Local companies searching for trade options in China

Tapping the China market

Universities help build bridge across Pacific

Business philosophies influence each other

Missouri Gov. Matt Blunt was in Mexico earlier this month, meeting with dignitaries from that country in an effort to increase trade of Missouri products south of the border.

But many local companies are looking at a more distant market in which to trade their wares.

It’s in the rapidly growing Chinese economy that local businesses hope to find opportunities to expand their potential customer base.

International Division Inc., commonly known as INDIV, began selling poultry processing equipment in Asian markets in the early 1970s.

Company President Forest Lipscomb Jr. said INDIV is not currently selling in China, though the company does purchase products from the country and has plans to re-enter the Chinese market in the future.

Joe Jenkins and his company, Jenkins Diesel, have been doing business in southeast Asia for years. He said he tried getting into the Chinese market about 10 years ago, but he had difficulty because of a need for internal connections.

“These days, however, things are changing very rapidly,” he said. “In making a couple of trips over there in the last few months I’m both amazed and very impressed with the progress they’ve made in manufacturing and supplying the world. I think there are still opportunities over there, and they’re a little easier (to deal with) now than in the past.”

The importance of relationships, Lipscomb said, is still paramount.

“When we started there, you had to have connections. You still do,” he said. “A person just trying to go over there to sell is wasting their time. They’ve got to have a connection.”

Statewide, Missouri is making some of those connections.

Exports of goods to China from the Show Me state increased 40 percent to more than $365 million, and export totals are up 382 percent in the last five years, according to the state Department of Economic Development.

Add in exports to Taiwan, which were up 10 percent in 2004 to more than $122 million, and Hong Kong, which bought more than $180 million in products, and the region is the third largest receiver of Missouri goods, behind only Canada and Mexico.

“(Trade) is far, far easier today than it was, say, in the early 1990s,” said A.J. Chivetta, a partner with Armstrong Teasdale LLP, part of the China Allliance, which helps clients deal with issues associated with starting and building business in China.

“I think the Chinese better understand what foreign businesspeople are looking for. The rule of law has had a chance to mature in China, allowing people to understand and get more clarity about what types of investment they can make. It’s a great time to be going to China.”

INDIV’s Lipscomb echoed that sentiment, adding that the company is setting up a new office in Kuala Lumpur, Malaysia, next year with the goal of eventually returning to the China market. The prospects for trade, he said, have certainly come a long way in 30 years.

“We were in there very early, so early that they didn’t have a lot of cash,” Lipscomb said. “They would give us things in return – if we sold them half a million dollars worth of equipment, they would say, ‘We’ll give you back a half million dollars worth of shrimp,’ or something like that.”

The three largest sectors for export to China are chemical manufacturing, computer equipment manufacturing and machinery manufacturing.

The fact that all the largest exporters are manufacturing companies is not an accident, according to Chivetta.

“The Chinese economy, while moving toward being a market economy, is still very much a planned economy,” Chivetta said. “There are certain industries in which they encourage foreign investment, certain industries in which they prohibit foreign investment and certain (industries) in which they’re basically neutral.”