.”

“NCTO believes that customs textile enforcement could be considerably enhanced by addressing some of the issues impacting the industry through the customs reauthorization bill which is expected to be considered during the 113th Congress.  NCTO believes that this can be done in a way that increases enforcement as well as trade facilitation. This is accomplished through improved targeting, increased resources, and enhanced authority.  This new approach will reduce the need for Customs to conduct broad investigations that can hamper legitimate producers while targeting high risk imports.”

Why are currency provisions important in the TPP?

“Export-oriented countries such as China and Vietnam have been shown to purposefully devalue their currency in order to promote their exports and to block imports into their markets.  This practice places the entire U.S. manufacturing base at a considerable disadvantage when it comes to international trade.”

“These illegal currency policies hurt American job creation and economic growth.  According to a 2014 study by the Economic Policy Institute, ending unfair currency policies can create as many as 2.3 million new manufacturing jobs in the United States by leveling the playing field in global markets.” 

“Currency manipulation creates an uneven playing field and puts American manufacturing and workers at a disadvantage. NCTO supports legislative initiatives that create tangible remedies for U.S. manufacturers that have been damaged by unfair currency practice and believes we need a bipartisan solution that involves both the Legislative and Executive Branches of our government.”

For more information on how the TPP could impact South Carolina's economy, visit http://www.upstatescalliance.com/sites/default/files/BRT_TPP_SC_1.PDF

For more information on business in the Upstate, visit http://www.upstatescalliance.com/about-upstate .

 

 

The S.C. Inland Port continues to stay well ahead of projections in terms of rail moves, proving that the development of the port has added a major asset to the economic development opportunities available in Upstate South Carolina.

In a recent column in South Carolina Business, the South Carolina Chamber of Commerce’s bimonthly magazine, Upstate SC Alliance President and CEO John Lummus offers insight into the success of the port and Upstate S.C. business:

“…the Port continues to be a major draw for international companies looking to expand or relocate in the Upstate. For example, BMW Manufacturing, a staple in the economic landscape of the Upstate since the early 1990s, has cited the Inland Port as a major factor in their decision to announce a $1 billion expansion project in the region. BMW has relocated its export operation from Duncan to a new, $20 million building adjacent to the Inland Port.

The Inland Port is also attracting the interest of distribution centers that would locate in the area in order to support e-commerce and this new generation of imports. Additionally, the Greenville Area Development Corporation cites access to cargo shipping at the Inland Port, along with the Greenville-Spartanburg International Airport, as a catalyst for new speculative building projects. In the northwest part of the region, Oconee County officials are in the process of readying an industry site that has infrastructure and rail connections capable of providing a direct link to the Inland Port. With the ability to send and receive products overnight through the Inland Port, the site should be very attractive to international investors.”

The South Carolina Inland Port opened in October 2013, extending the Port of Charleston’s reach 212 miles inland to Greer, S.C., and providing shippers with access to more than 95 million consumers within a one-day drive. The inland port boosts efficiency for international freight movements between the Port of Charleston and companies located across the Southeast, and the project is expected to create additional economic investment in the South Carolina Upstate, where BMW, Michelin and other international manufacturers already operate.

For more information on Upstate South Carolina’s infrastructure and resources, visit http://www.upstatescalliance.com/about-upstate/information-downloads#infrastructure

 

 

 

Upstate SC Alliance President and CEO Hal Johnson is currently in China conducting a economic development trip to visit with Chinese companies and government leaders.

Pictured below is Mr. Johnson and the Vice-Mayor of Fushun signing a MOU of Cooperation, Business, Friendship, and Education.