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Alibaba Group Holding Ltd (NYSE:BABA) ’s New Pasadena Hub Indicates LA As Emerging Gateway to China

Alibaba Group Holding Ltd (NYSE:BABA) ‘s leasing of a 22,000 square foot office space in Pasadena’s new Playhouse Plaza indicates the expansion of cross-border China and southern Californian business connections. Technology, entrepreneurship, venture investment and close by innovation hubs are endeavoring to make startups more pivotal to the city’s economic foundation.

Just 15 years back, there was barely any Chinese investment in U.S. business. However, presently it has jumped to $50 billion and is estimated to touch $200 billion by 2020, as per a report by the Rhodium Group and National Committee on U.S.-China Relations. At almost $6 billion, California is the front-runner among the US destinations for Chinese investments, primarily in the Los Angeles and San Francisco metros.

LA is much behind San Francisco where venture capitalists have had strong historic links with China. Chinese tech giants such as Alibaba, Baidu Inc (ADR) (NASDAQ:BIDU) and more have been establishing centers and investing in several Silicon Valley start-ups in recent years.

Pasadena, which is known for the annual Rose Bowl football game and parade, is emerging as one of California’s innovation hotspots. It hosts startups from Caltech, Idealab and now the much-awaited startup of the Chinese e-commerce giant Alibaba.

As per Peter Brack, an entrepreneur at Mucker Capital in LA, Southern California startups mostly focus on digital media and entertainment sectors. On the other hand, northern California’s emerging firms specialize in software, big data, AI, and others. While the Silicon Valley and China have had close links for years, the same does not apply to LA’s small enterprises in media and film.

The China-LA association is slowly gathering strength as major Chinese firms such as Alibaba Group Holding Ltd (NYSE:BABA), Fosun, LETV and others are closing Hollywood type deals. Chinese tech investors have made their presence felt in LA with BYD opening its plant in 2013 to build electric vehicles.

Chinese are the leading foreign purchasers of American homes, particularly in California. East LA’s Arcadia, next to Pasadena has drawn many newly rich Chinese earning it the name Chinese Beverly Hills.

Tourism in LA has experienced a significant influx of Chinese wanting to experience the Hollywood and Disney land culture. Chinese top the number of foreign visitors coming to LA.

Published by Alan Masterson

Alan has over 25 years of trading experience in the U.S. equity markets. He began his career in finance working on a program trading desk specializing in over-the-counter stocks. His career progressed from that point to his current position as senior trader on an institutional trading desk. In the evenings, Alan teaches economics at a local community college. He has contributed articles to various publications over the last six years, including feature articles for an economics magazine and various financial blogs. You may contact Alan via his email ([email protected]) or his Google+ page (https://plus.google.com/103338576216002376250).



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