The 300-plus Chinese companies, which offer about 6,000 jobs across the U.S. Midwest state Michigan, are facing challenges caused by U.S.-initiated trade frictions with China.
by Xinhua writers Xia Lin, Xu Jing
DETROIT, Dec.3 (Xinhua) -- More than 300 Chinese enterprises and companies in the Midwestern U.S. state of Michigan are facing a common challenge: the high import tariffs pushed up by the U.S.-initiated trade war with China, together with the ensuing uncertainties that linger on. Some of the companies have been downsized or halted investment, while others continue to plan ahead, believing a favorable situation will return.
In the state widely known as the center of the U.S. automotive industry, most of the Chinese commercial and manufacturing entities earn their bread by functioning as part of the chain of car manufacturing. They have established a foothold in the past three decades, and are faced with an unprecedented threshold which demands enough wisdom and patience to surpass.
U.S.-China relations are going through a difficult time, which he thinks will last some time, said Bill Zhuang, president and CEO of Tianhai Electric North America, the overseas branch of THB Group, China's top supplier of electronic connectors for automobile production.
"However, what we (can) do right now is to prepare for the day when the displeasure is over. I believe it will be," Zhuang said.
Photo taken on Nov. 17, 2019 shows the building of Tianhai Electric North America in the suburb area of Detroit, the United States. (Xinhua/Wang Ping)
PREPARE FOR THE WORST
Zhuang avoided talking much about the impact of the U.S.-China trade dispute on his business, which has prospered for a decade with an annual revenue close to 200 million U.S. dollars. He would rather emphasize that opportunities arise from hardship, and one should not be frightened by the volatility and lengthiness of the dispute, but instead cash in on this peculiar period to accomplish what is hard to do at the usual time.
"The more difficult the time is, the better the chances will be," said Zhuang, who studied mathematics, computer information science and business management in the United States before becoming a professional executive. Tianhai Electric North America now has over 1,200 employees and churns out one third of the total revenue of its parent company based in central China's Henan Province.
If the tides are ferocious on the market or the political-economic environment is not of help, an enterprise has good chances to consider a merger because the prices are agreeable, or to hire more talents to build up its team to get prepared for the better time to come, he said.
The U.S. automotive industry heavily relies on imported materials and auto parts. Tianhai Electric has striven to remain cohesive in the global supply chain, devoted to maintaining close ties with three major U.S. automobile manufacturers -- General Motors, Ford and Chrysler. Their headquarters are all based in the Detroit metropolitan area.
Bill Zhuang, president and CEO of Tianhai Electric North America, speaks during an interview with Xinhua at his office in the suburb area of Detroit, the United States, on Nov. 17, 2019. (Xinhua/Wang Ping)
"We now have this headquarters in Detroit and two plants in Mexico. Besides regular business, we are committed to alloying the high technology of the West Coast and the manufacturing power of the other parts of the United States, with our exceedingly strong connecting force," said Zhuang.
Meanwhile, Tianhai Electric is eyeing the European market as its next source of profit. "In the upcoming five years, we aim not only to double our revenues, but to secure a two to three-fold growth," he added.
Ken Chen, business development manager of the HAND Enterprises Solutions USA Inc., said the business of his company suffered due to the U.S.-China trade dispute, but didn't disclose any specific figures.
"As a management software provider, we are indirectly affected by the dispute. We neither import and export commodities nor manufacture any goods, but our clients do. Importers shut off their doors because high tariffs rendered their operations non-profitable. Manufacturers slow down their investment or just ceased to invest because the dispute has led to uncertainty, which is the deadliest enemy to an industrial entity," said Chen.
Photo taken on Nov. 14, 2019 shows the office of HAND Enterprises Solutions USA Inc. in the suburb area of Detroit, the United States. (Xinhua/Wang Ping)
Coming from Shanghai, he has consistently tapped the U.S. market for some 10 years and developed a clientele of some 40 factories and companies, including several top manufacturers of auto parts. When the clients withered, HAND, as a service provider, suffered losses.
"I believe it will go for the better in the medium to long term. Now is the time to maintain and beef up business ties with our existing partners, and target small- and medium-sized customers," he added.
Chen's parent company, one of China's largest IT consulting service providers based in Shanghai, started to design enterprise resource planning (ERP) systems in 1996. It now owns over 5,000 clients worldwide, with its market value peaking at 6 billion U.S. dollars and stabilizing at 1.4 billion dollars later.
