The National Electrical Manufacturers Association (NEMA) is spending more time than ever on China-related issues. According to NEMA President Malcolm O’Hagan, China “is the single biggest factor influencing NEMA members’ business these days.”
Two-thirds of the respondents to a NEMA survey on China said they are already sourcing from China, and half of the rest said they soon plan to be. O’Hagan said many of the companies, including Emerson Electric and GE have been in China for years.
O’Hagan recently testified at a House Ways and Means Committee hearing on U.S.-China economic relations and China’s role in the global economy. He also was instrumental in working with NEMA’s board of governors to launch a China initiative. NEMA is now working on plans to open a China office.
In October, NEMA won a $387,106 award from the U.S. Dept. of Commerce to support its China initiative. It’s a matching grant — for every $2 that the industry spends through NEMA, the Commerce Department puts up $1, said O’Hagan.
About 60 NEMA companies have signed on and will subscribe for three years to the China initiative. Issues of interest to these electrical manufacturers include product certification, market intelligence and strategies to battle counterfeiting. The grant and the money from NEMA members will fund the $1.2 million initiative.
“Our main mission there is to help our members gain market access and to minimize tariff and non-tariff trade barriers, deal with counterfeiting issues and anything other things the members feel would be helpful,” said O’Hagan. “The initiative is being handled by subscription, so those companies at NEMA that are interested and see the value will sign onto the program. It’s not a NEMA-wide program. We will tailor the program to the needs of the companies funding it.
“It (the grant) gives us a bit of a jump start. In addition to the monetary value, it has psychological value — the fact that we have the support of our government. We have a very strong working relationship with the Commerce Department. Because we have this grant, we’ll get very strong support from the U.S. Commercial Office in Beijing.”
As part of the China initiative, which was approved by NEMA’s board of governors earlier this spring, NEMA will open an office in Beijing. The association is currently looking for someone to head up this office.
Gene Eckhart, NEMA’s director of global operations, is heading the China initiative. He is also responsible for offices in Brazil and Mexico.
At the recent hearing of the House Ways and Means Committee on U.S.-China relations and China’s role in the global economy, O’Hagan called relations with China a “two-edged sword.”
“Too many people are quick to jump to conclusions about China and compare what is happening there to what happened in Japan, when the circumstances are not the same. There’s a lot of talk about China right now and a concern with the impact of direct manufacturing. People need to be very careful about how they look at China. A lot of people tend to equate it to what was happening in Japan 10 or 15 years ago and it’s totally different.”
In his Congressional testimony, O’Hagan said making the products is not the problem. The problem, he said, is “the social costs that have been heaped upon manufacturers.”
“The plaintiffs bar has imposed enormous costs on manufacturers,” he said. “Health insurance costs continue to drain more resources. Environmental, work safety, and other regulations add huge non-productive costs, and our tax code is punitive. Thankfully, under the current administration, industry has finally won some tax relief, but more is needed.”