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Gov. Glenn Youngkin embarks today on his first international trade mission, a trip that will take him to Japan, South Korea and Taiwan.
This is significant for at least two reasons:
First, Youngkin has broken with tradition by not making a foreign business trip in his first year, something that every governor since George Allen in 1994 has done. This has seemed especially unusual for a governor with a background in international business as former co-CEO of The Carlyle Group. Youngkin certainly traveled a lot in his first year, it was just to states with key elections where he could speak for fellow Republicans.
Second, the inclusion of Taiwan on the itinerary is an attention-grabber. Taiwan has long been a flashpoint in U.S.-China relations — China regards the island as a renegade province. China objected mightily when then-House Speaker Nancy Pelosi visited Taiwan last year and objected mightily to current House Speaker Kevin McCarthy meeting with Taiwanese President Tsai Ing-wen when she was in the United States recently. Indeed, China objected mightily to her even visiting the United States. How will it feel about the governor of Virginia visiting Taiwan? We don’t know, but we do know that Youngkin’s visit is being framed in political terms, in the context of a potential presidential bid (although The New York Times wrote that Youngkin has recently pulled back from such explorations). The Washington Post wrote: “The sit-down with Tsai — the only meeting specified in an announcement otherwise short on detail — could help the governor bolster his foreign relations credentials and perhaps atone, in the eyes of Republican primary voters, for his extensive business dealings in China before he became governor.”
I don’t dispute any of that. When I saw Youngkin’s itinerary, that stop in Taiwan was the one that jumped out at me, for the very same reasons (although Youngkin won’t be the first Virginia governor to visit Taiwan; Jim Gilmore did so in 2000).
I will, however, call attention to a more important destination on Youngkin’s tour: South Korea.
Taiwan concerns the politics of the moment; South Korea involves the economy of the future.
When he was running for governor, Youngkin loudly lamented that Virginia was losing out on big economic development announcements to other states — he cited auto plants that were going to Georgia, Kentucky, North Carolina and Tennessee. As governor, Youngkin found his state in competition with Georgia for one especially big project: the 8,100-job Hyundai electric vehicle battery plant that passed over the Southern Virginia Mega Site in Pittsylvania for a site near Savannah. While Youngkin says he wants to create a “rip-roaring economy” in Virginia, the latest gross domestic product figures from the U.S. Department of Commerce show that the state has the second-lowest GDP growth rate in the Southeast. Meanwhile, two new industry clusters are rising up in the Southeast, particularly in Georgia — one around electric vehicle batteries, the other around solar energy manufacturing.
Do foreign trade trips matter?
Mills Godwin was the first Virginia governor to make a foreign trade trip, just one of many milestones during his impressive first term in the 1960s. (His second term in the 1970s was more of a placeholder term.) Godwin made two trips, both to Europe — the first in 1967, the second in 1969.
Even into the 1980s, such trips were sometimes controversial. Gov. Gerald Baliles was criticized for his “globe-trotting.” Now we have a better understanding of how the economy works. And we do have some spectacular successes to point to. The Dynax auto parts plant in Botetourt County grew out of a trade mission to Japan that George Allen led in the 1990s. It was the company’s first investment outside Japan.
In an interview with The Washington Post last year, Allen recalled meeting the company’s chief executive. “He said, ‘I feel like I’m sending my daughter to a new place. I want to know if she’ll be welcome there. We said, ‘Well, Yokohama Tire is here and some other Japanese company.’ But he would not make that decision until he saw me face to face.”
One of Terry McAuliffe’s trade missions took him to Italy, where his visits included one to the Eldor company, which now has its first North American plant in Botetourt County.
The fruit of any trade mission may not be visible right away; sometimes relationships take years to develop. This is one time, though, that Virginians should be happy to see Youngkin out of state — and out of the country.
The thread that connects all these things is South Korea.
