Smart and Safe: Investment in Utah

Ranked as the number one state for business and careers by Forbes magazine for four out of the past five years, Utah is angling for the Asian market to come and experience why others are excited about doing business

By Blessing Waung


It’s a little-known secret that out of the entire United States, one state considers Hong Kong its largest export market. That state is Utah. In 2014, the state posted altogether USD$1.8 billion to Hong Kong, which represented just under 15 percent of the state’s total merchandise exports.

What exactly is the relationship between Hong Kong and Utah, and what is the former importing from the state? Governor Gary R. Herbert came in September with a delegation of business leaders looking for outbound investment, where he spoke of the strengths of doing business together and why Hong Kong and Utah are a symbiotic fit.

“Many people in this room here witnessed us go from the depths of the recession where we had around nine percent unemployment rate,” Herbert says. “Our unemployment rate is now between 3.5-3.6 percent, and we’ve also diversified our economy, which is now the fourth most diversified economy in the United States. Our future’s very bright indeed because of good principles that put us on the right track in Utah, I would say, similarly to what we find here in Hong Kong.”

According to the presentation given by Val Hale, Executive Director of the Governor’s Office of Economic Development, there were many “fits” between Utah and Hong Kong. For example, in the financial services industry, Goldman Sachs has their third-largest operations in the world based in Salt Lake City. In the aerospace and defense industry, the state is strong in composite manufacturing, creating materials with carbon fiber, airplane parts for Airbus and Boeing. And in the life sciences, Utah has very strong biomedical programs.

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Governor Gary R. Herbert

“We’re very business-friendly, we empower the private sector, we encourage investment, and we want to have the risk-takers come take the risk! And as you create wealth, you create jobs, the economy grows and expands and everybody benefits. It’s the rising tide that raises all boats on the pond,” Herbert says

The core industry sectors that are Utah’s strengths include: life sciences, energy and natural resources, software development and IT, aerospace and defense, outdoor products and recreation, and financial services.

Positive business climate

One of the top reasons to do business in Utah, according to Herbert and his colleagues, is the beneficial tax climate. All domestic and foreign corporations are required to pay a flat five percent income or franchise tax on all income earned in Utah, which has remained unchanged for nearly two decades.

While the cumulative GDP growth of the United States has hovered around five percent over the past decade, in Utah, it’s grown nearly 10 percent.

With the Economic Development Tax Increment Financing (EDTIF) incentive, there is a post-performance, refundable tax credit for up to 30 percent of new state revenues over the entirety of a project, which typically runs from five to 10 years. This includes sales, corporate, and withholding taxes, paid to the state, and is available to companies looking to relocate and/or expand their operations to Utah.

China’s current investment in Utah, OOCL (Orient Overseas Container Line) established an integrated management and service center in Utah. Val Hale was there to christen their new ship. “We are now so happy to have you as a part of Utah’s culture and they’ll be hiring about 300 people in Utah to help expand their business,” Herbert says. “It’s a mutual benefit, a prime example.”

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Or the XIO group, a Hong Kongbased alternative investment group, acquired the Israeli-based company called Lumenis, for approximately 510 million dollars. They’re involved with eye-care products, which are manufactured in Salt Lake City.”

The list goes on, with massive mergers such as Shanghai International Holdings Limited’s USD$4.72 billion acquisition of Smithfield Foods, whose parent company is based in Milford, Utah.

Bilingual advantage

Committed to a bilingual education, Utah is home to more than a third of all the Mandarin dual language schools in the nation. “One of the advantages that Utah has is that we are very much bilingual,” says Governor Herbert. “We speak the world’s languages, and as I came in as governor – at the depths of the great recession – we said, as a state, we’re going to focus on growing the economy.”

“We speak in Utah 130 languages,” he says. “We’re unique, we are the most bilingual state in America. And if you are going to be involved in international trade, it certainly helps to speak the languages. It’s nice here in Hong Kong that with English, you can get by with pretty well. But the ability to come here and speak the language of many which is English, is again, one of the secret successes of Hong Kong. We have the ability to go around the world as Utahns because of our language capabilities.”

As one of the pioneering states in the US for foreign language education, 33 schools in Utah currently offer Chinese dual language immersion programs, which outnumbers any other state in the US. Through the Utah Dual Language Immersion Program, students spend half their school day learning in English, and the other half completely in their target language. Many of these programs begin when children are five years old. The other languages offered are Spanish, French and Portuguese.

“I remember when I was on my first trip to Beijing, I met with a member of the Communist Party [working in economic development], and I was surprised how aware he was about Utah. And halfway around the world, we sometimes feel like we’re out there in the rocky mountains of Utah – but for him to talk about what was taking place in Utah, asking how the Jazz were doing (he was a big fan) and wanting to know how Jerry Sloan had retired and why they traded D-Will [basketball player Deron Williams] … I was just taken aback by how much they knew about Utah.”

Looking ahead

Herbert is the Chair of the National Governors Association, and says he often works closely with his colleagues on the economic development of their own individual states.

“I think, anybody – governor, any elected official – should have a vision for the responsibility,” Herbert says. “I don’t care it’s a local mayor, a city council, county commissioner, state legislator, governor, congressman, senator, but you have to have a vision for your responsibility.”

“But that means you also ought to set a goal – it’s not a matter of just having a vision. If all you have is a vision, it’s probably a dream, but if you set goals then you can actually put steps in place of how to accomplish the goal. I came in and we created a 10-step economic development program, which by the way has been copied by the states, which I believe is okay because I don’t believe it’s a zero-sum game, but we put steps in place and our goal was to become the premier business, economic development place in America. And so we want to be number one, the best, that’s pretty bold.”

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“My father had a slogan he taught me and it’s kind of our family slogan, which really kind of represents the attitude of Utah and that was, ‘Work will win, when wishy washy wishing won’t.’ We are, a very much a culture in Utah, of work,” Herbert says.

“We understand: roll up your sleeves, pull yourself up by your bootstraps, and succeed. We maybe don’t have some of the brilliance that others have, but we have a work ethic which is second to none. We will work shoulder to shoulder to succeed, and part of what we are doing here with our outreach for international efforts is to see opportunities for us to work together. To roll up our sleeves and find opportunities of success.”

“I want to continue to have people say, ‘Utah, great quality of life, great place to live, raise a family and do business.’ All three things, if we do that, we’ll be very successful indeed.”

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