Chinese investors discovering lure of Motor City
Updated: 2014-06-25 13:06
By Adelina Zhang in New York (China Daily USA)
In its bid to bounce back from bankruptcy, Detroit has been looking for help far and wide and Chinese investors have been responding.
"There is no better place for Chinese investors to be than the place that put the world on wheels," said Tom Watkins, an advisor to the Detroit Chinese Business Association.
"Chinese businessmen are setting up companies and creating jobs for American workers and Chinese companies are expanding their global business and acquiring more customers," Watkins said. "It's a win-win situation."
Since the economic crisis of 2008, Detroit has been reaching out to investors in China to help create new business in the automotive city. Both the Detroit Chinese Business Association and the Michigan Economic Development Corporation, the state's lead advocate for business development, said they have seen an increase in the number of Chinese investors in Detroit, especially in the automotive industry.
Jerry Xu, president of the Detroit Chinese Business Association, said Chinese companies have been looking or already invested in the Detroit metropolitan area for years. "We do not have a very accurate number," he said. "But we estimate there are close to 200 companies."
The largest percentage are automotive-related companies and relatively small, Xu added, but major companies were "definitely growing and increasing significantly".
One of China's Big Four carmakers, Shanghai-based SAIC Motor Corp, has a location in Birmingham, a suburb of Detroit. And Chinese-owned Nexteer Automotive, which makes components related to steering systems, has a branch in the Detroit suburb of Troy.
Chongqing-based Chang'an Automobile Group, a Chinese automotive original equipment manufacturer, set up a research and development center in Plymouth, Michigan, about 25 miles west of Detroit in 2011.
Hon Su, vice-president in charge of research at Chang'an's Plymouth facility, told China Daily earlier he had hired about 20 engineers with US auto industry experience in the last few years because of their expertise in developing vehicles.
"Here in Detroit, we have a tradition," said Jerry Xu. "We have a lot of history and experience that no other place can have. That is why Detroit is always respected by the Chinese as the place for the automotive industry."
Engine cylinder-maker ZYNP, based in Central China's Henan province, has recently quadrupled the size of its facility in Romulus, Michigan, about 25 miles southwest of Detroit. Xu said that's a sign they are "looking to expand their business and hence hire more people significantly".
The $30 million investment will result in 50 new professional and technical jobs, according to Leslie Santos, program development manager at ZYNP International.
Other Chinese companies with a stake in the Detroit comeback include Fuzhou-based Fuyao Glass and auto interior-maker Yanfeng USA, which has two facilities in the Detroit area.
A total of $1.1 billion from China has been invested in Michigan since 2000, the vast majority of it in the automotive and aviation industries, according to a January 2014 report by the Rhodium Group.
From 2000 to 2008, Michigan received $232 million from Chinese investments. By 2010 that total rose to $714 million.
"Since 2009, the Detroit economy has been bouncing back and getting back on track," said Xu. "In recent years, a lot of automotive companies have an interest in Detroit. They realize the value for them to come to the US, especially automotive companies."
"Detroit is the comeback city," said Dave Murray, deputy press secretary at the governor's office. "We're aiming for a trained workforce, trying to provide a better education to make sure that students will have a good fit for the workforce. Businesses want to locate to places where there is talent."
According to Xu, Chinese investment is also starting to branch out into real estate. Shanghai-based real estate company Dongdu International group recently acquired three buildings in downtown Detroit, he noted.
Brian Connors, the China business development manager from the Michigan Economic Development Corporation (MEDC), said that three-fourths of the research and development automotive investment in North America is in Michigan, approximately 375 centers, 120 of them foreign owned.
"Chinese businesses are recognizing the enormous value of Michigan," said Connors. "The acute need for automotive talent has sparked enormous interest among Chinese automotive companies."
"The market of demand for the talent that we have here is very high. Chinese companies understand that they need to come here and compete for that talent, if they want to be a part of the Michigan innovative story."
Connors also said that he has seen an increase in Chinese companies starting from scratch as opposed to acquisitions and mergers.
"Companies are setting up brand new operations and hiring locally," he said. "The ones in Michigan are at least 95 percent local hires."
Michigan Governor Rick Snyder, who has led trade missions to China to attract job creating business investments and strengthen trade relationships, has asked Washington for 50,000 more EB-5 visas - green cards for foreigners who invest and create jobs in the US - to attract foreign business.
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