Strings Attached

“Today, the appeal of Chinese investment goes beyond just the cash,” Thielman said. “Access to an emerging market that is approaching the size of the U.S. market is also part of the siren song.

“But many market segments are strategic to China, and the investment may be tied with building capabilities in-country,” he continued. “I have seen this in the medical device space where small companies can access Chinese capital if they are willing to locate the R&D at a tech center in China.” For the most part, entrepreneurs report that these arrangements, particularly when accepting investment capital from overseas sources, have little to no impact on day-to-day operations or their long-term strategy. On the contrary, access to Asian supply chains, scale-up and manufacturing talent, and other resources that simply are not available in the U.S. today, is often highly appealing to entrepreneurs as they enter the global market.

Interesting article that looks at the hidden implications of manufacturing overseas, particularly as China seeks to become self sufficient in 10 technologically advanced industries though its Manufacturing 2025 initiative.

If US and European companies trade innovative technologies for access to a market that will likely be cornered anyway, what comes next?

Ultimately what it comes down to is that the growth of the economy comes from small companies and businesses—it doesn’t come from Fortune 500 companies. So, are they able to ultimately make pieces and parts and the like within the U.S.? The answer is that it’s still hard to do that, and I think that’s ultimately where the challenge still lies.”

The good news, Kuczmarski explains, is that more and more large corporations are figuring this out and are taking steps to actively engage with small, entrepreneurial companies and the innovators in their industries. Those who do this well will be the most successful in the global economy, whereas those who don’t are going to struggle to adapt to a world where in- novation is the currency of growth.

So, keep up the good work everyone!

For (a lot) more on Manufacturing 2025, check out this report from the European Union Chamber of Commerce in China