That Hyundai plant that we lost to Georgia is Korean. While that’s the biggest “one that got away,” it’s really part of a much bigger phenomenon.
Georgia officials say that since 2020, about $22 billion has been invested in electric vehicle-related companies in the state, with 26,500 jobs expected as a result. You may pause here to marvel at the irony of a state with a Republican governor and a Republican state legislature being a key driver of the green energy revolution. Here’s the more relevant takeaway today, though: Most of these jobs are from South Korean companies.
Site Selection magazine says six South Korean companies last year invested $11.49 billion in Georgia, with 14,304 jobs projected. Most of those were related directly to electric vehicles; others were related more generally to the auto sector springing up in Georgia, so it’s hard to tell if they’re specifically EV-related. Only one of those wasn’t auto-related: a 470-job announcement from a solar energy manufacturer. Then in January, that same company announced another Georgia expansion, estimated to create 2,500 jobs.
By contrast, the Virginia Economic Development Partnership in its annual report says it assisted in the creation of 17,203 jobs in Virginia, no matter the source. It’s unclear whether these are apples-to-apples comparisons — or, should we say, Virginia hams-to-Georgia peaches — but the point is that South Korean investment is driving a lot of Georgia’s job growth.
The news release announcing Youngkin’s upcoming visit says 25 South Korean companies are located in Virginia. A list compiled by the Southeast United States Korean Chamber of Commerce says 84 are located in Georgia — and that list was put together five years ago.
“The most amazing advances and cutting-edge technologies right now are coming out of South Korea,” Georgia’s economic development commissioner told Site Selection. “Whether you’re SK or Hyundai or Hanwha Qcells or any of a number of others, advances coming out of Korea are truly driving economic prosperity around the world.”
That makes South Korea a smart choice for Youngkin’s first international trade mission. It won’t make the headlines that the Taiwanese visit does, but those headlines will soon be forgotten; any jobs that come out of the South Korean stop should be more long-lasting.
So how did South Korea become such an innovative economy? The answer is instructive. “As late as 1945, less than 20 percent of Koreans had received formal education of any kind and most South Koreans were illiterate,” says the website Facts and Details. “Today, South Korean 15-year-olds rank No. 2 in the world in reading, science and math.” In fact, South Korea now ranks as the fourth most-educated country in the world, behind only Canada, Japan and Israel; the United States ranks sixth, according to the Organization for Economic Cooperation and Development. That educated workforce has, of late, focused on tech sectors as the country has built an export-focused economy.
“Many Korean companies have become not only competitive players but global leaders in their industries, and they are seeking to expand their global market share by locating production in their key markets, namely, the United States,” reports the website The Diplomat.
Just as the pandemic focused American attention on how much — too much — of our supply chain is dependent on China, the same thing happened in South Korea. “This past year has marked a distinct shift in the tenor of the business relationship between Seoul and Washington,” The Diplomat reported last year. “Driven by intensifying competition in critical technologies, supply-chain fragility (which became apparent in the COVID-19 pandemic), and geopolitical trade risks such as the China-U.S. rivalry, the U.S. and South Korean governments, and firms from the two countries, have begun to update their relationships to meet new realities. Now, a new Korean wave of investment is sweeping through the United States.”
Since then we’ve seen the passage of multiple pieces of legislation — the CHIPS-Plus Act, the Inflation Reduction Act — aimed at encouraging the growth of domestic supply chains. If you’re a foreign company wanting to sell to the U.S. market, there are incentives (market incentives, if not actual financial incentives) to locate operations in the U.S. That’s one reason the Chinese company CATL partnered with Ford for electric vehicle batteries, something that Youngkin didn’t like, leading him to veto the state’s bid for that plant — which wound up in Michigan instead of Pittsylvania County. That’s also why so many South Korean companies are now winding up in Georgia; sometimes clusters of businesses create their own gravitational factors. All that means now is a propitious time for Youngkin to visit Seoul.