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China redux
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Essential advice for doing business in China
Part One: Accessing a growing market
It is difficult to open any business publication today without being confronted with some issue related to China. Indeed walking into Wal-Mart and buying a children's toy for $5.99 versus $8.99 at a competing retailer can typically be linked back to a China supply network.
This is impressive, given that 30 years ago there was no trade with China and consequently no trade problems. And 30 years ago, an American Secretary of State meeting with a Chinese counterpart essentially required a secret mission.
Today, both the political and economic relationships with this country are rich and complicated, challenging and mutually beneficial.
A growing trade partner
How fast is our trade growth with China? To put it in perspective, exports to China from the U.S. have been growing at a faster pace than to any other large economy, up 21 percent in 2005 ($41.9 billion). In the first half of 2006, this rate accelerated to a 37 percent increase ($21 billion).
As a reference point, our total exports to India were about $8 billion dollars last year. If the present growth rate is sustained with China, just the increase in exports to that country alone will grow at a rate of nearly double the U.S. exports to India each year. China is now the fourth largest export market for the U.S., up from eleventh five years ago.
Is China your next market?
In fact, if you look at the trend lines, sometime this year China will surpass Japan as America's the third largest export market. As the statistics suggest, there is tremendous opportunity for American companies, in virtually every industrial and service sector.
The practicalities, however, point to the need for a well-planned market strategy. The reality is that intellectual property theft is rampant, qualifying partners and performing other due diligence is difficult, pricing pressure and fierce competition is the norm, and it is a very diverse market with varying levels of development and regional industrial strengths. So, what is a small business to do?
The tale of one exporter
A Rockland, Massachusetts's manufacturer of analytical instrumentation for the food processing industry turned to the U.S. Commercial Service when its goods were stuck in China Customs.
Omnion Inc. had done their homework, found a distributor, concluded a contract and shipped the goods. But to their surprise, China Customs detained their shipment citing regulations on the treatment of its packaging. Through on-the-ground staff in China, and a network of specialized China service providers, the U.S. Commercial Service confirmed necessary documentation enabling Omnion to provide their distributor with proper certification, and in turn, get the goods released from Customs.
Get up-to-the-minute advice
An ever-changing regulatory environment in China requires constant monitoring and updated information. Fortunately, the U.S. Department of Commerce's China Business Information Center works for small and medium-sized American exporters to do just that. Regulations, trade leads, market research, and useful contacts are among the information they track, consolidate, and provide via their web site and export support call center.
Pulling from the experience of American companies with successful sales in China, as well as information from the U.S. Department of Commerce, accomoanying this article are few key considerations and helpful resources when doing business in China.
You can find an elaboration on this essential China advice and other suggestions through the U.S. Commercial Service in Beijing web site at https://www.buyusa.gov/china/en/chinabiztips.html.
Part Two of this article will provide an in depth review of those considerations and resources.
Helpful resources:
FAQs on Exporting to China (http://www.export.gov/china/exporting_to_china/faq.asp)
A quick way to get started.
China Business Information Center (www.export.gov/china)
Want to learn more? This is the most comprehensive federal government site on exporting to China, with market research, U.S. export regulations, Chinese import standards, and much more.
U.S. Commercial Service - China (https://www.buyusa.gov/china/en/)
Find out what can be done for you at the US Embassy and Consulates in China to identify trade opportunities, find local trading partners, and a wealth of other export support services.
Intellectual Property Toolkit (http://beijing.usembassy-china.org.cn/ipr.html)
Provides information on China's current IPR environment, protection through prevention, China's IPR enforcement system, how the U.S. government can help in IPR infringement cases, and information resources.
Contact China 2005 (http://www.buyusa.gov/china/en/contactchina.html)
Download this handbook published by the U.S. Commercial Service-Beijing. The resource guide for U.S. businesses contains key information and contacts for doing business in China.
Are You China Ready?
Take a quiz to self assess if you are market ready.
http://www.export.gov/china/assisting_us_exporters/areyouchinaready.asp
U.S. Export Assistance Centers in Massachusetts
http://www.buyusa.gov/newengland
Kellie Holloway is a Commercial Officer with the China Business Information Center, US Commercial Service (kellie.holloway@mail.doc.gov) or 503-326-3002.
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