China’s Ruyi Group Finds “High Cotton” in Arkansas
July 10, 2017 | By: DCI
The Shandong Ruyi Technology Group is a privately-held textile manufacturer based in China that employs 20,000 people around the globe. The company already had operations everywhere from Japan to Italy, but determined in 2015 that it was time to set up a major manufacturing facility in North America. They “followed the cotton,” their primary natural resource, to Texas, North Carolina and South Carolina, but ultimately chose a location in Arkansas – a state that barely made it on their short list, but impressed the company’s Chairman and his team with their responsiveness and tenacity. We spoke with two key players to get the full story: Jane Liu, a company legal advisor who was a key player guiding the company’s site selection process, and Danny Games, Deputy Director of the Arkansas Economic Development Commission.
Andy Levine (DCI): If you Google the Shandong Ruyi Technology Group, you won’t find a great deal of information. But the company is a privately held textile manufacturer that’s based in China and they employ about 20,000 people around the world. They have operations in Japan, Asia, New Zealand, India, Pakistan, the UK, France, Germany, and Italy.
Patience Fairbrother (DCI): Back in 2015, the company determined it was the right time to open a major manufacturing facility in North America. And the first step was to “follow the cotton,” which meant taking a close look at the states that were major producers of cotton. They looked at states like Texas, which produces more cotton than any other state in the U.S. by a factor of three. They also looked at North Carolina and South Carolina, states with strong histories of textile production.
Andy: But they ultimately chose a location in Arkansas, a state that barely made it on their shortlist, but impressed the company’s chairman and his team with their responsiveness and tenacity.
Patience: So welcome to Episode 22 of “The Project: Inside Corporate Location Decisions.” I’m Patience Fairbrother of Development Counsellors International.
Andy: And I’m Andy Levine, also with DCI and Patience’s co-host of “The Project.” Today, we bring you the story of the Shandong Ruyi Technology Group, or the Ruyi Group, for short. You are going to hear from two key players in this story. From the company, we’ll hear from Jane Liu. She is a Chinese lawyer who is a key player in guiding the company’s site selection process.
Patience: And we’ll also hear from Danny Games. Danny is the Deputy Director of the Arkansas Economic Development Commission.
Andy: But let’s start with the Ruyi Group’s Jane Liu, and her brief description of the company.
Jane Liu (Ruyi Group Legal Advisor): Ruyi Group is quite unique in terms of the way it operates. It’s a very modern and an aggressive, vigorously growing, comprehensive textile group in a traditional industry, the textile industry. It has been number one in terms of competitiveness and the capability for innovation among 50,000 companies in China. So in a short word, it’s the number one textile company in China.
Andy: We asked about the decision to set up the company’s first location in North America.
Jane: It happened just two years ago that Ruyi Group started very solid the first step in North America. The rationale is…the appealing points include the much cheaper energy costs, the overall quality, and also the availability of a multilingual workforce. And also most importantly, U.S. cotton availability.
So based on numerous considerations, a group this size, they cannot wait any longer to come to America to start their own business here.
Patience: At the same time the Ruyi Group started to look at North America, the state of Arkansas and its new governor, Asa Hutchinson, was stepping up its time and resources in the Shandong region of China. Here is Danny Games of the Arkansas Economic Development Commission about how the initial connection took place with Chairman Qiu, CEO of the Ruyi Group.
Danny Games (Arkansas Economic Development Commission): So we were actually introduced to them through the chairman of Sun Paper. Sun Paper was an announcement that we had in April. And Chairman Lee was friends with Chairman Qiu. And he knew that Chairman Qiu was looking to establish a facility in the U.S., and shared his good experience in Arkansas.
The timing was great. He was here in September of 2015 and we already had it on the governor’s calendar to be in China that following November. So naturally, we spent a little bit of extra time with the Shandong Ruyi Technology Group.
Andy: We asked Jane to go back and walk us through their exploratory visit to the United States.
Jane: We engaged professional advisors: commercial advisors, legal advisors, and big accounting firms. We tried hard to source their recommendations and which states would be the ideal destination for Ruyi’s first investment. And we got various answers.
And Arkansas was not actually on the top of the recommendation, to be honest.
Andy: The five-day tour covered three different states, and the first part of the trip didn’t go terribly well.
Jane: At the time, we have our priority of our visiting. But the people who we met, they cannot address our queries very timely. Or we had not been receiving a very quick response like site recommendation or whatever. Anyways, we are not fully convinced or we are not very comfortable with the information made available to us.
Andy: But the visit took an upward swing when the group arrived in Arkansas.
Jane: So while we came to Arkansas, we can feel the difference among the limited options. The people there, they are really committed to the project of attracting foreign investors in terms of creating new opportunities for the local community. And we spent…I still remember, we spent one and a half days, 36 hours, in Little Rock and West Memphis and ADC and this team, they give us very intensive agenda numerous meetings, and they give us a recommendation of five sites.
Patience: The fourth site on their visit was different. It had an existing facility, a former Sanyo plant. And Chairman Qiu fell in love with it. Here’s what Danny Games remembers about the visit.
