Street Talk

Street Talk: Pieces of a bigger pie

Pound-for-pound champ.

October 7, 2016
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When a Chinese student comes to the United States and studies at a university, it’s an export for the American economy.

Service exports, such as education, have potential to grow substantially, especially when the trade partner is China, according to Erin Ennis, senior vice president of the US-China Business Council. Ennis speaks to World Affairs Council of Western Michigan corporate members and guests at a luncheon Oct. 18 at the University Club.

During her talk, Ennis will discuss why U.S. trade relations with China have a direct impact on Michigan, while explaining obvious and less-known aspects of trade with the Asian nation.

China is the third largest trade partner with the United States, behind NAFTA trade partners Canada and Mexico.

“I want to help people think through what Chinese investment means and what it means for Michigan,” Ennis said. “Even key points people think they understand, such as ownership of debt by the Chinese government, but what it actually means.”

Ennis said she will lay out five major points she believes every business person should know about Chinese-U.S. trade. A major point Ennis will discuss is the growth of American service industry exports, which according to the USCBC, grew 300 percent from 2006-14. The $42 billion worth of U.S. services exported to China make it the fourth-largest services export market for the United States.

“There are a lot of companies in Michigan working with China,” she said. “A lot are automotive, but there is a great deal of services and businesses that go on that are an important part of the economy.

“Often, people think of trade as a pie that gets cut into smaller pieces, when in reality, the nature of the U.S. economy, the value is you’re growing the pie, so everyone is getting more.”

Michigan is among the top states when it comes to exporting to China, ranking in the top 15 in both goods and services exports. Since 2006, Michigan’s goods exports to China have grown 220 percent compared to 26 percent for the rest of the world, according to the USCBC. Service exports from Michigan to China have grown 380 percent in the same time frame, compared to 68 percent to the rest of the world.

The state is No. 7 in goods exports to China, exporting $3.5 billion worth of goods on a boat or plane. China is behind Canada and Mexico, respectively, as Michigan’s top goods export markets.

Along with transportation equipment ($1.1 billion), Michigan’s top goods exports to China include machinery, $314 million; chemicals, $292 million; computers and electronics, $270 million; and crop production, $267 million.

Michigan is No. 13 among states in service exports with $1 billion. China is behind Canada and the United Kingdom in services export market.

Among the top services exported to China from Michigan are travel and education, $556 million; royalties and licensing fees, $131 million; transportation services, $130 million; and business, professional and technology services, $105 million.

Conversely, according to the USCBC, the U.S. holds 6.5 percent of the Chinese import market, behind the European Union and South Korea.

Overall, U.S. service exports to China grew 17 percent annually during the past decade, outpacing the growth to all other trade partners, which Ennis said isn’t likely to slow down.

She said while goods export likely will continue to grow slowly, services exports have a chance to explode in China. Ennis likened the potential for growth to when China joined the World Trade Organization and opened up its manufacturing sector for the rest of the world. Growth in exports to China, she said, would help strengthen the U.S. sectors. She said competition from Chinese companies, and others across the globe, help keep American companies innovating and growing.

“The U.S. has some of the largest, most competitive global companies, but there are a lot of restrictive policies,” she said. “There is a lot of room for growth if China were to lift some of those restrictions.”

Looking in the mirror

West Michigan business leaders recently had the chance to peek behind the curtains and see what can make the region more attractive to potential companies looking to relocate or expand.

At a recent Grand Rapids Business Breakfast hosted by The Right Place, a panel of national site selection consultants spoke at length about what they look for when choosing a new location for their clients. Before a crowded room at the Grand Rapids Art Museum, all five panelists said the primary draw for attracting businesses is the workforce — if the region doesn’t have a strong base of talent, companies won’t bother. But other factors — such as proximity to airports, highways and railways, labor costs and yes, incentives — also play a role in site selection.

Incentive programs might not be the most important factor in site selection, panelist Dusty Duistermars of Newmark said, but it can make a difference when looking at several different locales. Jeff Stark of Rödl and Partners chimed in to note for some companies, incentives are important to offset moving and startup costs.

When asked what most impressed them about Grand Rapids, the panelists all had their own viewpoints. Philip Marschall of Navigator Consulting said the focus on long-term economic development and forward thinking was crucial, while Chad Sweeney of Ginovus liked the amount of community collaboration around the economic development industry.

With a bullet

Paul McCartney, Garth Brooks, Elton John and Kanye West all in their own way have helped a local professional.

SMG Regional General Manager Rich MacKeigan recently was named among the top 10 arena managers in the nation by Billboard Magazine.

MacKeigan was in the Sept. 24 issue of the magazine for arenas with a capacity between 10,001 and 15,000. His honors make sense, as the magazine said the rankings are based on “their leadership of venues that dominate Boxscore rankings,” and Van Andel Arena was the No. 1 venue of its size in North America with $13.4 million in ticket sales from Nov. 10, 2015, to July 18, 2016.

Van Andel is No. 5 on the worldwide list for its size.

MacKeigan can take special pride in the 20th anniversary year of Van Andel Arena, which hosted one of the largest productions ever with West’s Saint Pablo Tour in September, a record ticket sales show with McCartney’s One on One tour in August and Brooks’ six-show attendance record behemoth.

“We have consistently fought above our weight class when it comes to concerts and their success,” MacKeigan said in Billboard.

MacKeigan has been with the SMG in Grand Rapids for 18 years. “This is a reflection of everyone in Grand Rapids. The community has supported us for 20 years and allowed us to continue to grow and bring in some of the biggest shows touring today.”

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