San Francisco 's China Business Gambit May Be Staring to Pay Off

Repost from San Francisco Business Times

By Ron Leuty Mar 18,2011

Ginny Fang is helping build a bridge across the Pacific, one company at a time.

Fang leads ChinaSF, a public-private collaboration between the San Francisco Center for Economic Development, the City of San Francisco and the San Francisco Chamber of Commerce aimed at aiding Bay Area companies looking to do business in China and Chinese companies hoping to establish a North American beachhead in the Bay Area.

Fang talked with San Francisco Business Times reporter Ron Leuty about the impact of the Bay Area’s two biggest cities having Chinese-American mayors, what it takes to build an overseas relationship and a big U.S. export to China.

Q.: What’s the state of ChinaSF over two years in?

Fang: The first two years was about laying a foundation, like any startup company. You’re meeting all the important players for the first time — government, industry associations, business — all the big players.

I feel now they’re starting to come to fruition. That kind of return is just going to continue to grow.

At the same time, we’re broadening our platform with more cities and more relationships there, and as the opportunities grow into second- and third-tier cities, we’re laying the foundation for companies looking to expand abroad.

With the timing of the five-year plan moving forward and more pressure and support for companies to move abroad — whether they’re cleantech or biotech — we’ve aided those relationships. As companies are thinking about going abroad, they’re coming to us now.

Q.: Are you getting more inquiries from companies outside San Francisco proper as well?

Fang: The most important piece is we represent the Mayor’s Office for the City of San Francisco — they see that as a legitimate, safe relationship for navigating their company into the U.S. They see that as the tip of the spear for the entire Bay Area.

It’s like the Shanghai government that oversees many small districts. Chinese companies ask, “Can you introduce me to the district of San Bruno?”

We’ve pulled together a few relationships — like the Solano Economic Development Corp. and Steven Brewster (of San Jose’s Office of Economic Development) — when businesses aren’t looking for San Francisco proper and may want to do a different-style development. I want them in the Bay Area.

Q.: What has it meant to the relationships in China to have Edwin Lee as the city’s first Asian-American mayor?

Fang: I was in China when the transition was formally announced and had a few meetings set up with contacts at the Ministry of Commerce. It was such a fantastic feeling to be able to announce that. It was validation: Yes, San Francisco is the gateway to the U.S. for commerce. To have a Chinese mayor is tremendous, along with Mayor Quan in Oakland.

You can point to not only political leadership but business leadership. Executives have done very well who started here and went back to China or stayed here and rose up through a corporation.

I think it’s a tremendous source of pride for Chinese people. But because of the recent past, there is some insecurity and they want affirmation that “We are a great society.”

If the mayor were to want to go to China, that would have a huge impact.

Q.: What is China shopping for here?

Fang: It’s everything from tourists coming here to buy vitamins and Coach bags — because we have product lines they don’t actually have in China, and they want the real stuff — to technology.

Technology is high on their list. Cities are searching for technologies to better deal with environmental issues. If you want to demolish a building and build another, now Beijing takes (the debris) to the outskirts and dumps it somewhere. They’re looking for knowledge, and I connected them with our environmental department here: Their basic question was how do you make it so the drivers just don’t dump it along the way.

It’s mind-boggling — from all levels of what you can consume — they need all of that.

The urbanization rate in China is that 100 million people a year will move into cities — a year — and they all need stuff.

Q.: I’ve heard of the growing presence of China UnionPay, the national bankcard network. What is its future here as well as the future of financial services between China and the Bay Area, especially given the Industrial and Commercial Bank of China’s pending acquisition of the Bank of East Asia?

Fang: That is one of our priorities, to establish San Francisco as the Chinese West Coast finance center.

We’ve met with China UnionPay’s president twice now. I have hopes that they’ll have a presence here by the end of the year.

There are a handful of applications of Chinese banks seeking a bigger presence in the U.S. The top 10 or 15 banks already have a presence in the U.S., but only two years ago they weren’t allowed to have anything more than a representative office. The next level is commercial banking.

If ICBC’s deal goes through (which includes offices in South San Francisco), that would be the first Chinese bank.

China UnionPay would have a much easier regulatory process. It’s probably just a matter of setting up the infrastructure. We’ve had them talk to Pier 39 and major tourist areas as initial locations.

Q.: I’ve seen their logo on ATMs in Chinatown.

Fang: I wonder how many Chinese tourists go to Chinatown. They go to Union Square and buy things.

Q.: What about digital media?

Fang: We’ve made headway in meeting the big game companies in China. It’s a fascinating industry because there’s such rapid growth.

Electronic Arts has been in China, and it’s been a hard entry for them. They’ve been somewhat successful because of their brand. Going from San Francisco to China without a big brand like that, I haven’t seen that yet.

There’s probably more activity in this direction. It’s probably one of the best job generators — biotech companies are great, but they tend to be smaller. (Gaming companies) have such an opportunity in China — and they’re expanding so rapidly — but now they want to move abroad. Just because of the momentum that we’ve had in the city, with our own digital media firms, it’s a prime opportunity for those companies right now.