Jones Lang LaSalle


Turning to China
Wednesday, May 10, 2006
By HUGH R. MORLEY
STAFF WRITER

Prologis knows ports, and knows what drives them.

The Denver-based company, which has warehouses around the globe, owns 19 million square feet of property at New Jersey's ports, and plans to build 5 million square feet more.

But on Tuesday, the eyes of company Vice President Walter C. Rekowich were fixed firmly on the East. At about 11:40 a.m., he was one of 63 American executives to simultaneously sign contracts with the government of Chinese province Zhejiang.

After a brief introduction from a moderator, the businessmen -- each paired with a Chinese official on one of two raised platforms -- picked up their pens and signed the deals.

The unusual mixture of showman- ship and business -- which took place at a "trade and investment symposium" at the Waldorf-Astoria in New York -- offered a window into the weeklong visit of Zhejiang officials to New York and New Jersey.

While they sought to lure U.S. investors to one of the fastest-growing economies in China, American businessmen milled around the forum with their own agenda: to gain access and sell goods to the Far Eastern powerhouse.

Rekowich -- who signed a contract to spend about $50 million on building warehouse parks -- said Zhejiang's economic growth and population of 48 million were hard to resist.

"The region is one-quarter of the size of the U.S.," he said. "It's a very, very significant region in the business of China.

"Where there are people," he added, "there is a need for manufacturing and warehousing."
The forum followed a visit by the province's Communist Party Chairman Xi Jingping to Trenton to meet Governor Corzine. The two regions have maintained a "sister" relationship since 1981, and Corzine officially extended the agreement another 25 years.

Zhejiang Vice Governor Zhong Shan noted that his province had been ranked the 20th most competitive area out of 60 around the world, according to a Swiss business school study.

Located just south of Shanghai, the province has a strong education system, average economic growth of 13.1 percent a year and "one of the highest levels of personal income in Mainland China," he said.

Several American businessmen clearly saw opportunity in the booming region.
"We believe there is great potential," said Eric Dormoy, president of DM Industries, a Miami-based hot tub and bathtub manufacturer. The company signed an agreement to form a joint venture with a Chinese manufacturer, he said.

Bill Waters, an accountant for Missouri Walnut of Norwood, Miss., said the deal his company signed is modest -- $2 million to boost its distribution operations in China.

"Basically, that just gets us a foot in the door," he said. The company, which supplies Walnut timber for flooring and furniture manufacture, was bought by a Chinese investor several years ago, and already has a logging facility in Shanghai, he said.

It's now looking to open another, perhaps in Zhejiang, Waters said. He called the trade conference "very useful" because it gave the company a host of contacts in the region. He noted the challenge of doing business in China, where the government controls commerce.

"In China, it's difficult," he said. "You have to have permission to build a plant or anything like that."

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