A deal built on trust
Chinese furniture company establishes U.S. operations in Danville area
- March 1, 2013
Some developments in life are less about analysis and more about relationships. Such was the case for Jeremy Stratton and Ken Bowman, two economic development directors in Southern Virginia who recently sealed a deal with GOK International, a Chinese furniture company.
GOK has opened its U.S. headquarters in Danville and is about to move into a building in the Cane Creek Industrial Park in Pittsylvania County, which will become a showroom and assembly operation. The company is investing $12.5 million in the project, which is expected to create 300 jobs during the next three years.
The relationship with GOK evolved slowly. “It takes a lot of meeting with them, getting to know them, going over to visit them in China,” says Stratton, Danville’s economic development director.
Bowman, Pittsylvania County’s economic development director, says that while gaining a company’s confidence is important in any deal, trust is especially significant in working with a foreign firm. The GOK deal took more than a year to finalize. “It seems like it takes a long time, but it’s part of having that confidence because they are making a big investment,” Bowman says. “It’s a big risk on their part so we want to do everything we can to make sure it works out.”
In the end, everything worked out. GOK announced its plans for Danville and Pittsylvania last fall.
“We have a very good relationship with Pittsylvania County and Danville, which is important for us in reaching a decision to make our first investment in the United States,” GOK President Kevin Liao said in a statement at the time. “The plant’s location is only an hour and fifteen minutes from the vast furniture markets of High Point, [N.C.]”
Part of the process in gaining a prospect’s trust is letting it talk to similar businesses already operating in the Danville-Pittsylvania area. “They’ll ask them candid questions: ‘How is your work force? Do you have problems with people coming in late? Leaving early? Drugs?’” Bowman says. “They’ll get the straight answer from those folks.”
Maintaining confidentially before a deal’s finalized also is important, especially if a company’s relocating. “They have employees, so if the word gets out that a company is picking up and moving somewhere else, what kind of message does that send to your employees that are currently working for you?” Bowman says. “They want to make sure they’ve got everything in order, they’ve done all their due diligence before they make that announcement.”
Even though the GOK deal is done, Bowman and Stratton have maintained their ties with the company, which has helped them gain contacts in China. In November, the economic development directors traveled to China with two GOK executives. They stopped in Shunde City, Guangzhou and Beijing where they met with potential business prospects. “GOK helped set the itinerary and the meetings to cut through the red tape, if you will” Bowman says. “We could have never done that on our own.”
GOK decided to start an operation in the U.S. because duties imposed by an U.S. anti-dumping law would make it more expensive to produce furniture in China for the American market. GOK instead will ship parts to Ringgold where local workers will assemble the furniture. The company specializes in office, hotel and institutional furniture.
Most of the 300 GOK employees, which are expected to have an average annual wage of $30,000, will work in the Cane Creek building in Ringgold. The rest will be based at the Danville headquarters, a renovated tobacco warehouse downtown. GOK is leasing the 40,000-square-foot Cane Creek building from Danville’s Industrial Development Authority.
The project was supported by a $1 million grant from the Tobacco Indemnification and Community Revitalization Commission. The commission was established by the Virginia General Assembly to promote economic growth in former tobacco-dependent communities.
Workers in the area are expected to be well suited for the assembly jobs GOK will create. Many members of the labor force used to work for other furniture companies in Southern Virginia that required assembly skills and shift work. “It’s something they can hopefully plug into with very minimal training,” Bowman says.
GOK was one of two international companies that made an announcement in the Danville-area last year. The other was CBN Secure Technologies Inc. which is based in Ottawa, Canada. CBN produces Virginia driver’s licenses and identification cards.
The company plans to add 25 workers to its Danville facility, which currently has 40 employees. A number of other international companies also operate in the Danville area, including Japan Tobacco International, Sweden’s Swedwood and India’s Essel Propack.