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More Chinese investors are looking at property, farmland in California

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Posted: Saturday, June 1, 2013 12:00 am

Thinking of putting your home or property up for sale? Your buyer might come from much farther afield than you imagined. Chinese investors are buying up more homes, buildings and even farmland in California than ever before.

“Pretty much, China considers the U.S. on sale, and they are heavily purchasing here,” said Sheri Aguilar, president of the Lodi Association of Realtors.

Next week, the groundwork for more of those investments could be laid in Lodi. The Lodi Chamber of Commerce will host 20 Chinese CEOs from the greater Shanghai region during the Lodi leg of an investment tour of California.

Business with China is booming across the state.

In 2003, there was only one trade deal with China in California, for about $3 million. In 2010, there were 55 deals totaling $824 million, according to data gathered by CNN.

Chinese buyers make up the second largest group of foreign buyers, next to Canadians, according to the National Association of Realtors.

Foreign clients in general are making a noticeable dent in California’s real estate market, Aguilar says. By the end of March 2011, 38 percent of available residential real estate in the U.S. was purchased by foreign clients. In 2012, about 6 percent of total residential buyers in the state were foreign clients, up from 5 percent in 2010.

“Since we’re right here in California, it makes it natural to come in from China,” she said. These buyers tend to consider average home sale prices, around $170,000, very low, and usually look in the $500,000 price range.

Lodi’s links with Chinese businesses go beyond real estate, though. The connection kicked off in 2007, when Pat Patrick, president and CEO of the Lodi Chamber of Commerce, organized a trip of Lodi leaders to visit China for the first time.

Since then, several delegations have gone back and forth, creating sales relationships. But now, the Chinese want to invest and dig more deeply into California’s economy by investing in property.

“There is pressure from China to invest in the U.S. because while sometimes we think our economy is shaky, they look at ours as very secure and a place to invest,” said Frank Gayaldo, an international business consultant and Lodi grape grower. “Considering how small Lodi is, it’s amazing just what a dominant global player Lodi is becoming.”

It begins with Chinese interests in importing food, then food products, then wanting to be more involved in supply and distribution of those products. Some Lodi wineries, including those owned by Constellation brands and others, export their wine to buyers in China.

This next step might involve Chinese investors purchasing vineyards, wineries or other agricultural land. Their upcoming visit could forge those connections, hopes Gayaldo.

Gayaldo admits there are American concerns about foreign investment on U.S. soil. But he says this is different.

“It’s nice because they can buy the company, but they can’t take the land with them. So the jobs are often left here,” he said.

The main goal of the group visiting next week is to forge new marketing tactics to make U.S. products more accessible in Chinese markets.

Their stay will include meetings at the Hampton Inn with local growers and business owners, an overview of what products Lodi and the San Joaquin Valley have to offer, and an evening at the Downtown Lodi Farmers Market.

Patrick sees this visit as a huge international opportunity for Lodi businesses looking to export their products.

“Lodi stands to gain new business partners who can create jobs here in Lodi. The No. 1 focus of everyone who is in any kind of business development today is that we desperately need jobs,” he said.

According to Patrick, only 1 percent of California’s economy is in exports, and the growing middle class in China is ready to buy our products.

The underlying story, says Gayaldo, is that China has 1.4 billion people to feed. That’s 22 percent of the world’s population, but only China has only 9 percent of the world’s arable land. As a result, Chinese companies are looking for more and better ways to bring American food sources to China.

“It’s mind-blowing how large it is, and how untapped it is,” said Gayaldo. “The opportunity for California agriculture is immense. We have only seen the beginning.”

Contact reporter Sara Jane Pohlman at sarap@lodinews.com.

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