Jobs Mission to Asia

The last few days in Tokyo were incredibly productive.  There were many meetings with Governor Daniels and members of Toyota, Subaru and other key companies currently doing business in Indiana.  The delegation is very upbeat about the entire trip on many different levels.  The delegate members had a lot of meetings they set up with their own individual contacts as well as through the delegation itself.  We are very optimistic about the numerous opportunities that could be imminent in terms of trying to bring business to the Indiana.

We had about a 13-hour flight from Tokyo into Newark.  Our flight from Newark to Indianapolis was canceled and we're going to be rerouted through Dulles, so it's going to be longer than a 24-hour travel schedule back to Indiana.  The delegates are exhausted after being gone for 10 days and the extensive travel, but optimism is high in regards to the trip.  In addition, the delegation found significance in spending time with each other and learning about each other's companies – what's happening with regard to progress and growth within their companies and how we can work together to continue to facilitate job growth within Indiana.

There was a lot of discussion on the flight back about various opportunities among the delegate members and further strategies to build upon the meetings that were held while we were in China and Japan.  I think that the difference between the two is that we have established relationships in Japan, thanks to the continued efforts of Mitch Daniels.  In the last few years, there has been a new focus on China, from this second trade mission with the governor, as well as a follow-up trade mission trip by the lt. governor this past June.  We see an incredible amount of opportunity in China with a lot of desire for growth within the U.S.  The Chinese companies we met with are open to selecting Indiana as a place where they want to do business.  And as I mentioned in a prior blog, numerous companies had indicated that they plan to open up a facility in the U.S. within the next year.  And so, it was fun and easy explaining why Indiana is a top place to do business.

Post Authored by Ron Christian, Executive Vice President - Chief Legal and External Affairs Officer and Secretary, Vectren Corporation

Governor Daniels and other members of the delegation met today with the senior leadership of Toyota Diversified Industries, AISIN and Toyota Boshoku.  During the meetings, information was exchanged between the governor and the executives regarding the state of the economy in Indiana as well as the state of their respective businesses.  The governor, on behalf of the state, expressed his sincere appreciation to each of the companies for their presence in Indiana and their continued support of our economy.  It was a very good series of meetings and reflected the state's commitment to Japanese businesses that chose to do business in Indiana.

Saturday was a free day for the delegation in China.  We took a tour around West Lake, which is a large natural lake in Hangzhou.  It has a very traditional feel – there are beautiful bridges and other archways across the water and you travel in old-style wooden boats.  We also had a chance to tour a tea factory.  Tea is a very important commodity in China.  They showed us how it is grown and processed, explained the different types of teas, the significance of tea and how to drink it (how to hold the cup, etc.).  In the evening we had a large impromptu dinner where the delegates talked about the trip and the benefits of this job mission.  The delegation was very upbeat and very positive.  They felt like there are incredible business opportunities that resulted from this visit.  We hope there will be tangible results announced when we return to Indiana!

Sunday was primarily a travel day to Japan.  There are no direct flights out of Hangzhou, so we had to drive three hours to Shanghai and then fly to Japan.

The contrast between the two countries is interesting.  Of course, there is a long rivalry between the two – our Chinese hosts did not like the idea of us spending time in Japan and vice versa.  They are very competitive with each other, so this was a delicate balance for the delegation to maintain while visiting both countries.  Differences in the cultures are very strong.  China looks to end results and production, while Japan is detail-oriented and very focused on quality over quantity.  Japan is a very urban society, with only four percent of its labor force engaged in agriculture.  The labor force is very well-educated and industrious, with over 42 percent of the work force being female.  Japanese tend to have a high rate of savings and investment.  There is a strong promotion of trade – much more so than in China, obviously, with a communist government – and more open communications.  For example, Japan has embraced Twitter, Facebook and other social media, while under China's government these social mediums are heavily regulated or even not allowed.  There are also differences in how people dress.  Japanese people are very formal and style-conscious, big on designer clothes.  China is very casual and low-key.  There is also a huge difference in population.  China has the well-known one child per family rule, due to the explosive growth here, but Japan's population has recently started shrinking.  Japan is trying to develop social programs and incentives to encourage families to have more children.

