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Originally published June 8, 2010 at 10:02 PM | Page modified June 9, 2010 at 11:23 AM

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Chinese investor with deep pockets eyes Seattle

A Chinese businessman who made a fortune in the Shanghai real-estate market is setting his sights on Seattle and starting a new venture to scout for local investment opportunities.

Seattle Times business reporter

Jiang Zhaobai to visit Seattle

Jiang Zhaobai will speak in Seattle from 8 to 9:30 a.m. Tuesday, June 15, at the Rainier Square Conference Center. More details.

China's national strategy to promote investment abroad may be landing on Seattle's doorstep.

A Chinese businessman who made a fortune in the Shanghai real-estate market is setting his sights on Seattle and starting a new venture to scout for local investment opportunities.

Jiang Zhaobai, the 47-year-old head of the Shanghai Pengxin Group, is coming to Seattle next week to meet with business leaders and introduce his plan to blend Chinese money and American ingenuity to help U.S. companies find a foothold in the world's fastest-growing market.

His venture, called the Shanghai American Enterprise Center, will look for Seattle companies and others on the West Coast that have promising technology and want to do business in China, focusing on green technology, clean energy, new media, mobile telecom and biotech.

The venture is part of a growing wave of Chinese businesses trying to expand outside the country, backed by a Chinese government policy encouraging them to "go global" and use some of the country's massive foreign reserves to take advantage of opportunities overseas.

"The purpose of the center is to find good small- and medium-sized enterprises in the United States and help them to grow into the Chinese market and link them with local capital," he said through an interpreter in a short presentation to the Seattle City Council last fall.

Jiang is looking to make initial investments of up to $10 million in each company, becoming a minority shareholder. The center in Shanghai will provide those companies with access to capital, legal services, marketing and staffing and space inside its Shanghai offices. Jiang said he has already invested in a U.S. composite-materials company producing lightweight vehicles and bicycles.

Jiang's partners are Lee Sands and Joseph Massey, both former U.S. government officials who negotiated major trade agreements with China in the 1980s and 1990s. They chose to operate in Seattle because of its relatively friendly climate for business with China, Sands said.

"Right now in China, there's about $200 billion worth of private capital looking for a home," Sands said. "We would like to find a home for some of that capital for Seattle companies, and then provide them with a suite of services, which would allow them to embed themselves into the Chinese commercial environment."

"Smaller companies may have thought distantly about China, and this could be a solution to several of their problems," said Joe Borich, president of the Washington State China Relations Council.

"There's going to have to be relationship and trust building going both ways," he added. "Do we have complementary interests that can be put together?"

U.S. companies in China face a challenging environment at a time when economic tensions between the two countries have been running high, particularly over problems with intellectual-property protection.

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Foreign companies have also objected to China's "indigenous innovation" policy, which, they say, favors domestic producers. The policy has raised concerns about the role of foreign-technology innovation in China and whether companies will be squeezed out of the market or have their intellectual property misappropriated, Borich said.

Sands and Massey say the new venture has the backing of the Shanghai government and the legal clout to protect American companies' interests in China. To bolster that effort they hired Jia Mingru, a former legal counsel to China's central government who wrote many of China's intellectual-property laws.

One of the best ways for U.S. companies to protect their assets is to find "companies whose interests are bound up with yours," said Sands, previously the chief U.S. trade negotiator with China and now managing director of Sierra Asia, an investment-banking and consulting firm.

"We're not going to participate in anything that loses a single U.S. job," he said.

"If you think about the trade deficit with China, we will be best served by finding ways U.S. jobs can be created with overseas investment," said Massey, who was chief U.S. trade negotiator with China and Japan from 1985 to 1992 and later directed the Center for International Business at Dartmouth College. "That happened before with the Japanese; it's part of the globalizing of the economy."

Jiang, a self-made entrepreneur from a small town near Shanghai, is among China's richest men.

In 2008, Forbes magazine listed him and his brother, Jiang Lei, as No. 61 in the 400 richest Chinese, estimating their net worth at $670 million. In 2009, Forbes listed Jiang Zhaobai as No. 185 with a net worth of $560 million.

Jiang's Shanghai Pengxin Group has 40 subsidiaries and about $3 billion in assets, Massey said. Pengxin's website says that in addition to its work as a real-estate and infrastructure developer in Shanghai, it is involved in agricultural projects in Cambodia, Bolivia, Argentina and Africa, as well as in mining.

If the venture succeeds, Sands said, he hopes Chinese companies also will use it to bring their technology to the U.S., and other Chinese investors may join in as well.

Kristi Heim: 206-464-2718 or kheim@seattletimes.com

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