Around two years ago, the China business at my law firm underwent a major shift. Around that time, the bulk of our clients were companies seeking to profit from China, as opposed to save money from China. In other words, we started getting more work from companies selling into or in China as opposed to those manufacturing in China so as to reduce their costs. Last year I felt this shift was accelerating.
Looks like my feelings correspond to the bigger reality. American sales to China grew by nearly 50% last year and are quickly edging towards $100 billion a year. From 2000 to 2010, U.S. exports to China increased by 468% as compared to 55% to the rest of the world.
In his New York Times article, “As China Grows, So Does Its Appetite for American-Made Products,” David Barboza writes about the growth in China’s desire for American goods and notes that most of these sales have come from California, Washington and Texas. Barboza talks of how BMWs made in South Carolina are being shipped to China.
The article does not talk about the growth in sales by United States service companies to China and I do not know whether the statistics include those sales or not. If my firm’s clients are any indicator (and I am guessing that they are), the sale of services to China is also accelerating rapidly. I estimate that around a third of the WFOEs we have formed for China in the last year are for companies in the service sector. Most of these companies had been doing business for years before they felt comfortable opening up their own company there and hiring Chinese employees. We have well-established architecture and design and construction-related clients who within one year of getting serious about China are making more there than in the United States.
We are also seeing plenty of companies that have been manufacturing their products in China for years beginning to sell their products in China as well. The biggest issue facing these companies is figuring out how to get their products into the China market.
Bottom line: Wages and incomes are rising fast in China and the demand for American products and services is there.
Are you seeing these same trends?
