The power of foreign direct investment from China

World Today

The power of foreign direct investment from China

Trump, threats, and tariffs are dominating the headlines in the trade dispute between the U.S. and China. Lost in the coverage – the fate of foreign direct investment dollars pouring into the U.S. and their impact on the economy. CGTN’s Mike Walter has more.

According to one research group, Chinese acquisitions and investments in the U.S. plummeted 92 percent in the first half of 2018. It’s shift change at the International Vitamin Corporation manufacturing plant in Southern California. The place is bustling, and IVC is growing jobs in a big way.

“It’s nice to have a business with tailwinds. When you think about it, the vitamin nutritional sector is growing rapidly. More consumers are utilizing the products and are getting into it,” said Eric Bauer, IVC Chief Financial Officer.

IVC manufactures vitamins and nutritional products for all the major stores in the U.S. One pallet sits ready to head to Sam’s Club, a retail warehouse chain, in Texas. Another shipment is destined for a Walmart in the state of Arkansas. But they also supply Target, Costco, Walgreens and the list goes on.

“IVC is an interesting mix. We are the biggest company you’ve never heard of. We basically are the brand behind the brand,” Bauer said.

This is the type of feel good story the U.S president longs for. Trump claims China is stealing manufacturing jobs. But the founder of IVC will tell you, in this case at least, China saved American manufacturing jobs.

“Ha, ha, yes we did. We are very proud of ourselsves,” added Bauer. “We have an employee base of 200 employees. So in about eight years, we have grown that to 11-hundred. So we’ve expanded our base and grown probably about six times.”

Steven Dai was born in China. He grew up in Henan Province and moved to the U.S. to attend Rutgers University where he graduated with a master’s in 2000. Ten years later, fueled by foreign direct investment, much of it from China, he bought this business. This wasn’t always a state of the art facility; Dai needed the money to upgrade the company.

“Our investment is for long term and to build something that can last long term. We don’t anticipate to generate quick cash or easy cash,” Dai said. 

The vitamins and supplements business is a healthy one. In fact, there aren’t just jobs here in California. IVC has facilities in New Jersey, Pennsylvania and South Carolina and they want to build capacity, which means perhaps even more manufacturing jobs in other parts of the U.S.

“So we look at Arizona and Utah and a few other states,” Dai added.

IVC is an illustration of the power of foreign direct investment from China. A recent Pew Research study showed that China was outpacing other countries in creating jobs in the U.S. through FDI. The China General Chamber of Commerce tracks the numbers.

Since 2005, it says Chinese member companies have poured in tens of billions of dollars into the U.S. economy and provided jobs for hundreds of thousands of workers directly and indirectly. And while foreign direct investment is down dramatically in 2018, IVC executives feel it has become a story lost in the trade war narrative.

“So in our experience, industry, business I think the direct investment into the manufacturing is very helpful, supportive and important,” Dai added.

“I think we see a huge symbiotic relationship in our business certainly with China and the U.S.. I think it’s not getting out there because it’s very easy and convenient to vilify one side or the other… In the end, you are trying to create jobs, you are trying to enhance peoples’ living, trying to build better lives for people and we can do that in partnership with foreign entities,” said IVC Chief Financial Officer, Eric Bauer.

IVC will continue to churn out items to help with nutrition and wellness for consumers, but the company knows it will never be able to manufacture a remedy to improve the health of the U.S.-China trade relationship.