CICP News & Updates

Later this week, our Energy Systems Network initiative will be hosting a historic meeting between the largest delegation of Chinese automakers ever to visit the U.S. and the growing cluster of Indiana firms that are manufacturing components for electric cars and trucks.  The U.S.-China Advanced Technology Vehicle Summit is a first-of-its-kind forum that represents a global opportunity for Hoosier companies.

China is the world’s fastest-growing market for electric cars, and this Summit will set the stage for stronger relationships and new business opportunities among the participants while showcasing Indiana as a potential site for future investment.

Indiana participants in the Summit include EnerDel, Remy, Allison Transmission, Cummins and Delphi.  EnerDel is one of the region’s brightest economic development success stories of the last few years, and the other firms are mainstays of our manufacturing economy that have positioned themselves on the cutting-edge of the hybrid electric market.  Visiting Chinese companies include such powerhouses as Chery, Geely, Dongfeng and BYD (recently ranked #1 on Bloomberg BusinessWeek’s Tech 100 list).

We’re optimistic that the Summit will pay off relatively quickly in new business opportunities for Indiana firms, supplying more components to the booming Chinese market (China is already the fastest-growing market for Hoosier exports).  The longer-term prospects for Chinese investment in Indiana are also intriguing.  I’d like to excerpt a piece I wrote back in 2008 after a trip to Shanghai:

Back in the 1980s, Americans watched with growing concern as Japanese manufacturers captured a growing share of our markets – in cars, consumer electronics and steel.  There was an outcry against ‘unfair competition;’ publicity-seeking congressmen went so far as to smash Japanese-made TVs and radios on the Capitol lawn.  Here in Indiana, Japan even became an issue in the 1988 campaign for Governor, with barbs about “giveaways” to Japanese companies. 

Fast forward twenty years, and the landscape has completely changed:  Japanese investment is universally recognized as a fundamental strength of Indiana’s economy.  Foreign firms employ more than 90,000 Hoosier manufacturing workers, with companies like Toyota, Honda and Subaru leading the way.  The attraction of the Greensburg Honda plant is recognized as the signature economic development victory of Governor Daniels’ first term. 

Japan has turned from economic villain to valued partner.  It’s an experience we should learn from as we look towards China, another Asian powerhouse that’s stirring protectionist fears.  How can Indiana anticipate and take advantage of future investment from China, as its economy reaches the tipping point that Japan started to reach 20 years ago?  I recently read an interesting report from Deloitte Consulting (“The Coming Investment Wave from China”) that starts providing some of the answers.

To be certain, with the country’s massive population and resources, Chinese companies are still focused on domestic growth, serving international customers through exports.  But this is changing – in 2007, Chinese firms invested a record $37 billion in foreign countries, a 76% increase over 2006.  In Zhejiang Province in eastern China, an epicenter of private development, nearly 900 private companies invested overseas in 2006.

According to the Deloitte report, the list of industries that will experience the first wave of Chinese foreign investment will be topped by the automotive sector, one of Indiana’s strong suits.  Other key industries for overseas investment include pharmaceuticals and electrical equipment – other areas where Indiana has a significant base, existing workforce and fast-growing exports to China. 

The driving forces behind Chinese foreign investment are also likely to mirror the Japanese overseas wave, including the desire to get closer to customers and integrate distribution and supply chain functions.  Indiana’s central geography and strong transportation infrastructure can serve us well in meeting these needs, just as with Japanese automakers and other international firms.

All of China’s major automotive companies have released or announced plans for electric models, and international partnerships and joint ventures are very much a part of their plans.  This Summit could mark the beginning of significant and long-term economic benefits for Indiana.  Read more here and here.