Q: What prompted the creation of the Innovation Center?
A: The state's support was key. The economic development agency recognized the growth of China's economy and its automotive industry and its importance as a long-term strategic market. As the Motor City and the Motor State, we knew we needed to be talking to China.
Why set it up as a separate entity from Michigan's existing economic development agency?
One reason is that it helps to be a dedicated group, tailor-made to doing business in China. Everything here is happening in Chinese and all of the staff here is bilingual, speaking Mandarin Chinese, including myself. And due to the time difference, we're often doing conference calls in the middle of the night. Things with China often happen in a last-minute fashion. If we discover an opportunity to promote a certain investment, we can jump on a plane or throw together a hosting event quickly.
Investment projects are often very slow-moving. Have you had time to log any results yet?
Oh, yes. For example, we helped land r&d centers for three major Chinese players in the state: GAC and Great Wall Motors in Farmington Hills, and FAW in Troy, Mich.
Why would a Chinese company want the Detroit area instead of Chicago or the West Coast?
No. 1 would be the automotive talent. Next would be proximity to where design and purchasing decisions are being made. And third, it's just a value proposition — to get the quality of engineers you find here, with know-how in both r&d and manufacturing.
But haven't a number of Chinese automotive companies landed in California?
Yes. We've seen some instances where Chinese companies made splashy announcements about locating in California. But it didn't go as planned and they've relocated to Michigan.
Is California your chief competitor for investment from China?
Not entirely. It depends on the nature of the work. For cutting-edge technology, in artificial intelligence or mobility, we do hear that assumption — that it's between Michigan and California. But for projects in traditional manufacturing, it could be between Michigan and the region south along the I-75 corridor.
Have the challenges of the past couple of years been resolved, and can you move forward?
The U.S. and China signed a Phase 1 agreement on Jan. 15. And then China went on break for their New Year holiday. And it's now facing a major international crisis with the coronavirus. So we're waiting for things to get back on track and hoping for the best for the health of the people in China.
But there is at least reason to be optimistic about the reduction in tensions, isn't there?
It's fair to expect that things will warm up in 2020. In this past two years of tensions, to dodge the tariffs, a lot of companies had to scramble to reconfigure their supply chains and move production out of China — into Vietnam, Morocco and Mexico, for example. Some of those were long-term commitments that definitely reshuffled the supply chain. We're waiting to see how the coming months resolve some of these issues.
Has all this stymied your staff's efforts to talk with Chinese automotive companies?
Surprisingly, no. The level of interest in China in doing business in the United States has remained very high. So our conversations continued steadily through 2018 and 2019. And we even had a few projects come through during that time.
How big is the universe for Chinese automotive companies wanting to come to the U.S.?
Chinese companies want to go global. And they see having operations in Asia, Europe and North America as a gold standard. They want to make that happen.