======================================== Amid explosive trade debate, China sends the United States jobs JOE McDONALD, Associated Press Writer Sunday, May 21, 2000 Breaking News Sections ----------------------------------------------------------------------------- (05-21) 09:18 PDT QINGDAO, China (AP) -- Haier Group is sending the United States a new Chinese export: jobs. China's biggest appliance maker just opened its first U.S. factory, hiring 180 people in Camden, S.C., to make refrigerators under its own brand name. Last year, Haier started a design studio in Los Angeles to get closer to American consumer tastes. Haier's $30 million venture in South Carolina comes as China is nearing its goal of joining the World Trade Organization and perhaps seeing Congress give it permanent low-tariff access to U.S. markets. Haier is leading a new wave of ambitious Chinese companies that hope to create international brand names, following an Asian trail blazed by Japan in the 1960s and South Korea in the 1980s. The Chinese want the fatter profits that come with selling their own technology and a marketable household name. ``You can't be an international company if you only make things at home and export them,'' said Haier's president, Zhang Ruimin, whose success at home has made him one of China's most celebrated business leaders. Other Chinese companies eager to make the leap to the global big leagues include computer maker Legend and television maker Konka. China's only established brand name is Tsingtao beer, whose main brewery is a short distance from Haier headquarters in Qingdao on China's northeastern coast. American labor unions oppose permanent normal trade relations for China, which would end annual reviews of U.S.-Chinese trade relations. They say that would eliminate a tool to improve human rights and warn that a flood of Chinese imports could cost American jobs. The U.S. House is scheduled to begin a heated debate on the question Monday and is expected to vote on it later in the week. An immediate increase in Chinese imports appears unlikely. China already gets the same tariff treatment given most U.S. trading partners. American consumers devour a steady flow of goods made in China, often by U.S. companies -- Nike shoes, Fisher-Price toys, Kathie Lee handbags and Ralph Lauren clothing. The picture will be complicated by the ambitions of Chinese companies to shed their role as cheap, anonymous exporters and expand to the world stage. They have a long way to go: China's foreign investments totaled just $6.5 billion at the end of 1999, the government says. Haier's new South Carolina factory puts a Chinese company in the unusual position of creating American manufacturing jobs at a time when U.S. companies are adding to their own country's trade deficit by shifting production to China and other low-wage countries. But with plenty of cheap labor at home, Chinese companies are unlikely to hire enough Americans to make up for manufacturing jobs lost to China and other cheaper producers. Membership in the WTO could help aggressive firms like Haier, though more inefficient farms and state factories will suffer. Lower Chinese import barriers will make foreign technology easier to obtain, while WTO rules promise stability for China's exporters by mandating equal access to foreign markets. Expanding abroad is a natural step for Chinese companies that have reached the stage where they dominate the home market and are desperate for more affluent customers, said Andy Xie, chief economist for Morgan Stanley Asia. He said China's TV and appliance makers are the strongest contenders because they are close to matching Japanese and Korean competitors in quality -- at lower prices. ``That's how Japan beat American companies,'' Xie said by telephone from Hong Kong. ``Who will eventually become China's Sony or Samsung? That race has just begun.'' Haier is still far behind industry leaders Electrolux of Sweden and Whirlpool of the United States. Haier had $3.2 billion in sales last year, compared with $10.5 billion for Whirlpool. But Haier already claims to have 25 percent of the U.S. market for compact refrigerators. Moving some production to the United States could ease political strains by reining in the growth of China's surplus in its trade with the Americans. But Haier's president said the reasons behind it are purely commercial. ``Americans know their market much better than we could. And they are skilled workers,'' Zhang said in an interview at the 130-acre campus that houses Haier's 12-story headquarters and main factory. Ultimately, he said, Haier plans to have a third of its production based overseas. Legend and Konka have set up foreign sales networks. Haier has gone a step further, opening a string of factories, mostly in developing countries, and design and service centers in Europe and the United States. Haier, with 20,600 employees, makes refrigerators in Algeria and Mexico and air conditioners in Malaysia. It also has factories in the Philippines, Iran and Indonesia. The company is one of China's biggest success stories of the past two decades. Zhang is credited with transforming Haier after a state company sent him in 1984 to take over a failing appliance factory. The factory began its ascent the next year by licensing refrigerator technology from Liebherr Corp. of Germany. Haier adopted its name from the ``herr'' in the German company's name. ``The first year, we had 600 employees and 300,000 yuan ($35,000) in sales. We were bankrupt,'' Zhang said with a laugh. Since then, Haier has expanded to 18 factories in China, making 9,000 products that range from microwave ovens to a machine sold in South Korea for drying herbal medicine. Last year, it launched its own lines of cell phones and laptop computers. A survey of corporate chief executives published by the London-based Financial Times in December ranked Zhang 26th among the world's most respected business leaders. The only Asians ahead of him were Hiroshi Okuda of Toyota and Noboyuki Idei of Sony. Zhang wants Haier's sales to triple within a decade to $9 billion a year. ``We can't compete yet with the big companies. Their scale and histories are enormous,'' he said. But one day, he said, ``our target is to compete at their level of technology and marketing.'' ©2000 Associated Press
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