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March 09, 2012

Kidder Mathews facilitates U.S.-China businesses

The San Francisco Chronicle

Tapping into the increasing flow of business between the United States and China, real estate firm Kidder Mathews has opened a division to help companies on both sides of the Pacific set up shop in each other's country.

The China Services Group offers advisory, brokerage and property management services to Chinese companies looking to invest in the United States, and vice-versa.

The firm, with nine offices in California, Oregon and Washington, is teaming up with Binswanger, a global real estate firm headquartered in Philadelphia, and Synergis, a facilities management company in Shanghai.

The partnership will focus on "filling the significant void in existing services for the location of industrial, manufacturing and distribution sites inside China (and) serve the many Chinese companies looking for such space and also for investment and other real estate opportunities within the United States," Kidder Mathews said.

The opportunities for the Bay Area are particularly ripe, said Skip Whitney, executive vice president at Kidder Mathews, who heads the new division.

"I've been going to China consistently for many years, and I'm seeing more and more Chinese companies wanting to come here," said Whitney, who co-founded San Francisco's public-private agency ChinaSF and has worked with the Bay Area Council on its China initiatives. "We also heard from Synergis that many of their clients want to come here."

Tech companies, real estate investors and winery buyers are among those for whom Whitney expects to be providing services in the Bay Area. One Chinese company has expressed interest in building a manufacturing plant in Wisconsin.

"We're having several conversations right now," Whitney said.

Cross-border startups: One recent, unrelated deal involving Kidder Mathews is the creation of Silicon Valley's first Sino-U.S. tech incubator, in Santa Clara.

When it opens next month, InnoSpring will provide space, mentoring, professional service referrals and access to venture capitalists for U.S. and Chinese startups interested in "cross-border development." The center also will work with Chinese government agencies "to facilitate Silicon Valley companies' expansion efforts into China."

"We're providing a whole eco-system for startups," said Inno-Spring president Eugene Zhang. The incubator plans to start off hosting 10 startups and build to between 20 and 40, many of them in the mobile applications, health and clean tech sectors.

Kidder Mathews found the space, 13,000 square feet of offices on Tasman Drive, and brokered the deal on behalf of the incubator's financial partners: TusPark, a Chinese developer of high-tech business parks affiliated with Tsinghua University; Shui On Group, a Shanghai real estate and construction company; Silicon Valley Bank; and Northern Light Venture Capital, a Hong Kong investment company, with offices in mainland China and Menlo Park.

"These are the kinds of relationships we're setting up with the services group," said Whitney.

Major customer: One Chinese company is spending big-time in California - the Bay Area in particular.

Huawei, a telecom infrastructure company, recently doled out $6 billion worth of contracts to three California high-tech firms, including San Jose's Avago Technologies, to provide semiconductor chips and communications equipment over the next three years. The other firms are Broadcom in Irvine and Qualcomm in San Diego.

Neither Huawei nor the companies would disclose dollar figures, but it's not pocket change. "They've been an important customer for us," said Bryan Ingram, a vice president at Avago, which is supplying RF semiconductors for mobile phones. "And they've become a big customer now they're in the mobile phone business."

Huawei, based in Shenzhen, is a private, employee-owned company, not one of China's ubiquitous state-owned enterprises. It recorded $32 billion in revenue last year and does business in 140 countries, and with most of the world's major telecom carriers. Last month, AT&T announced it would be selling a 4G Huawei tablet.

The company has 1,700 employees in the United States, including nearly 700 at its flagship R&D center in Santa Clara. Last year, when the center opened, Huawei spent $3.6 billion on R&D, $230 million of it in the United States.

On Thursday, LinkedIn had 14 openings listed for software engineers, systems architects and mobile device specialists at the Santa Clara facility. Much of the work there is focusing on the enterprise server and cloud spaces, said William Plummer, vice president of external affairs. "We're ramping up," he said.

However, Huawei has hit some bumps in the United States. In October, the Commerce Department, citing a "national security decision," blocked the company's participation in a proposed nationwide wireless communications network for public safety agencies. In 2010, Huawei and a Chinese state-owned company, ZTE, were barred from bidding on a multibillion-dollar network-modernization project planned by Sprint Nextel.

"There's been an unfortunate misperception about Huawei arising from broader trade and other tensions," said Plummer. "Sometimes, we're seen through that prism. In fact, we've had as difficult a time building trust with the Chinese government as with the U.S. government."

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