Case Study: South Korean FDI in the State of Georgia, Part II

PART II: Georgia Department of Economic Development (GDEcD)

This "case study" series will be covered in five parts, listed below:

• Part I: State of Georgia Profile 
• Part II: Georgia Department of Economic Development (GDEcD) 
• Part III: Interview with Peter Underwood, Senior Partner, IRC Limited and Managing Director, State of Georgia Korea Office
• Part IV: City of West Point, Saddling LaGrange and Troup Counties
• Part V: Conclusion

You can read my introduction here.

As I mentioned in Part I, the Georgia Global website is a slick interface for businesses in the state wishing to participate in Georgia's trade with foreign countries--both exports and imports. In its own words, the GDEcD describes itself as follows:

"The Georgia Department of Economic Development (GDEcD) and its international offices are the one-stop-shop for businesses looking for the right components for success. The Department’s business development and industry experts, along with its partnerships with public and private sector resources, make it possible for Georgia to meet the specific needs of your company."

For an idea of the services offered in terms of trade, the GDEcD breaks it down into local companies wishing to branch outward and international companies looking to get in to the Georgian market. I have highlighted those services that would provide support to a company's supply chain architectures:

What can our international representatives do for you as a Qualified Georgia Company?

• provide market assessment and entry strategies
• locate and pre-qualify appropriate partners and customers (relational architecture)
• offer advice on current issues, local business practices and solutions (innovational architecture)
• assist companies in preparing for and participating in trade shows
• providing information on key contacts in market such as lawyers, accountants, translators, interpreters, trade associations, etc. (relational architecture)
• set appointments for Georgia companies visiting their markets (relational architecture)
• arrange delegations of international buyers to visit Georgia (relational architecture)

What can our international representatives do for you as an International Company?

• provide site location services for companies interested in expanding or relocating to Georgia (physical architecture)
• identify Georgia suppliers of specific products and services (relational architecture)
• arrange appointments for visiting Georgia companies seeking to do business internationally (relational architecture)
• organize buying missions to Georgia
• provide information on key business events in Georgia
• provide information on key contacts in Georgia such as lawyers, accountants, translators, interpreters, trade associations, etc. (relational architecture)
• support companies’ marketing efforts with PR and press coverage (relational architecture)
• provide group tour operators and travel agents with information on Georgia tourism
• leverage opportunities to promote Georgia as a great place to live, work, play and do business

Notice how support for building and establishing relational architecture is predominant--I believe this is due to the fact that this architecture is one of the hardest to develop, establish and maintain in the supply chain.

I would like to finish off Part II with a 2007 interview with Kenneth Stewart, Commissioner of the Georgia Department of Economic Development. This interview provides a great big-picture view of Georgia trade that includes a mentions of China and Japan, via Area Development Online (highlights are mine):

Q. What was one of the most exciting happenings for economic development this year?
A. Kia Motors Corporation announced a new automotive assembly plant in the city of West Point that will create more than 2,800 jobs at a $1.2 billion economic investment in the state. The business deal includes a commitment from five supplier companies to locate in Georgia, meaning an additional 2,600 jobs. It is scheduled to begin testing operations by May 2008 and reach full production by 2009, and will include two vehicle lines, an engine assembly line, paint shop, training center, welcome center and two adjacent supplier facilities.

Biofuels is another exciting area. In February, Range Fuels, Inc., a Colorado-based cellulosic ethanol company, announced Georgia’s first wood-based cellulosic ethanol plant in Treutlen County. Instead of ethanol produced from corn, wood waste from our indigenous Georgia pine trees will be the main source of this facility’s biomass needs. This plant means 70 jobs and $225 million of capital investment. At the beginning of the year, Governor Perdue introduced legislation that would exempt sales taxes on the purchase of materials and equipment used in the construction of biofuel facilities in Georgia. We also had announcements for a corn-based ethanol plant with two more on the drawing boards and a wood pellet-based plant.

Q. Does the economic development department have a specific industry focus?
A. Our focus is on the industries that provide some economic sustainability to our state; sectors that are strong now and have the capability to use our natural resources and our work force to increase that strength. Logistics is important. We have the fastest-growing ports on the East Coast in Savannah and Brunswick, and very active airports.

