China, the Motor City and Michigan have a lot in common

Updated: 2013-07-15 10:54

By Michael Barris (China Daily)

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If there's one US state where people are starting to see the value of a good relationship with China, it's Michigan. Last year, the Great Lakes State, struggling to recover from the economic slump, exported $3.2 billion worth of goods and services to China, a 25 percent jump from 2011, lagging behind only Canada and Mexico. Going the other way, Michigan is one of the top 10 states for direct investment from China, receiving more than $917 million in capital in 2012.

Other states have recently reached out to China - California, for instance, has made overtures to the Asian nation, highlighted by Governor Jerry Brown's leading a 90-member business entourage on a week-long trade and investment tour of China in April. But Michigan didn't have the advantage of a history of Asian settlement stretching back to the Gold Rush era - as California does - to pave the way for its outreach. What it does have is a web of engineers fanning out from its heart, the automobile industry - and that interests China greatly.

"Michigan matches really, really well, maybe better than any other state, with China, for their 12th Five-Year Plan," said Milan Stevanovich, business community development officer with the Detroit Chinese Business Association. "Their emphasis now is not so much more automotive, even though there's a nice little gold rush of companies trying to make global alliances, which we have seen for the last two or three years," Stevanovich said in an interview.

China, the Motor City and Michigan have a lot in common

"But also the Chinese are coming in looking for clean technologies; looking for environmental and water solutions; looking for medical healthcare. And we've had such an overabundance of automotive engineers here over the last five years, a lot of these engineers here are now either working with angel capitalists or are just starting new startups in all these new emerging sectors. It's quite an exciting time to be here in Michigan," he said.

Michael Finney, president and CEO of the Michigan Economic Development Corp, a public-private partnership that provides grants, loans and other economic assistance to businesses that make investments or create jobs in the state, calls China's economic growth "an opportunity" for Michigan. "More and better jobs are created both by promoting Michigan exports to China and by attracting Chinese companies to locate operations in Michigan," Finney said.

The feeling appears to be mutual. Zhao Weiping, China's Chicago-based Consul General to the Midwest, including Michigan, called the state "an important business partner of China" during a recent visit to the Detroit Chinese Business Association in Troy, about 25 miles north of

Detroit. Credit for that recognition goes in large measure to first-term governor Rick Snyder, who served as chairman of California computer maker Gateway Inc from 2005 until Gateway's sale to Taiwan's Acer Ltd in 2007. Snyder, who also is the former chairman and CEO of Michigan venture-capital firm Ardesta LLC, is leveraging closer ties with China against a slow economic recovery in the state that a century ago gave the world the automobile.

There's no doubt Michigan needed help. According to state-provided statistics, Michigan's economy spent the decade from 2000 to 2010 in recession, a casualty of the overall decline in US manufacturing tied to outsourcing and increased reliance on the financial sector and consumer spending to drive demand. The state, whose economy is disproportionately affected by the fortunes of automotive industry, lost nearly 218,000 manufacturing jobs from 2000 to 2005 and suffered further near the end of the decade when the US credit crunch sent auto sales at the Detroit Three - General Motors, Ford and Chrysler - plunging.

Although the drag from the manufacturing sector on Michigan's economy appears to have bottomed out and the national recovery in vehicle sales has lifted Michigan's economic situation somewhat, the state unemployment rate was at 8.4 percent in April. In 2013, job growth and personal income growth both are expected to remain below the national average.

In hopes of tapping China's economic growth, last September Snyder and business leaders from 21 Michigan companies embarked on a 10-day trade mission to China. A highlight of the trip was the launch of the Michigan China Center, which will promote trade, tourism and cultural exchanges between Michigan and China.

In the latest example of China-Michigan synergy, on Thursday, the US distribution arm of Mengzhou, Henan-based ZYNP China Manufacturing, a maker of engine cylinder liners, said it would invest $9.5 million to expand its operations and add a new R&D center in the city of Romulus, Michigan, about 25 miles southwest of Detroit, creating 51 jobs. The new R&D center will allow the company to accommodate more advanced labs, test cells, equipment and personnel, ZYNP said.

In a release, Snyder said the expansion and new R&D center in Romulus "will further strengthen" ZYNP's Michigan presence. "The new jobs resulting from ZYNP's expansion will keep us moving in the right direction," the governor said. The company received a $350,000

Michigan Business Development Program grant that will be tied to performance targets and could be granted a property tax abatement for the facility, pending approval by the City of Romulus, according to the release.

For its part, ZYNP, whose distribution operations have been in Romulus since 2005, said it has "long-considered the state of Michigan - specifically the Metro Detroit area - as the best location for its North American presence because of Detroit's legacy of technology and manufacturing, robust infrastructure and network, as well as its skilled workforce". The area consists of a "unique labor force with the automotive background, capabilities and protocol essential to conducting business in the automotive industry", the company said.

No matter how you look at it, Michigan's China outreach appears to be a win-win proposition.

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(China Daily USA 07/15/2013 page2)