MCALLEN, TEXAS - The consultant McAllen Economic Development Corporation works with to bring Chinese manufacturers to the region says the Rio Grande Valley has great potential for foreign investment.
Tony Liu is managing director of Los Angeles-based Proline Distribution Services. He was born in China but is now a U.S. citizen living in California.
“The unique advantage this region has is the maquiladoras. I have done logistics for 25 years and I am so sorry I did not know about maquiladoras before,” Liu said.
Tony LiuLiu said McAllen EDC President and CEO Keith Patridge opened his eyes to the twin-plant Maquila concept of manufacturing.
“Keith introduced me to the program, it is fantastic. It has a lot of advantages for manufacturers, particularly big manufacturers. Other regions do not have this advantage.”
Liu said he first met Patridge four or five years ago.
“I have been involved in the logistics industry for about 25 years. We have our own warehouse and we have a trucking division. So, we haul containers from China in and out of the port in Los Angeles,” Liu said.
“Then, a friend of mine recommended I come down to the Rio Grande Valley. I thought, okay, let’s take a look. I found the people were really nice and the whole Rio Grande Valley impressed me. I thought, I want to do business here.”
Liu continued: “Then I met with Keith and I knew immediately we could work together on joint ventures. I know a lot of the investors because I am in the logistics business. I know a lot of the people who like to move money around. I think there is a great opportunity to bring a lot of business to the whole Valley.”
Before Covid things were going swimmingly, Liu explained. Working with the City of McAllen, McAllen EDC took a trade delegation to China three or four times. Jim Darling was mayor of McAllen at the time and he enthusiastically participated.
Then Covid hit.
“It was such a shame. We had taken Jim and Keith and a delegation of 14 or 15 people to Shenzhen. We visited BYD, a big car manufacturer. We visited Huawei, the cell phone manufacturer. We visited a lot of other big companies. I think Keith and Jim were surprised at the opportunities. We had plans to go back four times a year but unfortunately Covid hit. Sad to say, 2019 was our last trip to Shenzhen.”
Liu said the trips to China are important to build relationships. Such trips are not possible right now, however, because of China’s strict quarantine regulations. “As a U.S. citizen I would have to remain in quarantine for four weeks. We would lose a lot of time,” Liu said.
But while trips to China are currently off the table, work on bringing Chinese manufacturers to the region is still going on.
“I am working with (McAllen-based customs broker) Jorge Torres and Keith to bring a battery manufacturer to the the maquiladoras across the border. Kansas City wants the project also but they do not have maquiladoras. With Chinese material and U.S. labor it is going to cost even more. It does not make sense to do it there,” Liu said.
Asked how big an investment the battery manufacturing project would be, Liu said: “In the region of $25 million.”
Another potential Chinese project is a solar panel manufacturer. “We are working on that. That would a $20 million investment.”
Liu said the timeframe for both projects is about two years.
“A lot of research has to go into this. If there are policy changes by the U.S. administration that would change things. If they take down the Section 301 tariffs there would be no advantage to coming here. I think U.S. policy needs to be very consistent, otherwise it deters investment. You are not only hurting customers, your are hurting all the regions.”
Liu said he has heard that the Biden Administration wants to cancel the 301 tariffs. “In that case the manufacturers don’t need to come over here,” he said.
Liu said there are some other smaller projects he is working on with Torres and Patridge.
“As Jorge mentions, ocean freight costs are incredibly high. Pre-pandemic it cost $1,500 per container to ship from China to the U.S. During the pandemic it jumped to $20,000 per container. Now it has gone back to $10,000 for one ocean container coming from China,” Liu said.
“Also, (the Port of) Long Beach is so congested. It takes about three months to get a container boat into dock. Then you have to unload it. Time is very important. That is why the border region has so many advantages.”
Liu said he believes in the Tamaulipas-South Texas region so much he wants to open a branch of his company here.
“My business in California is going very well. But, it would be good to open a branch here, to help bring the freight to the border.”
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