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US Exports To China. Catch That Train Before It Leaves The Station.

Posted in China Business

Whenever a client decides not to venture forward (those words intentionally chosen) overseas in a situation where I am convinced that it should, I get frustrated.  I get particularly frustrated if the client says that it “hasn’t ruled out the move, but it is going to table it for a while.”  I keep my mouth shut, but I want to say something like, “well, I just hope that your waiting won’t permanently harm your market position.”  There are definitely some products where not getting into a foreign country now may permanently doom you to second or third tier status in that country should you ever actually go.

So imagine my frustration this morning when I got an email from the US-China Business Council summarizing its new report on US China Exports by state. The good news is that US exports to China expanded by “6.5 percent, representing an increase of $6.6 billion.”  The bad news is that “the United States’ share of imports into China has fallen to 7 percent from 10 percent in 2000.”  In other words, the United States is losing competitive ground in China to other countries.

Why is this?  I do not know exactly (does anyone?), but I suspect that it has a lot to do with the United States’ large size, large and wealthy population, consumer diversity and economic vibrancy.  The opportunities are simply so great for companies just within the United States itself that there is less need for them to go overseas, than a company from South Korea or from France.  The problem with this is that with certain products being second or third or fourth to the party may end up being the equivalent of not being invited at all.

There is a lot of good news from this report though, starting with the fact that China’s import purchases are rising and rising fast.  I also find it interesting how the composition of US sales to China also seems to be changing. Until recently, sales to China were dominated by large-ticket sales made by major multinationals. Think Boeing aircraft and GE power plants, with occasional big equipment sales by mid-sized companies thrown in. In the past few years, however, I have seen way more SMEs move into the China market in areas such as software, tooling and specialty manufactured products and consumer products. We also have seen a rapid growth in services sales in industries like architecture, education, energy consulting, and marketing. I anticipate that the trend of China buying more in the way of services from American companies will increase at an accelerated rate as China works to move its manufacturing base and its other industries up the value scale.

China needs the help of American companies and it finally seems to be willing to pay for it.  Now it is the job of American companies to satisfy that need.  See   China’s Five Best Business Opportunities

And for some of  the legal issues involved in exporting to China, check out the following:

On a related topic, the US-China report listed out the following as the top fifteen states for exports to China:

1. California                        $13.6 billion

2. Texas                                $10.1 billion

3. Washington                   $7.9 billion

4. Illinois                               $6.1 billion

5. New York                        $4.2 billion

6. Georgia                           $3.8 billion

7. Michigan                         $3.7 billion

8. Ohio                                  $3.7 billion

9. Minnesota                     $3.5 billion

10. South Carolina            $3.3 billion

11. Iowa                               $3.2 billion

12. Pennsylvania              $3.0 billion

13. North Carolina            $2.8 billion

14. Indiana                          $2.6 billion

15. Alabama                       $2.5 billion

What do you think?

  • Ed Balls

    You are actually late with this. I think this shift occurred years ago.

  • http://www.facebook.com/lucasblaustein Lucas Alan Blaustein

    I could not agree more that there is an abundance of opportunity for not only SMEs, but large businesses within China.

    I recall being in a taxi in Guangzhou when the driver asked me, “Where have all you Americans gone?”

    He revealed to me that when he began driving his taxi in the early 1980′s the only foreigners you found in China were U.S. firms and their employees.

    But now the vast majority of foreigners are Europeans, Canadians, and other Asians.

    As a Texan in agricultural business, I cannot stress the opportunities for American companies in China. We produce more food, at lower cost than any other nation in the world.

    We need better trade policies domestically, and we need to continue to look abroad for opportunity. We have the products, the knowledge, and the opportunity is there… We only seem to lack the motivation.