Danny: We rolled the dice and said, “Let us show you this building. It sounds like something you might be interested in.” And our project manager who was out working the project at the time, Esperanza Massana, they were able to get him to the building about 6:00 p.m. one evening. He spent three hours at the building til he ran out of daylight and flashlights and headlights, and suffice it, fell in love with the building. Large open space of formerly manufactured televisions had been probably shuttered for almost ten years.
Patience: The group had a late dinner that night in Memphis, Tennessee. And Danny Games relayed to us an interesting moment in the conversation.
Danny: I can remember us sitting across the table and I won’t go into the particulars, but we were having a particular discussion where he was taking a position. And we wanted to advise him in a different fashion. So I had to find a delicate way to be very direct, if I can put it that way. And I can remember saying, “We just have to be honest. We have to be direct.” And I said it. And I sat across the table as my palms started to sweat and there was some interpreting going on. And I was reading his facial expression, and it came back to me that he was very appreciative of my recommendation. He agreed with me and he thought that was a smart decision, and he would go with that.
Andy: But it was sounds like a bit of a…your heart stopped beating for a moment or two there.
Danny: I apologize. I said, “I’ll make it or break it.” But that, I think, continued to build the directness and the trust and the comfort level that he knew we had his interest in mind as well as our own.
Patience: Trust had been established. And it was at that moment that all other competitor states fell away, and the Ruyi Group decided they would work with Arkansas.
Danny: In less than a month, they were back here. They were back here, Jane was here, and then engineers were back here. So they very rapidly began their due diligence in terms of the engineering on the building and measurements, and where would equipment be placed, and what lines could be put into place.
Andy: As a final question, we asked Jane what made Arkansas different from the other states and the other economic development groups that they had interacted with.
Jane: They react very specific requests or questions so quickly, which is impressive. At that time, you can’t imagine as a foreigner, we don’t have much common sense. Not saying legal or financial knowledge in the business circle. Some common sense beyond our understanding, we had so many simple questions or difficult questions for them. But most of the questions can be addressed very clearly in a timely manner. That’s impressive. That requires a cooperation. That gives us the comfort because when you start a greenfield project, you can never do it by yourself. You need hand holding from the government agency and also you need their guidance as to maybe some potential business partners.
So that indicates their culture of understanding and commitment, which is a very important message. And that message has been received, been read clearly from the outside.
Andy: Okay. It sounds like you felt a very good chemistry with the people you were working with.
Jane: We clicked very well, yes, with Arkansas, yeah.
Patience: On May 11, 2017, the Shandong Ruyi Technology Group announced plans to invest $410 million in Forrest City, Arkansas. At full employment, the company expects to employ 800 people. So Andy, we’re up to the takeaways portion of the episode. So since you actually conducted both of these interviews…
Andy: And one of these interviews, by the way, took place at 6:00 in the morning when I called Jane Liu when she was in Australia.
Patience: So I’m grateful that you were able to take that one, obviously.
Andy: Sure.
Patience: So what stood out to you from these conversations that you had?
Andy: I think there were two things that stood out to me. You know, so many of the episodes that we’ve been doing have focused on talent, talent, talent. This one was different. They sort of said, “Listen, it starts with the cotton. We have to have this resource, this natural resource, and we’re gonna focus on where the cotton is, and that’s sort of the starting point of us. We’re gonna look at Texas, we’re gonna look at North Carolina, South Carolina.” They also looked at California, interestingly enough, as well as Arkansas, which has the fourth largest cotton crop in the United States. So it started with the cotton.
Patience: It’s interesting because I think a lot of companies are moving away from looking specifically at natural resources and talent has become, you know, kind of the major resource that companies look for. But the cotton still was very important to them, obviously.
Andy: This was the absolute starting point. So the second thing that stuck out to me, there was a point in the middle of this where we talked to Danny Games about sort of the developing of trust. So I think probably on paper or based on data, there were other locations in the South and North Carolina, South Carolina, and Texas that were probably just as good as Arkansas. But Arkansas did a better job creating trust with the chairman of this company, Chairman Qiu. And they did that by kind of just simply responding to their requests. The company said, “We’re interested in this,” they responded. They developed this sort of great working relationship. And then you heard about this dinner, that Danny Games is at dinner. The chairman says something, it’s translated, and Danny disagrees with him.
And they used that moment to build trust, and it sort of was at that point all the other competitors fell away. And the Ruyi Group said, “We’re gonna work with Arkansas.”
Patience: So that is a wrap on episode 22 of “The Project: Inside Corporate Location Decisions.”
Andy: There are a couple of people we have to thank. I’m going to start with Scott Hardin, the Director of Communications of the Arkansas Economic Development Commission. So he arranged the interview with Danny Games, his colleague, while I was visiting Little Rock, Arkansas. But he also set up this 6:00 a.m. interview with Jane Liu who was halfway around the world in Australia, and that was not the easiest thing to get done, but we got it done which was terrific.
Patience: Thanks to both Jane and Danny for participating in the project. They were terrific guests.
Andy: The project is sponsored by DCI. We are the leader in marketing places and have served over 450 different cities, states, regions, and countries. You can learn more about us at aboutdci.com. If you like what you’re hearing, we hope you’ll tell your friends about the project. Something like, “Of all the podcasts I listen to about corporate location decisions, ‘The Project’ is my favorite.”
Patience: We hope you will keep listening. There are many more projects to come in the year ahead.