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:
- Selling to China by using a distributor
- Exporting your product/technology to China through a Licensing Agreement
- Selling services to China
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?