"HUDDLE FOR WARMTH"
Apart from business giants like Tianhai and HAND, there are still a large number of small- and medium-sized Chinese enterprises and corporations operating in Michigan.
While the giants had their own resources and ways for survival and expansion, the small and medium ones opted to join hands, share cues and help each other, believing one plus one is bigger than two.
In mid-November, when the ground was covered with thick snow and icicles dropped off the eaves in Detroit, the China General Chamber of Commerce-USA Chicago (CGCC Chicago), a non-profit organization aiming to promote investment and trade between China and Midwestern United States, hosted a workshop for a dozen Chinese entrepreneurs running businesses in Michigan to hear advice from local lawyers, insurers and accountants.
Representatives from Grant Thornton, a global accounting firm; Hylant Insurance, a large U.S. insurance broker; and Locke Lord, a full-service law firm, briefed the Chinese entrepreneurs on U.S. taxation rules and policies, as well as risk management.
"In Chinese we say 'huddling for warmth.' This is why the workshop is held. When hard times prevail, weak ones are prone to be victimized. However, if they unite and count on each other, they get extra power to fend off the coldness and survive the adversity," Li told Xinhua.
Noting that the United States has more rules and regulations on enterprises than China, Liu Lei, deputy general manager of CAEA Automotive Electronic Systems (USA) Inc., the U.S. arm of China's Changjiang high-tech company, told Xinhua that the workshop was helpful as "we need to adapt to the requirements."
Charles Wu from Locke Lord cited several examples of how Chinese enterprises handled lawsuits in the United States.
"The trade disputes raised legal risks for enterprises on both sides. Cases have been on the rise as the disputes get prolonged," said Wu, who has been a lawyer for 16 years and served Chinese clients for six years.
Pan Guohua, representative of Wellew Technologies, speaks during an interview in the northern suburbs of Detroit, the United States, on Nov. 15, 2019. (Xinhua/Wang Ping)
Pan Guohua set up his Wellew Technologies in Michigan in May to provide IT and electric-mechanical installation service for Chinese enterprises. He then realized the risk and difficulty posed by the U.S.-China trade friction, but continued to get the mission done.
"Fierce competition and unfavorable conditions just can't thwart my passion. So long as you fulfill your job step by step, people will see it and you can earn respect and credit," said Pan.
Otie McKinley, media and communications manager of Michigan Economic Development Corporation (MEDC), told Xinhua in October that the U.S.-China trade dispute had impacted Michigan's trade links with China.
"Michigan's unemployment rate is near historic lows and growth is strong. Still, the impacts on our business with China are noticeable," he said.
Michigan hosts the largest number of Chinese-owned automotive facilities in the United States, according to an Automotive News report. Citing the latest research by ZoZo Go LLC, the report said in November that there are a total of 84 Chinese-owned automotive sites in Michigan, 43 percent of the nation's total. Most of these facilities are in the Detroit area.
According to the Michigan-China Innovation Center, since 2000, some 300 Chinese companies have invested 4.2 billion dollars in Michigan, much of it in manufacturing. Chinese firms account for 6,000 jobs across the Michigan state, which ranks No. 3 in the country in terms of the number of investment deals by Chinese companies.
People attend a workshop organized by the China General Chamber of Commerce-USA Chicago (CGCC Chicago) in the northern suburbs of Detroit, the United States, on Nov. 15, 2019. (Xinhua/Wang Ping)
Chinese enterprises and corporations are intended to keep participating in the global chain of car making in Michigan, one of the automotive industry's global hubs and home to more than three-quarters of all automotive research and development in North America.
"Over the past several years, Beijing has steadily pumped billions of dollars' worth of investment into Michigan, buying crumbling factories, building new ones and supporting more than 10,000 jobs in the state," The New York Times once reported in an article entitled "Trump's Trade War With China Pierces the Heart of Michigan."
Just as the title suggests, the newspaper also noted that China's boon to Michigan had been partly blocked by the U.S. government's trade policy towards China. The headaches were so severe that they could never be cured at the state level.
"As (U.S. President) Mr. Trump tries to punish China with tariffs and other restrictions, Michigan is caught in the cross hairs, with its ability to remain competitive and develop emerging technologies like autonomous vehicles, robotics and artificial intelligence highly dependent on ties to international markets, including China," the report added. (Video reports: Miao Zhuang, Xia Lin, and Xu Jing; Video editor: Jia Xiaotong)