Trade mission opens doors to China

When Missouri Gov. Jay Nixon last month signed trade agreements with China totaling $4.6 billion, he secured invitations and support for businesses in the state to export more goods to the most populous country in the world.

By early November, the mission already had borne fruit for one company represented on the trade mission. Springfield-based Tracker Marine received a $1 million order for its boats from a Shanghai-based distributor seeking to expand its market share for recreational boats in China, said Tai Li, Tracker Marine’s Asia sales representative.

Li declined to disclose the name of the trading partner because the details of the sale, including the types of boats to be purchased, are still under discussion.

Tracker Marine is pursuing additional transactions with other Chinese companies as a result of the Oct. 21–29 mission, he said.

Li praised Nixon’s ability to bring Chinese government and business officials together with the Missouri delegation for rewarding discussions, including those that led to the sale.

Li also said fellow Missouri executives on the trade mission supported Tracker Marine by conveying endorsements for the company’s boats to Chinese officials.

Brian Hammons, president of Stockton-based Hammons Products Co. and a trade mission delegate, said he also expects new sales in coming months as a result of the trip.

Trade details, demand
The largest of the agreements is a national deal with the China Council for the Promotion of International Trade, allowing for $4.4 billion in Missouri exports during three years. That’s an increase of roughly $1.5 billion from Missouri’s 2010 export rate of $987.4 million to China, according to the Missouri Department of Economic Development.

The state’s exports to China already have increased in 2011 – up more than 25 percent to $870 million year-to-date through September, according to state data.

During the trade mission, Missouri also entered into two deals worth $100 million apiece with provincial governments.

State leaders, seeking aggressive increases in exports, recommended the amounts,  said DED Communications Director John Fougere. The value of the agreements represents China’s commitment to facilitate exports from Missouri up to the amounts designated.

“These agreements provide Missouri firms with the additional and necessary support from the CCPIT for assistance in identifying Chinese business partners in regional Chinese markets where the state of Missouri does not have representation,” Fougere said, noting that the DED currently has representation in Shanghai.

A strong demand from the burgeoning Chinese middle class for consumer products and commodities makes the nation a prime export market, said Mike Vogt, managing partner of Marisol International. The Springfield-based global logistics company provides exporters with supply chain technology for such services as transportation booking arrangements, shipping documentation and customs brokerage.

“Just something as simple as their desire of adding more protein to their diet drives our Missouri agribusiness opportunities,” Vogt said.

Marisol’s agricultural clients, which he declined to name, are exporting frozen pork, beef and poultry, feed supplements, and dairy and agricultural equipment, he said.

Marisol recently received from the state a $1.5 million Missouri Linked Deposit Program loan to support 15 hires made this year – 10 in Springfield and five in Kansas City.

The majority of the positions were driven by increased exports in the past six months, nearly all to China, Vogt said.

Hammons, who also had traveled to China prior to the trade mission, said his company already had exported a few cases of  shelled black walnuts and a separate small shipment of retail packages under the Hammons Products name for a Hong Kong grocery chain. The trade mission gave him the chance to talk with Chinese businesspeople directly.

“We are hoping that sometime in the next few months, we can develop some container-load business over there,” he said. “It does take a long time. We understand that.”

Shawn Askinosie, founder and owner of Askinosie Chocolate, said he worked with the DED to find a trading partner in China, and that role was crucial.

“But for their help, we would not have been able to export to China,” said Askinosie, whose company shipped a pallet of chocolate to Shanghai on Oct. 21, to be carried in high-end department stores through an agreement with Shanghai Eagle Import & Export Co. Ltd.

“I had personally been trying to find the right partner for approximately three years,” Askinosie said.

Obstacles worth overcoming
Difficult documentation and surprise requirements are among the hurdles that slow the process of trading with China, executives said.

Hammons said his company had trouble preparing documents to the satisfaction of customs officials, and Askinosie said he had to provide unfamiliar certificates, mainly in areas of health and sanitation.

He recalled red tape involving his attempt to ship wooden gift boxes, which are popular packaging for the company’s chocolate bars.

“At the last minute, we were not able to export those wooden boxes to China because we didn’t have the proper certification,” Askinosie said. “What’s interesting is, I bought the boxes in China.”

Then, there are added expenses, which Hammons and Askinosie said they did not pass on to customers. Askinosie estimated additional costs of up to 15 percent for doing business in China, but both he and Hammons consider establishing themselves in the Chinese market a worthwhile investment.

While many local manufacturers see potential, one executive sees exports to China as a risky venture. Springfield-based Allen Filters Inc., a custom manufacturer of fluid filtration and purification equipment for power grids and the oil and gas industries, does more than half of its business overseas but has avoided China due to concerns about the nation’s reputation for intellectual property theft, CEO Katherine Simon said.

“Given that there are other markets in the world that are much more easily accessible, we have not been really interested in having our technology copied,” Simon said.

Simon said Allen Filters has tapped into the Chinese market by doing business with other international companies that have interests there.

Next steps
Businesses seeking to take advantage of the trade agreements should choose a viable export product or service and contact the DED for help identifying Chinese partners, Fougere said.

In addition to assistance from Missouri agencies, Chinese national and provincial entities stand ready to assist the state in the flow of export transactions up to the values specified in the trade deals, he added.

Locally, Springfield Area Chamber of Commerce’s International Business Council is dedicated to helping prospective exporters – to China or anywhere else – develop plans and connect with experts, said Brad Bodenhausen, the chamber’s executive vice president, who also serves in the Greater Ozarks International Trade Association, another resource for exporters.

Bodenhausen said the chamber’s International Business Council meets monthly and provides opportunities for prospective exporters to meet with representatives of experienced companies.

Bodenhausen, who has traveled widely to study export markets, pointed to three nations with which the United States has recently entered into free trade agreements: South Korea, Colombia and Panama. Chile has had a free-trade agreement with the United States since 2004, he said.

No matter where exports are sent, local executives said it’s important to remember that international trade is a lengthy process.

For example, Simon said the sales cycle for Allen Filters averages three years but could go as long as seven.

Not only does exporting require adjustments for language, culture, finance and geopolitical forces, but people also have to adjust to “relationship versus transactional orientation” mindsets, Simon said.

“When you are dealing in various countries around the globe, then relationship building only supports your activities in the market. And that takes time,” she said.[[In-content Ad]]