By Eric D. Lawrence
An expert on China's impact on the U.S. auto industry might agree with President Donald Trump's strong stance on dealing with China, at least when it comes to trade.
Michael Dunne, author of "American Wheels, Chinese Roads," offers some advice for Trump:
"Be very strong and very firm," Dunne said today during an Automotive Press Association luncheon at the Detroit Athletic Club.
The "Chinese respect when you are strong and firm."
Dunne said reciprocity should be the rule in negotiating trade deals.
"We should have equal access in each market. Today that's not the case," Dunne said, describing the differences U.S. and Chinese companies face in the other country's markets.
Dunne said reciprocity should be the rule in negotiating trade deals.
"We should have equal access in each market. Today that's not the case," Dunne said, describing the differences U.S. and Chinese companies face in the other country's markets.
Chinese companies can own companies outright in the U.S., but that's not the case for U.S. companies in China.
Among the hurdles for American companies in China is the requirement that they form a joint venture with a Chinese company, and the U.S. companies are not allowed to own more than 50% of the new entity.
Such requirements along with extra costs associated with exporting to China are unique and should not be accepted, Dunne said, noting that if China doesn't open its market to the U.S., then the U.S. should impose similar joint-venture requirements on Chinese companies.
“India doesn’t have it, Russia doesn’t have it, no other country has it," he said.
“We should be able to control our own destiny in China with our business."
Not all differences, however, relate to trade deals.
Dunne said Chinese businesspeople like to ease into business discussions because they want to feel comfortable with potential partners.
He said he had once been given advice to take Chinese business people to a nice dinner on the first day of a multiday business trip here.
Such requirements along with extra costs associated with exporting to China are unique and should not be accepted, Dunne said, noting that if China doesn't open its market to the U.S., then the U.S. should impose similar joint-venture requirements on Chinese companies.
“India doesn’t have it, Russia doesn’t have it, no other country has it," he said.
“We should be able to control our own destiny in China with our business."
Not all differences, however, relate to trade deals.
Dunne said Chinese businesspeople like to ease into business discussions because they want to feel comfortable with potential partners.
He said he had once been given advice to take Chinese business people to a nice dinner on the first day of a multiday business trip here.
By the second day, business could be discussed, but plowing immediately into business discussions was not advised.
Dunne described how China's dealings with foreign companies had changed over the years, from one in which foreign companies had advantages early on to today, in which the Chinese have the advantages at home.
The goal of the country's political leadership had been to build a huge home market and protect it.
As China's annual vehicle sales have grown from 2 million in 2000 to 27.5 million in 2016, imports represent less than 4% of that total.
By 2020, Dunne said, there would be more cars in China than in the U.S.
"What's sold in China is built in China," Dunne said.
As these changes have occurred, China's investments in the U.S. have grown dramatically as well. Dunne said that from 2010-16, Chinese entities had invested $5 billion in the Midwest supplier base. He noted that the Chinese already have a presence here, referencing Beijing West Industries, which, according to Crain's Detroit Business, acquired Delphi's global brake and suspension business in 2009.
The company is currently involved in vehicle testing in Milford.
In California, where Dunne lives, six companies with Chinese connections have located, with ambitions to build high-end, electric and autonomous vehicles.
He noted that Faraday Future, which is based in Gardena, is connected to a Chinese billionaire who runs the "Netflix of China."
The company says it has created the world's quickest electric car.
And further disruption is coming through the production of cars being built in China for shipment back to the U.S.
The Free Press had previously reported on plans to sell Buick's Chinese-made Envision crossover in the U.S.
Nothing about that vehicle suggests it was built in China, Dunne noted.
Dunne described how China's dealings with foreign companies had changed over the years, from one in which foreign companies had advantages early on to today, in which the Chinese have the advantages at home.
The goal of the country's political leadership had been to build a huge home market and protect it.
As China's annual vehicle sales have grown from 2 million in 2000 to 27.5 million in 2016, imports represent less than 4% of that total.
By 2020, Dunne said, there would be more cars in China than in the U.S.
"What's sold in China is built in China," Dunne said.
As these changes have occurred, China's investments in the U.S. have grown dramatically as well. Dunne said that from 2010-16, Chinese entities had invested $5 billion in the Midwest supplier base. He noted that the Chinese already have a presence here, referencing Beijing West Industries, which, according to Crain's Detroit Business, acquired Delphi's global brake and suspension business in 2009.
The company is currently involved in vehicle testing in Milford.
In California, where Dunne lives, six companies with Chinese connections have located, with ambitions to build high-end, electric and autonomous vehicles.
He noted that Faraday Future, which is based in Gardena, is connected to a Chinese billionaire who runs the "Netflix of China."
The company says it has created the world's quickest electric car.
And further disruption is coming through the production of cars being built in China for shipment back to the U.S.
The Free Press had previously reported on plans to sell Buick's Chinese-made Envision crossover in the U.S.
Nothing about that vehicle suggests it was built in China, Dunne noted.
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