L.A., OC & FDI

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There’s plenty to cheer in “Foreign Direct Investment in Southern California 2018,” a report issued last month by the World Trade Center Los Angeles along with the Los Angeles County Economic Development Department, American Airlines and Pepperdine University’s School of Public Policy.

The sponsors published the entire report in the May 21 edition of the Business Journal, and it remains available at laedc.org.

The good news is apparent and familiar at a glance: Southern California remains a “major hub for the global economy” and a “critical bellwether of the state of global trade.”

Foreign-owned enterprises accounted for nearly 430,000 jobs in the region as of last year, spread over more than 10,000 firms from San Diego to Ventura counties.

The average wage came to $62,810 annually, for a total payroll of nearly $27 billion coursing broadly through Southern California’s economy.

The list of top countries for foreign direct investment – the places the various firms call home – also was familiar. Japan, the U.K., Canada, France and Germany – all long developed economically – led the way.

Any cheers should give way to some concerns for the community of business in Los Angeles, though. That’s because the report rendered the service of pointing out what looks to be a discomfiting trend with the potential for enormous implications here.

Los Angeles has more than three times the population of Orange County but trails our southern neighbor as a host for jobs at foreign-owned enterprises from China and India – the two emerging giants of the global economy.

Employers with home offices in China account for 7,500 jobs in Orange County compared with 6,026 in L.A., according to the report.

The Orange County jobs tied to China pay $66,773 a year on average, compared with $58,696 in L.A.

Another seeming edge for Orange County – the jobs that ultimately track to China are spread over 79 companies or entities, with an average of nearly 95 jobs per employer.

L.A.’s smaller base is spread over 267 firms, for an average of about 23 jobs per employer.

The outlook on other Chinese nations – several smaller countries or areas where the majority of populations is ethnic Chinese – looks to be a split decision. Singapore favors Orange County while Hong Kong leans towards L.A., with Taiwan about even.

India’s numbers are considerably smaller than China’s but they also point to edges for Orange County. The study found that 1,611 jobs in Orange County at enterprises owned by parent entities in India, compared with 1,494 in L.A.

The report lists plenty of other countries, and a trove of data for each of the six counties taken into consideration.

And there are many factors that go into decisions by big and small enterprises in China and India when it comes to establishing a presence in Southern California.

Quality of life is no doubt a major criterion, however – and that’s reason enough for the community of business in Los Angeles to consider the numbers from China and India as a wakeup call.

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