Chinese Companies Flock to Metro Detroit in Search of Automotive Expertise

7/27/11Follow @XconomyDET

When Tianhai Electric North America won a $300,000 incentive from the Michigan Economic Growth Authority to establish a world headquarters in Orion Township this past May, it was the latest example of a Chinese automotive company choosing to locate operations in Southeast Michigan—and part of a growing trend that has the Detroit area playing an increasingly prominent role in the Chinese auto industry.

According to the Detroit Regional Chamber, at least 50 Chinese companies serving the auto industry have established new ventures in metro Detroit during the past decade—up from 5 in 2000. (See the list on the next page for some prominent players.) The companies range in size from a handful of employees to several hundred, but all are united in a common goal: to make better cars.

“China’s auto industry is booming,” said LianneYan, Executive Vice President of the Detroit Chinese Business Association. “But it’s trying to raise the quality of the cars it produces. Detroit’s strength is in auto parts and research and development, and that’s why the companies come here.”

Hong Su, Vice President of the Changan US Research and Development Center in Plymouth—which is wholly owned by Chongqing Changan Automobile, the first major Chinese automotive manufacturer to open a facility in the United States—said that Detroit is like no other place in the world in terms automotive know-how.

“Detroit has more than 100 years of design and development expertise, in addition to many experienced engineers and a whole spectrum of service providers, from tooling to testing to consulting firms,” Su said. “The biggest plus to doing business in Southeast Michigan is its concentration of talent, resources and supplies.”

Detroit’s century-plus of experience is something the burgeoning Chinese auto industry needs, as it wasn’t until 1956 that China’s very first road vehicle rolled out of the Changchun No. 1 Automotive Works. In late 2000, the first car to be made entirely in China was produced. The vehicle, called Zhonghua (translation: China!), was not only historic, it was symbolic of the coming decade, which would see China’s transformation into a global manufacturing and economic powerhouse.

Chinese companies soon realized that demand for automobiles outpaced local capabilities to develop and manufacture them, and the Chinese government began to encourage state-owned companies, newly flush with capital, to invest outside of China. It wasn’t long before companies began setting up shop in metro Detroit.

“Most of the global automotive companies have significant operations or headquarters in the Detroit area,” Su said. “It makes it easier to co-develop components that are then included in the final product, which is manufactured in China.”

Chinese companies aren’t the only ones who are benefitting from this arrangement, said Therese Thill, Director of Business Attraction for the Michigan Economic Development Corporation.

“Besides creating new jobs and opportunities for Michigan suppliers, each new Chinese company that locates here helps build a bridge to additional investment,” Thill said.

Thill adds that while most of the companies fill their highest-level management positions with Chinese nationals, they offer many job opportunities for Michigan workers—especially those seeking to work in middle management.

Yan and her organization are also working to foster relationships between Chinese and American businesses. The DCBA helps Chinese companies at every stage of business, from greeting them when they first arrive in Michigan to attending ribbon-cutting ceremonies. Most often, she said, Chinese corporations want to invest in or partner with established automotive operations, and the DCBA will work with state and local governments to facilitate connections.

“A lot of large, state-owned companies in China need Michigan companies because they already know all the rules and how to play the game,” Yan said.

In September, Governor Rick Snyder will travel to China as part his administration’s first overseas trade mission. Snyder will host an event with the DCBA in Beijing to promote Michigan as a great place to do business to an audience of industry leaders and government officials.

Wayne County Executive Robert Ficano is a veteran of similar investment missions to China, and he said each trip has been more successful than the last. Although he said Wayne County is perhaps most aggressive in its pursuit of Chinese companies, the entire Southeast Michigan region is focused on cementing China’s automotive footprint here.

“Not only are these companies investing here, they’re growing here,” Ficano said.

Some Prominent Chinese Auto Company Outposts in the Detroit Area

Summitech Engineering, Canton, MI
Summitech is the North American engineering base for the Tempo International Group, a Chinese conglomerate of vehicle and auto-part manufacturing entities. Summitech develops automotive chassis systems and components for a global clientele.

Changan US Resarch and Development Center, Plymouth, MI 
A subsidiary of Changan Automobile Co—one of China’s “Big Four” OEMs—Changan US Research and Development Center focuses on chassis design and development.

Tianhai Electric North America, Farmington Hills, MI
Tianhai Electric North America is member of the THB Group and is a manufacturer of wiring harnesses and battery cable assemblies for the automotive industry.

Daimay North America, Redford, MI
Daimay North America manufactures sun visors, headrests, steering wheels and seating assemblies for a variety of clients, including General Motors, Ford and Chrysler.

SG Technologies, Farmington Hills, MI
SG Technologies is a division of Liaoning SG Automotive Group, a multi-national leader in automobile, axle and components manufacturing. Advanced technology and imported equipment are utilized at SG to improve robotic welding, machining, computerized on-line testing, standardized measuring and assembly.

Sarah Schmid is the editor of Xconomy Detroit. You can reach her at 313-570-9823 or sschmid@xconomy.com. Follow @XconomyDET

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