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Cars for China

Jun 14 , 2013

China is the largest country in the world with over a third of global population. What many do not know is that China middle class will grow to over 600 million citizens by

Tom Watkins

This is good news for the automotive community periodically pummeled by the hollowing out of America’s domestic manufacturing. The biggest always fall first and hardest during any recession. After housing and construction, the auto industry followed, leading the nation into massive unemployment during the 2008 economic decline.  

It has been said that when Detroit/Michigan catches an economic cold the US gets pneumonia. Chinese investment in Michigan is helping to stabilize the patient. 

Why have the Chinese selected states such as Michigan as destinations for business, cultural and educational investment?  Quite simply, Michigan is ripe for investment and rolling out the welcome mat on so many levels.  

First, governors, such as Rick Snyder of Michigan, have led numerous delegations to China in recent years. Thoughtful, progressive governors are hoping to build the win-win relationships with China that grow jobs at home.  

Snyder, who has traveled to China twice as Governor, with a third trip planned for this fall, often says, “Michigan is open for business and warmly welcomes you.” 

Michigan, like other states, is seeking foreign direct investment, and wants to export its automobiles, agricultural products, technology know how and other goods and services to developing markets, such as China. 

According to Michael A. Finney, President and CEO of the Michigan Economic Development Corporation (MEDC),”Michigan’s business community now includes more than 50 major Chinese companies that have invested more than $1 billion in our state and growing.” 

At a recent meeting in Detroit, Chinese Consul General Zhao Weiping said, “Michigan has many ingredients: Economic, social, cultural and educational that make it attractive to Chinese investors and I suspect as the relationship matures, the investments and job creation will only continue to grow.” 

It was just a few short years ago that General Motors and Chrysler Corporation were humbled into bankruptcy, surviving only through massive cash infusions courtesy of American taxpayers.  

Yet today the auto industry is in the throes of yet another comeback, the roar now restored to the Motor City.  

“As a result of US automotive investment in China, these past few decades have seen China emerge as a major player in production. Now Chinese investors continue to see the unique opportunities in the Detroit region which now leaner and meaner, remains the brain center of advanced manufacturing, design and technology,” said Sandy Baruah, president and CEO of the Detroit Regional Chamber. “As the epicenter of the global automotive industry, we welcome Chinese and other foreign direct investment to our region.” 

“There is more technology in today’s car than there is in an iPad, tablet, laptop and iPhone combined says David Cole, Chairman of AutoHarvest and Chairman Emeritus for The Center for Automotive Research. 

Many successful Chinese auto suppliers including: Nexteer,Yanfeng USA, Henglong and ZYNP International are established in Michigan and creating jobs for our community.” says Jerry Xu, President of the Detroit Chinese Business Association

Michael Dunne, a leading expert on China’s auto industry and author of American Wheels, Chinese Roads: The Story of General Motors GM in China observed, “The Chinese are bringing new money into the State of Michigan. Thirty years ago, China showed signs of potential but had no capital. Today, the situation seems almost reversed. The Chinese are cash-rich and Michigan is seen as a place with great potential thanks to the strong design and engineering talent.” 

Global auto technology and talent is clustered in Michigan, including over 15,000 Mandarin speaking engineers. Opportunity abounds.  John McElory, a global auto expert and president of Blue Sky Productions understands well, “The Chinese are coming to Michigan because when they look around they don’t see shuttered factories, they see nothing but opportunity.” 

The New York Times has taken notice of the resurgence of both the US auto industry and Chinese automakers in establishing a beachhead in Detroit. After decades, if not centuries of looking inward, the Chinese are spreading their wings.  Chinese President and leader of China’s Communist Party, Xi Jinping speaks of “The China Dream, The People’s Dream.”  Part of this dream entails expanding its economic reach and soft power to every corner of the globe. 

Bilateral trade between the US and China could exceed $450 billion this year and will continue to grow.  

What many in the West are discovering is that when we speak of building bridges with China economically, culturally, and educationally, these bridges run both ways. “This reality creates opportunities on both sides of the ocean,” said Lisa Grey, President of the Chinese Association of Greater Detroit

The Chinese economic wave will continue to wash upon Michigan’s and America shores. We could do nothing and be swamped—or we can learn to surf and ride the wave. Governor Snyder and the State of Michigan are already riding the wave and creating both jobs and wealth.  

Other states and nations are in competition to capture the upwards of $2 trillion dollars the Chinese are expected to invest around the globe over the next decade. Michigan and America would be wise to continue to create economic magnets to attract global investment from China moving forward. 

Tom Watkins serves on the University of Michigan Confucius Institute Board of Advisors and the Michigan Economic Development Corporation International Advisory Board.  He is also the former Michigan State Superintendent of Schools, and former President and CEO of the Economic Council of Palm Beach County, FL. He is currently an US/China business and educational consultant.

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