The story about Steve Saleen’s, founder of specialty high-performance sports car manufacturer Saleen Automotive, a new automobile company.
China enticed an American entrepreneur with the opportunity of helping build a cutting-edge automobile company in the world’s largest car market, then used the uncertainty cast by COVID-19 to steal his intellectual property, the businessman says.
The city of Rugao’s government, which owned the remaining third, was responsible for providing $500 million of capital and $600 million in subsidized loans over three years to fund the operations and build a manufacturing facility. Rugao, located on China’s Eastern seaboard in Jiangsu province, is about 125 miles north of Shanghai.
“It sounded like a great deal to us, so we went along with them,” Wang said, adding that his experience enabled him to set up the company’s corporate governance and articles of incorporation in accordance with Chinese law.
By early 2020, everything was going according to plan. The initial product, an SUV, was in certification and the employee headcount had swelled from three to nearly 1,000. The factory, armed with 470 state-of-the-art robots, was ready for production.
Then the COVID-19 pandemic struck.
With both Saleen and Wang stuck in the U.S. as flights to China were grounded, the Rugao government seized on an opportunity to “nationalize the company,” according to Saleen.
On June 29, the city sent six police cars with sirens blaring and vans full of private security forces to raid Jiangsu Saleen’s manufacturing facility and offices.
The forces ordered employees to leave and shut off the water and electricity when some refused to do so. Executives, who were Chinese nationals were forced to resign or face consequences from Rugao’s government, Saleen told FOX Business. The remaining employees were terminated. Read the full story on Yahoo.
More Reasons to Reshoring/Producing Domestically: Overall Cost Continues to Trend Down
When you take into consideration freight, more inventory, longer wait times, the cost savings in China isn’t as luring as it may have been in the past. This is largely contributed by the Chinese middle-class wages increasing as well and automation in the U.S. that has replaced Chinese workers with high-end jobs managing robots.
Reshoring Initiative says There are many reasons for American manufacturers to reevaluate offshoring and consider reshoring. Companies are increasingly recognizing that costs, risks, and strategic impacts previously ignored are large enough to overcome the shrinking emerging market wage advantages. They are seeing the benefits of proximity, i.e. producing in the market, especially when the home market is the U.S., still the world’s largest.
The top reasons that companies reshore include:
- Lead time
- Higher product quality and consistency
- Rising offshore wages
- Skilled workforce
- Local tax incentives
- Image of being Made in USA
- Lower inventory levels, better turns
- Better responsiveness to changing customer demands
- Minimal intellectual property and regulatory compliance risks
- Improved innovation and product differentiation