AEDC: Arkansas still engaged with Chinese companies amid new Trump trade tariffs

Arkansas economic development officials are still engaged in talks with Chinese officials to bring two major durable goods projects to Arkansas. The news comes amid a new round of trade tariffs from President Donald Trump’s administration that could thwart progress and push Far East investments to other international markets.

On Monday (Sept. 17), Trump released a new $200 billion list of products subject to a 10% tariff beginning Sept. 24. That’s in addition to more than $300 billion in Chinese goods already under U.S. tariffs.

Arkansas Economic Development Commission (AEDC) spokeswoman Brandi Hinkle said two long overdue economic development projects from the Shandong Province of China announced in early 2016 and 2017 are still on the table.

“[AEDC Director] Mike [Preston] and the rest of the team are in weekly contact — daily when necessary — with Chinese project coordinators, and if the need arises will travel back to China,” Hinkle said of rumored trade missions to China to shore up the project. “However, AEDC is in a ‘wait and see’ position for now in regards to traveling to China before year-end.”

Hinkle said Shandong Sun Paper, which first announced plans in April 2016 to invest more than $1 billion to build a paper mill in south Arkansas, told Talk Business & Politics China’s largest paper goods manufacturer is “moving along as planned with environmental engineering and permitting work currently taking place.”

In January, Sun Paper had to reconfigure its four environmental permits with the state Department of Environmental Quality (ADEQ) following a trip by Preston to bolster the $1.3 billion project. Preston, however, came home with news that the Chinese consumer goods giant had proposed to invest another $500 million in its proposed Arkadelphia paper mill that will now produce the cardboard products that package online goods shipped by Amazon, Walmart and other online retailers.

Hinkle also said AEDC officials hope to complete final details of a deal with Chinese textile giant Shandong Ruyi to locate its first manufacturing operation in North America in Forrest City. That project is expected to create up to 800 jobs through an initial investment of $410 million to retrofit the former 1.4 million-square-foot Sanyo manufacturing plant into a cotton-spinning, garment factory.

“Ruyi is in the middle of another international acquisition, and the Forrest City team hopes to be done with that deal by October and head back to Arkansas,” said Hinkle.

EXPLORING OTHER MARKETS
Originally, Shandong Ruyi officials had planned to begin processing this summer more than 200,000 tons of Arkansas cotton annually at the Forrest City facility. The first Ruyi plant in the U.S. was planned to take advantage of Arkansas’ position as the nation’s fifth-largest cotton producing state to help China’s largest textile manufacturer move closer to its goal of being the world’s largest upscale garment maker.

In fact, both Ruyi and Sun Paper — which are headquartered in the East China province that is home to Confucianism and one of the country’s most populous and affluent regions — are exploring other opportunities in Africa to fuel their own growth plans to keep up with China’s fast-growing middle class as well as competing with U.S. companies and other international rivals on the global stage.

Just last week, Shandong Ruyi made a commitment to expand its reach in Africa by selecting Nigeria, Egypt and Mali to invest more than $2 billion to develop a continental cotton-making supply chain. That agreement would allow the company access to Africa’s cotton-growing industry, from ginning and spinning to textile manufacturing and garment making.

Shandong Ruyi Investment Holding, which is the Chinese textile and manufacturing investment vehicle behind both the cotton gin and projects in Arkansas and Africa, has not made secret its plans to move alongside upscale French labels LVMH and Kering, which respectively owns the Louis Vuitton and Gucci brands.

In February, Shandong Ruyi and global investment firm JAB Holding Co. announced plans to purchase Switzerland-based luxury shoe and accessories company Bally International AG for $700 million. That deal, mentioned by AEDC officials, is in the latter stages of transition as Ruyi acquires the Swiss brand.

“Bally is one of the most important luxury shoe and leather accessories brands, with a heritage going back more than a century. Bally’s history and its products greatly complement our existing strength in ready-to-wear apparel,” Shandong Ruyi Group Chairman Yafu Qiu said in statement after the close of the deal. “This is an important milestone for Shandong Ruyi Group in our enterprise to become a global leader in the fashion apparel sector. We look forward to supporting Bally in achieving its continued growth and enhancing its brand globally.”

Shandong Ruyi first emerged as a key player in the high-end fashion industry in early 2016 with the purchase of French fashion firm SMCP, the parent behind affordable luxury brands Sandro, Maje and Claudie Pierlot. That deal was followed up later that year with the purchase of British trench coat brand Aquascutum for nearly $120 million.

In late 2017, the Chinese garment maker completed a pivotal deal when Ruyi investors spent $2.22 billion at the to purchase the majority interest in Hong Kong’s Trinity Ltd., which manufacturers and designs Gieves & Hawkes suits and other upscale menswear.

At Shandong Ruyi’s packed memorandum of understanding signing ceremony with Gov. Asa Hutchinson, Qiu said the Chinese textile manufacturer and upscale garment maker chose Arkansas for two reasons: cotton and ease of working with Arkansas economic development officials.

“You must be asking why such a Chinese company parachuted into Arkansas. Those factors were a crucial point to making this decision,” he said.

‘BAD POLICY’
Still, there is no word from state economic development officials on what impact the new round of trade tariffs on China companies will have on the pending deals to gain access to Arkansas’ plentiful cotton and timberland resources. On Tuesday (Sept. 18), Beijing officials had already responded with $60 billion in retaliatory tariffs on U.S. imports and said they will likely cancel a trip to send its chief economic adviser to the U.S. for talks with top U.S. trade officials.

Consumer Technology Association President and CEO Gary Shapiro called the new tariffs illegal and “bad policy,” and called on the Trump administration to halt their implementation.

“Today’s retaliatory tariffs are not an effective trade policy and may violate U.S. law. Congress has not given the president or the United States Trade Representative [USTR] a blank check to pursue a trade war,” Shapiro said. “We urge the administration to reconsider its misguided approach of increasing tariffs, as they are directly paid for by American companies and consumers.”