Howes: Snyder's wooing of Asia pays off
The numbers tell the story.
Since Gov. Rick Snyder's first trade mission to Asia three years ago, business investment in Michigan from China, Japan and South Korea topped $1 billion, and Michigan exports to China last year increased more than 89 percent from 2010.
China is Michigan's third largest export market after Canada and Mexico, according to figures cited by the Michigan Economic Development Corp. More than 100 Chinese companies operate in the state, ranked No. 8 last year among U.S. states exporting to China, up four spots from three years earlier.
Yes, those numbers reflect a slowly recovering U.S. economy, a retooled Detroit auto industry and a more competitive business environment in Michigan. They also evince the governor's readiness to sell foreigners on the state, even if it rattles xenophobes on the left and right who run from the room screaming at mention of the word "China."
The world doesn't work like that, not now. Not when capital is more mobile than anytime in human history. Not when states and nations are vying for new investment to create tax-paying jobs and bolster communities. Not when Detroit's largest automaker, General Motors Co., sells more vehicles in China than in its home market.
The world can't operate that way when emerging markets outside the orbit of the United States, Canada and western Europe disproportionately account for growth in consumption. Or when nativist urges to resist interconnections with the likes of China overlook how lower-cost markets produce goods and services that lift standards of living at home.
Ignoring China as a potential trading partner and direct investor in Michigan's economy and its human capital — as former Gov. Jennifer Granholm famously did in her eight-year stewardship of the "Lost Decade" — is political malpractice steeped in economic ignorance. Snyder clearly is not repeating his predecessor's mistake.
He shouldn't. The governor, a former CEO, venture capitalist and one-time plant manager for Gateway Inc., rightly is working to build relationships abroad by pushing to exploit economic opportunities that may exist between Michigan and China. He understands business-friendly government paired with the resurgent auto industry and a Detroit in financial recovery can woo new investment, because it is.
"It's a huge market," Snyder said in an interview Monday from Shanghai. Concentration of the auto industry "in Michigan helps drive Chinese investment because they want to be in the center of activity."
It's complicated, to be sure. Even as China continues to solidify its position as a major geo-political rival to the United States, the country represents a double-sided opportunity for a state endowed with both industrial prowess and agricultural bounty:
China's rapidly evolving consumer market is too large and too upwardly mobile to ignore. And Michigan's cornerstone auto industry is proving a magnet for foreign direct investment, including Chinese players seeking both access to the world's richest auto market and the status that comes with it.
"It's critically important that Michigan have an aggressive campaign in China and other countries," Michael Finney, CEO of the MEDC, said in an interview from Shanghai. "And it's bearing fruit. Our governor is the only one who's traveling here on a regular basis, four years in a row."
It's time well spent. By 2025, estimates McKinsey & Co.'s Global Institute, China will claim 46 of the globe's 200 largest cities. An estimated 190 million Chinese — equivalent to two-thirds of the total U.S. population — are expected to migrate to the nation's cities, a trend historically accompanied by rising per capita income.
Snyder's fourth trade mission to the Middle Kingdom in as many years is a clear rebuttal to the labor pandering practiced by Granholm for the benefit of who, exactly? Say what you will about this governor, but he understands a cardinal rule of business investment: capital goes where it's invited and stays where it is welcomed.
On the first full day of his trip, Snyder helped mark a new partnership between Michigan and CITIC Dicastal. The company will deploy $140 million and create 300 jobs to build aluminum alloy wheels in Greenville, site of its first investment in the United States.
During his delegation's seven-day swing through three cities, Rochester-based Air and Liquid Systems Inc. signed a $2.6 million export agreement with Hydrotech Filtration Corp. to supply ALSI's equipment to GM's joint-venture plants across China.
He fielded fewer questions about Detroit's bankruptcy and more about what it augured for the future. He and his team doled out pocket cards, English on one side, Mandarin on the other — one version with 10 reasons to visit Michigan, a second with 10 good things to know about Detroit, the third with 10 facts about Michigan.
And Snyder continued his push for two of Michigan's most under-appreciated assets: agricultural products and tourism. From destination golf and the Great Lakes to apples, cherries, blueberries and timber, Michigan is more than cars and home to some of the most spectacular bankruptcies in American history.
If the numbers are any indication — and they usually are — it's an argument that appears to be gaining traction and opening doors.