The east is red; Why more Chinese companies are moving west
This is the second part of a two-part study of China's growing overseas business clout by George McKibbens, a Guangzhou-based writer and educator. who teaches history at South China Normal University and writes for Guangzhou News Express.
One of the best ways for Chinese marketing executives to raise their companies’ profile is to ride on the coat-tails of a foreign brand. One example that springs to mind is Shandong sporting goods company Qiaodan, which ended up in a lawsuit with Michael Jordan, accused of stealing the basketball legend’s name.
Even more comical is the Guangzhou wine company Mark 1818, named after Karl Marx who was born in the year 1818. It’s wise to name your company after a dead foreigner who can’t sue you, although perhaps not so wise to pick someone who’s synonymous with anti-capitalism.
The most successful Chinese brands are not just looking overseas for marketing ideas. They’re looking abroad for resources they can’t find at home, creating job opportunities in the western world.
Access to new markets, talent, and IP protection have sent China’s version of Fortune 500 companies to Europe and North America. In the past 10 years Chinese companies have retained jobs in Europe and the United States, through investment and acquisition.
In 2010 Zhejiang Geely Holdings Group, a Chinese Auto-Maker purchased Volvo. They retained the manufacturing headquarters in Sweden, rather than relocating the factory and Swedish design. A Chinese owned foreign Brand.
Similar to Lenovo’s 2004 purchase of IBM, the company saved jobs in research and development.
In December last year Wanxing Group won a bid on A123 Systems, electric car parts manufacturer that began at MIT and recently filed for bankruptcy.
Earlier in the same year China’s Sany Heavy Industrial Company purchased German cement pump manufacturer, Putzmeister. None of these acquisitions have moved western jobs overseas, but rather saved jobs of otherwise struggling companies.
Americans are reluctant to admit just how much they need investment from China, which is already the biggest holder of US debt.
Chinese companies often are seen as low quality with little or no respect for intellectual property, but they are also lured by western countries’ legal systems and creative talent.
That’s why China’s Fortune 500 Company Haier has been developing products in the United States for over a decade. In 1999, Haier opened a factory in Camden, South Carolina and in 2001 the company won a job creation award. Visit Haieramerica.com and see the factory. The street is now named Haier Boulevard, after this Chinese company which revitalized a small American town.
“It says made in America right there on our boxes. Most people don’t even know it’s a Chinese company,” said one of Haier America’s factory managers in a 2011 interview with NPR.
Few Chinese work in the factory, and Haier recruits local management and a local design team to service American consumers.
But China remains a scapegoat for America’s economic woes. In the last year US presidential election, both Obama and Romney built their campaigns on China bashing; demonising China as a sinister vortex sucking up American jobs. Nothing could be further from reality.
The advantages of production in the US are related to culture. Chinese produce goods but Americans produce ideas. This is a classic weakness in Chinese education which rewards test taking but lacks critical thinking. The exodus of Chinese jobs should be a serious wake-up call to Chinese universities. Students are graduating without the skills they need to compete.
Haier isn’t the only big name manufacturer emigrating to the New World. Chinese solar panel maker Suntech opened a factory in Phoenix Arizona in 2010, avoiding the tougher new tariffs on Chinese solar panels. While the US and the EU resort to old-fashioned trade measures, local governments are quietly courting Chinese investment.
Visit Suntech’s website (am-suntechpower.com) and you’ll read the slogan, “Powering America from America” and “Compliant with the Buy American Act.”
Arizona’s governor, Jan Brewer, visited Shanghai in 2011, seeking further Chinese investment for the state.
Brewer, who is probably better known for a 2010 anti-immigration campaign, lobbied Chinese investors to open more factories in the US. For Chinese companies it means they can sidestep any protectionist trade tariffs, through sporting a “Made in America” stamp.
This spring mainland universities will produce nearly seven million graduates complete for low paid starting positions. How will they feel about Americans taking their jobs?