Japan is very organized and very structured.  From the minute you land in the airport, there are signs indicating exactly how many minutes the wait will be.  They have individuals constantly monitoring and rushing you through in an orderly manner.  The environment is hurried, rushed and precise.  It's a very clean and neat society.  The streets and sidewalks are immaculate.  The terrible pollution problems I mentioned in an earlier blog about China are completely absent in Japan.  When you enter a building, there is a special machine that covers your umbrella up so that rain does not drip onto the floor.  When you walk by someone in an establishment, they bow to you and greet you.  If a task is done untimely or it takes a period of time to accomplish the task, they are incredibly apologetic, constantly indicating how sorry they were that you waited.  They are a society that very much wants to please you and is incredibly service oriented, polite, and courteous. 

Japan is slightly smaller than California, and about 73 percent of the land is mountainous.  Their economy is the third largest in the world and it is highly efficient and competitive, with areas linked to international trade, but has very low productivity in areas such as agriculture (because of all the mountains) and services.  What little agriculture they have is highly subsidized and protected by the government.  Japan has few natural resources, so trade helps foreign exchange.  Major industries include electronic equipment, food processing, machinery and metals.  Electronics are state-of-the-art and common.  Even curtains are opened and closed electronically.  Televisions and appliances are top-of-the-line.  Japan is very proud of its electronic achievements and they are a fairly successful society.  The GDP is about $5 trillion and the per capita GDP is about $32,700. 

Governor Daniels met today with the senior leadership of Honda, Toyota Motor Corporation and Subaru.   According to Ron Christian (fellow delegation member and executive vice president of Vectren), the governor expressed the appreciation of the people of the state of Indiana for these organizations' continued support of the Indiana economy through their presence of facilities in the state.  He also described the benefits the state provides relative to other locations for existing and expanded operations.  They had a very good exchange with the companies about their operations in the state and continuing opportunities that might exist.

Hangzhou is the wealthiest province in China, mostly due to their successful industries. Near where the delegation is staying are dealers for Lamborghini, Porsche, Bentley, Mercedes – any luxury car you can imagine. It's also very global and Americanized. For instance, we went to dinner last night at an Italian restaurant (in part because we've had a lot of Chinese food already!) that had Mexican food and ESPN was on. As we walked back to our hotel, we heard a rock band playing what sounded like the kind of music you would hear in the U.S. (other than they were singing in Mandarin) and then they broke into "Take Me Home, Country Roads" by John Denver.

Today, we visited a company owned by the Chint Group, which produces low-voltage electrical, power transmission and distribution equipment. They are listed as one of the top Chinese companies by Fortune and are the fourth largest private employer in China, with over $3 billion in revenue. Their subsidiary, Astro Energy, is a leading supplier of solar products in China, a brand-new enterprise only in existence since 2006 with approximately 8,000 employees. They make solar panels and solar cells that can be used for power stations, homes and commercial use on the top of roofs and on the ground. They export most of their products primarily to North America and Europe, with Germany and Spain as the two key purchasers of their products. They are selling in 90 countries worldwide. 

Astro Energy is very big on research and development. They spend about three percent of their revenue on R&D and have a special research and development center. They even have a location in Silicon Valley that focuses on R&D for sales, marketing and manufacturing.   We had a fascinating plant tour. Because of the sensitivity of the equipment, we had to go through an air-cleaning machine. We wore hair nets, jackets and covers over our shoes. Their machines are new, automated and expensive. The equipment was designed in Switzerland. They have a very big focus on quality control. They guarantee their product for 25 years, so it is very important that they create a quality product. Astro Energy is looking for innovation from its employees, and they talk a tremendous amount about safety and environmental protection, and taking care of their employees. It is a publicly-traded company, partially owned by the government, but they talked a lot about their private independence vs. government control.

