Alibaba's New Pasadena Hub Signals LA As Growing Gateway To China

Alibaba's move into Los Angeles by leasing a 22,000 square foot office space in Pasadena's new Playhouse Plaza signals a bigger opening of cross-border China and southern California business connections. These links are being framed around technology entrepreneurship, venture investment and nearby innovation hubs that seek to make startups more central to the city's economic base.

This is a catch up for LA compared with its northern neighbor San Francisco. Sand Hill Road venture capitalists have long been bridged with China, and Chinese tech titans Baidu , Alibaba, Tencent, Fosun and Renren have been setting up bases and making numerous investments in Valley startups over the past few years.But far fewer SoCal venture and tech links with China have existed. Now a new corridor between LA and China is emerging from Silicon Beach in trendy Santa Monica to San Gabriel Valley's Pasadena. Famous for hosting the annual Rose Bowl football game and parade, Pasadena is getting on California's innovation hotspots map with startups from the world-renown Caltech, Idealab, the Art Center College of Design -- and soon Chinese e-commerce giant Alibaba.Peter Brack, an entrepreneur and investor at Mucker Capital in LA, observes that southern California startups center on digital media and entertainment sectors while northern California's emerging companies hinge on deep-rooted technology in software, big data, artificial intelligence and the like. Synergies between the core tech-focused Bay Area and Beijing have existed for years, but haven't developed much yet with LA's glitzy and creative small businesses in media and film.

The China-LA link is gradually strengthening though as leading Chinese companies such as Alibaba, Fosun, LETV and Dalian Wanda go global and begin doing Hollywood type deals. Chinese tech investors have arrived too such as Tencent's $250 million majority stake investment in LA-based video game maker Riot Games in 2011 and  BYD's plant opening in 2013 to produce electric vehicles.

Meanwhile, downtown LA has become a magnet for Chinese developers and purchasers, ranging from the LA Marriott Sheraton Universal Hotel to mixed retail-residential complexes Fig Central and the Metropolis project.

Not to be overlooked are the newly affluent Chinese who are buying up pricey residential real estate. Chinese are the top foreign buyers of U.S. homes, with Los Angeles a focal point. Catherine Marcus, a broker at Sotheby's in Beverly Hills, says Chinese are buying up brand new, multi-million dollar mansions in Pasadena, Beverly Hills and other rich enclaves as a long-term investment overseas. One Chinese family even bought a decorator showcase home equipped with the latest gadgets for their teen-age son to stay in while enrolled in USC.

East LA's suburban Arcadia, adjacent to Pasadena, has become a haven for newly rich Chinese and is known as a Chinese Beverly Hills. A branch of the Chinese restaurant chain Hai Di Lao, popular for its tasty hot pot dishes, was packed here on a recent visit.

Tourism in LA is naturally benefiting as an influx of Chinese soak up Hollywood and Disneyland culture. Sage Brennan, a consultant in LA specializing in the China travel market, says Chinese lead among foreign visitors arriving at LAX.  He's working with the city of LA, Pasadena's tourism board and the Four Seasons Hotel in Beverly Hills on reaching Chinese clientele.

The Four Seasons Hotel, which derives 10 percent of its business from Chinese guests, is making sure to cater to this fast-growing segment. A Mandarin-speaking guest relations manager has recently been appointed to be a main contact for China guests, the web site and tourist guide book have been translated, the breakfast menu features congee, and China UnionPay credit and debit cards are accepted. The hotel's marketing director Greg Velasquez is reaching out to Chinese travelers through the mobile messaging app WeChat. Such moves have helped the Four Seasons to be designated "China Ready" by the LA Tourism and Convention Bureau.

The Chinese-owned luxurious Langham Hotel (formerly the Huntington) in Pasadena is tapping the Chinese market as well with tai chi classses and spa treatments that feature Chinese traditional medicine.

China investment in U.S. business was almost non-existent just 15 years ago, following a trend of Japanese buying up trophy properties such as Pebble Beach, but it's climbed to $50 billion and is predicted to reach $200 billion by 2020, according to a report by the Rhodium Group and the National Committee on U.S.-China Relations.  At nearly $6 billion, California tops the U.S. destinations for Chinese business investment, mostly in Los Angeles and San Francisco metros.

Silicon Dragon's forum in LA, July 29-30, will delve into this trend of LA as a gateway city for China investment, with tech talks, venture panels and deal making at the Pasadena Convention Center, just a few blocks from Alibaba's soon-to-open digs.