Groups aim to do business with China

SAN JOSE, CA (KGO) -- After decades of isolation, the U.S. and china re-established relations 30 years ago. Now, a major Bay Area group is working on a significant strategy to link Shanghai's economy with ours.

China is the world's factory. Major Silicon Valley firms manufacture there, which has drawn poor workers from rural areas like Sichuan, to take assembly line jobs.

However, that's going to change soon.

"It's important for China to begin to develop its own intellectual property and their own value-add rather than just bare bones manufacturing. In fact, I'd say about a third of the lowest cost manufacturers are going to migrate -- either go out of business or migrate to Vietnam," said New Enterprise Associates Co-Founder Dick Kramlich.

Kramlich is a well-known Silicon Valley venture capitalist. He is an early investor in PowerPoint and heart stent technology.

With labor cheaper in Vietnam, Kramlich sees Shanghai and the Yangtze River region resembling what Silicon Valley was 20 years ago, with the same potential.

The Bay Area Council has launched a campaign to foster that development. It's holding a venture capital summit in Shanghai next week.

One of its bold goals is to foster technology there that will bring jobs to the Bay Area.

"I think a lot of the companies realize that they can start in China, they can develop a product in China, but ultimately they need to have some sort of face here in the U.S., and the Bay Area, just with the technical know-how and the experience we have, is probably their first choice," said Jim Atwell from Deloitte Technology Partner.

Jim Wunderman heads up the Bay Area Council, which is helping to create a $150 million fund to invest in promising Chinese companies.

"There's a stream of over 50 companies that are being investigated at the current time, but not actual investments have been made. The private placement memorandum was just completed, so we're just beginning the fundraising stage," said Wunderman.

The strategy is also bi-directional. The Bay Area Council is organizing programs to showcase clean technology, developed in the Bay Area that can be sold to China.

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