Toledo Mayor Mike Bell took an international approach to local economic development this month during an 11-day trade mission to China that concludes this week with his flight home.
Accompanied by a delegation of local business executives, Mr. Bell set out to net opportunities and investments for northwest Ohio, especially in new jobs.
Yet considering the many structural differences between the two countries' economies - the United States with its gaping trade deficit, the Chinese and their trade surplus - can the city gain tangible benefits from the mayor's trip to the Celestial Kingdom?
Several state and local development specialists say there are real opportunities for Chinese investment in Toledo and Ohio, just as foreign ownership from Canada, Europe, and Japan has ventured into the local economy.
And if not now, then definitely in the near future as the world's second-largest economy continues to mature.
"A strong manufacturing base, a great work force, and great intermodal assets, all of these things makes us very competitive and attractive to international companies," said Megan Reichert-Kral, the University of Toledo's director of business incubation who recently traveled to China.
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Yet one Chinese business expert urged Toledo's leaders to think strategically about the type of investments and employment they want to attract from China before signing just any contract that could bring jobs.
Oded Shenkar, professor of management and human resources at Ohio State University's Fisher college of business, said that eager community leaders can occasionally cut sweet deals with foreign investors to entice them to build a local outpost, such as a factory.
But those enticements can put existing firms at a disadvantage. The subsidized newcomer could elbow out the home-grown competition.
"I think there is a very good potential here, but one also needs to tread very carefully," said Mr. Shenkar, author of Copycats: How Smart Companies Use Imitation to Gain a Strategic Edge (2010).
"We have to think about the local players who often complain, 'Hey, if you'd given me all the incentives that you're giving the foreigners to come, I'd be able to compete too.'"
The issue of Chinese commitment to fair competition was debated last week in Washington as Mr. Bell journeyed through several cities, including Hong Kong, Shenzhen, and Shanghai.
On Wednesday the U.S. government said it would file two complaints against China with the World Trade Organization, claiming Chinese discrimination against U.S. steel makers and credit-card companies.
Later in the week, Treasury Secretary Tim Geithner told a Senate committee that China unfairly undervalues its currency to gain trade advantages, and creates barriers to U.S. imports while allowing theft of foreign technology.
Ms. Reichert-Kral was one of 17 delegates on a June trade mission to China led by the Ohio Department of Development.
She spoke with groups of Chinese businessmen and said that Toledo generated interest among several investors.
The two biggest areas of interest concerned the Toledo region's rail industries and market for renewable energy, particularly wind, Ms. Reichert-Kral said.
Because wind turbines can be large and heavy and tough to transport, the Chinese saw Toledo as a good location to manufacture the components and ship them out via water and rail. The investors also looked favorably on Toledo's strong skilled-trades work force, intermodal assets, and its history in manufacturing.
She said the different wage standards between the United States and China wasn't a deal-breaker for the investors because there is a lot of automation in making high-tech components.
"They viewed Ohio as a very competitive location," Ms. Reichert-Kral said.
A survey by the Regional Growth Partnership, a northwest Ohio economic development agency, found at least 90 companies with foreign ownership in the 18-county region, many from Europe and Canada.
So far the agency hasn't identified any local Chinese firms, said Steve Weathers, president and chief executive officer.
He said his agency undertook the survey as part of its effort to attract foreign investment.
Common tools for luring outside businesses include tax credits, work-force training funds, and the strategy of financing a firm's facility in exchange for a long-term economic commitment.
"Foreign companies do have a very positive impact on this region - job creation, capital investment, taxes being paid," Mr. Weathers said.
As an example of Chinese investment, state officials point to a 2009 deal in which Beijing West Industries Group paid $100 million to buy auto supplier Delphi's suspension and brake units, including intellectual property rights.
The industries group is partially owned by a Chinese state-owned steel maker and the Fangshan District government of Beijing, according to Chinese media reports.
China is Ohio's third-largest export market after Canada and Mexico, according to the Ohio Department of Development.
Mr. Shenkar, the OSU professor, said the Chinese in recent years have made a number of small-scale acquisitions of U.S. facilities, often with an eye to gaining technological expertise.
He anticipates the Chinese will in the future open larger-scale assembly plants in the United States, similar to what Japanese automakers did in the 1980s to gain market access, although "not tomorrow."
And if and when large-scale Chinese factories do appear on U.S. shores, the job opportunities for local workers may not always match the high-tech products churned out.
"If the design is done over there, and the development is done over there, and a lot of the production is done over there, we become an assembly operation," Mr. Shenkar said, "what they used to call a screwdriver plant."
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