Astro Energy is a very Americanized company. Their management team is comprised primarily of people that are either from the U.S. or have been educated in the U.S.  Every person we met with was from the U.S. They travel all over the world to various solar-powered trade shows, including the largest in the world which was recently held in Los Angeles. They have a real affinity for America. In the next year, they'd like to have a manufacturing facility in the U.S. This is the second energy-related company we have met with in less than 24 hours whose goal is to have a manufacturing facility in the U.S. Labor costs seem to be very low in China, because so much of the process is automated. 

We spent a lot of time talking about the pros of Indiana and why Indiana would be a great place to locate. It is going to be very important for them to find places in the U.S. with the sourcing and infrastructure resources they need. For instance, they need glass. In Indiana, Muncie has a great glass history and industry!

China is very interested in how government policy interfaces with renewables and renewable energy standards. I think, given the growth in the electric demand in China and the serious air quality issues that they have, out of necessity China is going to be the world leader in renewable energy technology. It is amazing how much growth there has been in such a short amount of time. Many companies that have been in existence for 10 years or less are already doing billions in revenues.

China is facing a terrible pollution problem. When we landed in Shanghai, we saw this very heavy haze over the city. It looked like a terrible fog. It actually was air pollution. In fact, part of our delegation was flying from Beijing into Shanghai and got within 10 minutes of landing, but had to turn back around and go back to Beijing because the "fog," as they call it, was so heavy that the plane could not land. China has surpassed the U.S. as the world's largest emitter of carbon dioxide and greenhouse gases. Half of its population lacks access to clean water. Some estimate about 300 million residents a day drink contaminated water and 90 percent of the urban water bodies are badly polluted. Water is a scarcity in China. China has the same land mass as the U.S., but a population of over 1.3 billion people.

China is one of the largest producers and consumers of agriculture products. Almost 40 percent of the labor force is engaged in agriculture, even though only 13 percent of the land is suitable for cultivation and agriculture, and agriculture only contributes 11 percent towards China's GDP.

China's growth is incredible. They are building so many roads now that GPS systems are not able to keep up. China produced approximately 17.5 million automobiles this year, and within five years they intend to increase that number to 25 million.

Source of data: U.S. Department of State

For this trade mission, the decision was made to focus on four key sectors in Indiana: vehicles, life sciences, energy and agriculture. The format has been to engage in breakout sessions in each of these sectors and do on-site plant tours and meetings with various leaders from the host country. Today, we had numerous meetings set-up with various leaders in these areas.

The main purposes of this trade mission is to attract Asian companies to Indiana and to have them start businesses here. One entity on this trade mission, Sherry Labs, wants to introduce their services in China and are potentially considering a location here in China as well.

This is an incredibly engaged delegation. The majority of delegates either have businesses that are currently doing business in China, or are seeking to do business in China. China is an economy that is growing at an exponential pace. They are very interested in doing business with people in the U.S. China is rich with cash and has a tremendous amount of capital ready to be invested, so they do not need capital from the U.S. They plan to spend a few trillion dollars putting in roads and streets over the next couple of years.

China has great interest in our economy and our financial strength here in the state of Indiana. They were very inquisitive about how we fared in the recession, and they were very interested in how well our state has done compared to other states in the last couple of years. They do recognize Indiana as a leading state in the U.S. with regard to the economy, jobs and innovation. The leaders we've met are very impressed with our highly productive workforce and the number of colleges and universities we have. The Chinese leaders are also very impressed with our governor.

Currently, the delegation is in Hangzhou, China, a sister province to Indiana. Hangzhou means Paradise City. We have had an incredibly warm greeting from the various officials here in China as well as the business leaders. Last night, we attended a very impressive banquet with key leaders from Hangzhou where we toasted our continued long-term relationship. They had a group of young girls playing some of our favorite songs, such as Jingle Bells and The Old Swanee River.