Our advanced manufacturing sectors in aerospace, automotive, and material sciences show a substantial amount of growth. Our strong life sciences sector includes biotechnology, elder care, medical devices, and vaccine production. Now, we are one of the strongest states in the life sciences in terms of critical mass. We are working with Georgia Tech in electrical design and multimedia to encourage interest in advanced communications. We have Centers of Innovation focused on advanced communications, advanced manufacturing, and life sciences that are strategically aligned with industry. Our agriculture and forestry sectors are growing as a result of technology advances as well.

Q. Is any new legislation or initiatives on the horizon?
A. HB 186 has been passed by the legislature and is expected to besigned soon by the governor, to allow for a sales tax exemption for alternative fuel.

Q. What about foreign interests?
A. Our largest trading partner is Canada, followed by Mexico, China, the United Kingdom, and Japan. We are strategically trying to improve our global approach. We have 10 international offices around the world and will open one in China this spring. Currently, 44 countries operate almost 1,600 internationally owned facilities here. In 2006, international companies accounted for 36 percent — more than $2 billion — in new investment in the state. We are very attuned to the need to think and act globally, and we are very proactive in recruiting international companies to invest in our state and to market our products to those countries. With 60 consulates, a commercial trade office and bi-national chambers in Georgia, we are prepared to play on the international stage. It’s critical that we know exactly where to place our money, people, energy, and time.

In a follow-up article from this summer:

"Foreign direct investment has a major economic influence. Since the announcement of a Kia auto assembly facility in West Point with a commitment to hire 2,500 workers and begin operations next year, "a number of Tier-One suppliers have also chosen to locate here," says Stewart. Korea-based Sewon Precision is locating its first U.S. plant in LaGrange, creating 700 jobs to manufacture stamped chassis, body components, and decorative trim pieces for the Kia plant. Another Kia supplier, Sejong Georgia LLC, anticipates 250 jobs at its new LaGrange muffler and exhaust systems manufacturing facility, planned to begin production in October 2009."

The article continues on to note how regional, U.S. partnerships have been valuable in directing FDI towards Georgia:

"Canada is Georgia’s largest trading partner, with $4.7 billion of exports. At the end of 2007, Governor Sonny Perdue signed a declaration to charter the SEUS (South East United States)–Canadian Provinces Alliance, to promote trade and tourism between Canada and the southeastern states. Says Stewart, “It models our success with SEUS–Japan, started in 1975, which has been a factor in attracting many of the more than 300 Japanese companies currently operating in our state."

"Additionally, says Stewart, “We have had much success with China, Georgia’s second-largest trading partner.” In April, the governor opened the Beijing Georgia Business Advisory Center in Beijing to encourage foreign direct investment and find new export markets and tourism opportunities. Also in April, point-of-sale manufacturer Pax Technology Ltd. of China announced an Atlanta venue for its U.S. headquarters, sales, and support center. Stewart points out two Chinese projects in 2007: General Protecht in Barnesville, for an assembly and distribution facility for electrical devices, and Sany Heavy Industry Company, Ltd.’s U.S. headquarters and assembly center in Peachtree City.

Other countries are investing in different areas of technology, including bio-technology:

"Other foreign countries are also boosting employment in Georgia, including transformer company Group EFACEC of Portugal’s 600 jobs, compressed air technology firm BEKO of Germany adding 35 jobs, and software development center for Wipro of India, which is expected to hire 500 people over the next three years.

"The biosciences sector continues to expand, with concentrations in vaccine development, cancer research, immunology and medical devices. Georgia is home to 270 pharmaceutical, biotech, medical device, diagnostic, ag-biotech, and biofuel companies. The state is also headquarters to the U.S. Centers for Disease Control and Prevention. In 2009, Atlanta will host the BIO International Convention, a four-day event which is forecast to attract 25,000 people from 70 countries."

In Part III, I will begin to focus solely on Georgia-South Korea interaction, but the above provides a broad picture of how dynamic Georgia trade has been and how successfully it has built a foundation for stronger trade competitiveness into the future.