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Posted: 10:30 p.m. Tuesday, Nov. 13, 2012
By Everdeen Mason
A rapid increase in local exports to China and the country’s investments in U.S. businesses has caused local business leaders to look at building relationships with companies there.
According to the U.S. China Business Council, exports to China from the congressional district that includes Clark County has increased from $18 million in 2002 to $105 million in 2011.
And Chinese businesses are beginning to invest in U.S. businesses. Ohio is in the top five states in terms of attracting investment. According to an October report from global economic analyst Rhodium Group, Ohio has attracted $2.7 billion of investments from China — including acquisitions and new buildings — in the past 10 years.
The latest local investment has been in Konecranes Inc., which has its U.S. headquarters in Springfield. Konecranes recently received an order for 24 steel mill cranes for a Texas mill run by a Chinese company called Tianjin Pipe.
“China is critically important to our business as an emerging market,” said Scott Gilbert, Konecranes spokesman. “That whole area of the world, Asia, is important … Their needs are unique compared to ours here.”
Konecranes didn’t disclose the dollar amount of the contract, but the crane maker said the project in Texas is the largest single investment by a Chinese company in a U.S. manufacturing facility. Tianjin Pipe will spend more than $1 billion through it’s subsidiary TP-CO America with U.S. joint venture partners to build the Texas mill.
Because of increasing investments like that, Wittenberg University and the Greater Springfield Chamber of Commerce have taken strides to educate the community about trade with China.
“It’s important to understand that business is global today. The more we educate ourselves and understand the markets, the better,” said Mike McDorman, chamber president and CEO. “We want to market to outside investors in China, that specific area is grown and they’re looking to invest and we’d like to see them invest here, whether it’s auto related or in other areas such as IT or technology.”
An expert in Chinese relations, Henry Levine of the Albright Stonebridge Group, visited Springfield to speak with business leaders last week and also to talk to students at Wittenberg University. Levine spent 25 years working with the U.S. Department of Commerce, and now helps companies such as Coca-Cola and Walmart forge better partnerships there.
“Most of the investments from China are not at the federal level,” he told representatives from businesses such as Avetec, Robbins & Myers and Rumpke. “It’s down here at the local level and at the state level.”
In Ohio, the lead industries for investments have been in fossil fuels and chemicals, and aerospace, auto and transport, according to the Rhodium Group report.
In exports to China, the leading industries in Ohio are machinery, computers and electronics, and transportation equipment.
Companies such as Konecranes have seen an increase in demand for its products in Asia.
“We certainly have a growing customer base in China for our technologies and China is important to our global supply chain,” Konecranes’ Gilbert said. “We also have a number of jobs and facilities in the U.S. for which we have no plans to outsource.”
Demand has increased so much that the company recently moved its global CEO from Finland to Singapore to be embedded in a region with so much potential customer growth, Gilbert said.
It’s important for locals to understand the potential for growth in that market, said Tom Kaiser, director of Wittenberg’s East Asian International Business Institute.
“We have a lot of exports out of Springfield, Clark County and South Central Ohio,” Kaiser said. “So we want students to see the people who are on the front lines working with China.”
Kaiser was instrumental in bringing Levine to Springfield, who visited classes and gave a colloquium at Wittenberg after speaking at a chamber luncheon.
At the chamber, business leaders asked Levine for advice and clarification on relations with China.
“There’s no magic bullet here,” Levine warned. “It’s tough to do business in China.”
He advised businesses to work hard to build relationships with the Chinese government on a professional level, and make sure not to only communicate with government when they need something.
He used Coca-Cola’s investment in clean water initiatives as an example of building relationships while showing a willingness to cooperate with government interests.
Local business leaders shared concerns about China’s perception of the U.S. and how that could affect business relations.
When China joined the World Trade Organization in 2001, Levine said the country showed signs of leaning toward competition and openness in its markets.
But after the global economic downturn China returned to micromanaging its economy and businesses, he said. After the recession in the U.S., the Chinese developed, Levine said, “the idea that China is on the rise and the U.S. is on the decline. So then the Chinese model of government control is better.”
“They are wrong, and they will come to regret that,” he said.
In turn, U.S. perception of China has also become negative.
“With the economic climate at home and employment down, there’s additional concern about China and how they’ll contribute,” Levine said. “There has been an evolution in an unhelpful way in China’s policies. China is more assertive and aggressive with its neighbors.”
Local leaders also expressed unease about the amount of debt owed to China, and wondered if it would be used against the U.S. Levine said he believes it’s not an issue at all.
“It’s still a relatively small number, even if they sell (the debt) it can be absorbed,” he said. “Secondly, it’s not in China’s best interest to do that. The communist party is still in power, not because people love communism but because they can bring economic results to their people. So they have a huge interest in seeing the U.S. grow its economy.”
Exports to China from region
2002: $18 million
2007: $54 million
2011: $105 million
2002 - 2011: $532 million
Source: U.S. China Business Council
*Data is from 7th Congressional District, which includes Clark, Fairfield, Fayette, Franklin, Greene, Perry, Pickaway and Ross counties.
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