Ties That Bind - Bay Area Council Economic Institute

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110 Ties That Bind recycling, which will dramatically increase the recycling stream and demand. Similar laws have been passed in Taiwan, South Korea and Japan, and recycling capacity remains tight because of the complexity in separating plastics from other materials, and different plastics grades and colors, in products with sophisticated electronics components. The U.S. has no such regulations, meaning that a lot of recyclable plastic ends up in dumps and landfills. A lack of steady raw material supplies has limited expansion potential for the Richmond plant, Biddle says. The Guangzhou plant—55% owned by MBA Polymers and 45% owned by GISE—has double the capacity of Richmond, and 100 workers versus Richmond’s 22. Low labor costs, government incentives in the development zone and modern equipment will help MBA Polymers produce its recycled plastics for a low $200–300 per ton, increasing its margins. State-owned GISE’s government connections helped smooth permits and approvals. Prospective customers Toyota, Honda and BASF, as well as GE Plastics, have operations in or near Nansha Development Zone. The China joint venture, and a similar one in Austria, have improved the viability of MBA Polymer’s overall operations. Biddle says the company intends to maintain Richmond as a headquarters, R&D center, demonstration center and production facility. It has hired additional engineers there and has made additional capital investment to modernize and increase output. Another company Galaxaco has taken to China is Silicon Valley-based Arasor. Led by overseas Chinese who are now U.S. citizens, Arasor is developing broadband wireless architecture for the 2008 Beijing Olympics that will enable visitors at one event to watch multiple events simultaneously through their personal digital assistants (PDAs). Arasor’s R&D is done in both Silicon Valley and China. A China Strategy Helps a Small Manufacturer Survive SKS Die Casting, in Alameda, grew with the computer industry. As the economy stumbled and more components were outsourced overseas, however, profits dropped by half and its employees by almost two-thirds. Silk Road Enterprises (SRE), a company founded by then-San Francisco State University President Cai Wei Woo to facilitate tech transfer to the computer industry in China, introduced several teams of Chinese engineers to SKS, which led in1984 to a joint venture between SKS and SRE called Pacific Die Casting and Machining to explore a joint venture in China. This led in 1987 to an invitation from China’s Ministry of Science and technology and the China National Electronics Import and Export Corporation to submit a proposal to build a modern die casting and machinery facility in China.
Investment: Building Global Businesses in a New China Since then three joint venture plants have opened: in Zhuhai (Guangdong Province), Qinhuangdao (Heibei Province) and Chongqing. State of the art equipment has been installed and engineers were brought to the U.S. for further training. SKS management believes that this strategy has allowed the company to stay in business, in the face of rising costs and intensifying competition. Today prototype development and early stage and small scale production is done in Alameda; higher volume production is done in China. Even as its China operations have grown, SKS maintains a significant workforce in the Bay Area and in recent years has added employees. Venture Funding Accelerates For the future, China’s attraction for venture capital is the deep base of assets—research, education, entrepreneurial, manufacturing and market size—that gives it the potential to produce competitive companies of global scale. One factor that limits China’s attractiveness is the inability of companies capitalized with foreign investment to pursue IPOs on the domestic stock markets (Shenzen and Shanghai). This leads foreign VCs to invest in companies with foreign domiciles, positioning them for possible listing on the Hong Kong, NASDAQ or other foreign exchanges. Zero2IPO, a Chinese venture capital research firm based in Beijing, estimates in its latest annual report that nearly $1.06 billion in foreign venture capital was invested in 233 mainland and mainland-related enterprises in 2005, most of those in Shanghai. More than 60% of that investment was in the IT sector, and another 20% was in internet-related businesses. In 2005 VC funds supported 17 IPOs and 12 M&A deals; between 30% and 40% of the $1.06 billion total is believed to have originated with Silicon Valley venture funds. Last year’s investment represents a tapering off from the $1.27 billion in VC investment in 253 companies for 2004. A third of total investment was in the integrated circuit sector—including $353 million to some 30 fabless (using outsourced fabrication) design companies. Accordingly, most of the investment recipients were in and around Beijing universities and technology parks. Total VC investment in China since 2001 has totaled more than $4.2 billion. 111
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The Bay Area Economic Forum wishes
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Table of Contents Introduction ....
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Introduction About This Report The
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Introduction dollar-denominated ass
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Introduction practices of their sup
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Executive Summary The San Francisco
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Executive Summary As Silicon Valley
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Executive Summary 8. Establish regi
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1 A Rich History of Work and Reward
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A Rich History of Work and Reward m
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A Rich History of Work and Reward t
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A Rich History of Work and Reward T
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2 New Networks Emerge The Bay Area
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New Networks Emerge With scholarshi
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New Networks Emerge nomic Law; the
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New Networks Emerge and academics f
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New Networks Emerge schools on the
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New Networks Emerge Hong Kong and T
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New Networks Emerge financing—ban
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New Networks Emerge Since the mid-1
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New Networks Emerge (R&D) innovatio
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Hong Kong Seeks Its Role New Networ
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New Networks Emerge In recent years
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New Networks Emerge savings rates a
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New Networks Emerge Two, featuring
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New Networks Emerge All of the abov
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3 Bay Area-China Trade: Behind the
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Bay Area-China Trade: Behind the Nu
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Sources Liou, Fu Tai, “How Taiwan
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