U.S. cities promote themselves in effort to find new markets in China
05/19/2014 12:13 PM
05/19/2014 3:02 PM
Bodyguards in tow, a rising star in China’s Communist Party, Sun Zhengcai, marched through a vast trade show last week in Chongqing, a municipality of nearly 30 million people. Suddenly, Sun and his entourage made a detour when a sign caught his attention _ a pavilion showcasing Sacramento, Calif.
“Ni hao!” said Sun, greeting the 20-odd delegates from the California capital with handshakes. He didn’t stay long, but it was the kind of moment the California contingent had hoped for after traveling 7,000 miles.
Not long ago, U.S. cities relied solely on state trade missions to make connections in China, joining governors to visit the usual business capitals of Beijing and Shanghai. That’s starting to change. Increasingly, city and regional leaders are recognizing that they need their own unique economic relationships overseas, including engagement with lesser-known megalopolises, such as Chongqing.
Once known as Chungking, this city in southwestern China is home to one of Asia’s most robust economies. Its leaders claim that 1 of every 4 laptops in the world are assembled here, as are more than 9 million cars and motorcycles annually. But it isn’t on the map of many U.S. cities and states, one reason officials from Sacramento say they’re courting it so aggressively.
Overall, China sells to the United States four times more goods than the U.S. sells to China, creating a major imbalance in the $580 billion annual trade relationship. But U.S. exports to China and other countries helped revive the economies of Seattle, Los Angeles and numerous other American cities after the recent recession. That’s prompted the realization that cities can’t rely on sporadic trade missions abroad to drum up business. They must selectively target where they might build partnerships, and stay on them for several years.
“China is a huge place, so to be successful it’s smart to focus on a city or region where you are likely to be successful,” said Sam Kaplan, the president of Trade Development Alliance of Greater Seattle. “You need to get your public officials involved and make clear this is a sustained effort.”
The Brookings Institution, a Washington-based research center, documented how individual cities benefited from exports in a 2012 report. The director of Brookings’ Metropolitan Export Initiative, Brad McDearman, now urges U.S. cities to be very specific when they seek out overseas partners.
“It is tough for metro areas to go everywhere given their budgets,” he said. “They need to decide where they should (be), based on their particular industries.”
So far, more than 25 U.S. cities have developed or are working on individual export plans, McDearman said. They include smaller cities such as Wichita, Kan., and Lexington, Ky. Many are looking to diversify their economies. In Sacramento’s case, it hopes to attract Chinese investment for public works projects and clean energy businesses, while building a market in Chongqing for produce and agricultural products.
James Rinehart, Sacramento’s director of economic development, said Chongqing was a natural partner for California’s state capital. Both are inland cities built along major rivers, and both are seeking to elevate their profiles. Two years ago, Sacramento signed a memorandum of understanding with Chongqing, and last year it opened a staffed trade office in the city, at a cost of $100,000 a year.
Like other Sacramento visitors, Rinehart was staggered last year on his first visit to Chongqing. Skyscrapers dotted the skyline on steep hills descending to the Yangtze River. At the city’s international trade fair _ in a just-opened 1 million-square-foot exhibition space _ Rinehart said he was jolted out of his seat when his hosts fired booming cannons filled with confetti. “It scared the bejesus out of us,” he laughed.
Rolling with the ceremony is a prerequisite for international trade missions. For the Sacramento delegation this year, that meant bringing gifts, shaking a lot of hands, sitting through long speeches, eating the fiery local hot pot and even knocking back rounds of baijiu _ an especially potent Chinese spirit _ with their hosts.
Xu Qiang, the director of the Chongqing Foreign Trade and Economic Relations Commission, said his Sacramento counterparts seemed to appreciate the local lifestyle, a prerequisite for doing business in China. “Modification is important,” Xu said in an interview. “You have to adjust to local conditions, and that is true for both sides.”
Xu said some businesses and delegations arrived in Chongqing unfamiliar with the scale of the city or the competition they faced. “This is a huge place, with 30 million people,” he said, speaking through an interpreter. “To do business here, you need to concentrate your energies.”
For the past several years, Columbus, Ohio, has been working to figure out and refine its own focus, with an emphasis on Japan, a manufacturing giant with a long connection to the area. But China has shown itself to be an opportunity that can’t be ignored, said Deborah Scherer, the director of global markets for Columbus 2020, the city’s economic development arm.
Scherer cited the success of Sutphen, a Columbus-based manufacturer of fire trucks, which recently found an unexpected market in northern China. A summer intern for Sutphen _ a business student at Ohio State University named Lynn Lun-Rich _ persuaded the company to market its products in Inner Mongolia, her home province. With Lun-Rich’s Chinese language skills, Sutphen sold its first truck there in 2012, and then the company hired her on full time. Since then, Sutphen has sold nine more trucks to China, Thailand and other countries, bringing in $11 million in revenue, according to The Columbus Dispatch.
The company’s breakthrough, said Scherer, reflects how universities and outside intermediaries can play crucial roles in helping cities and companies find export markets. Columbus, she said, depends on consultants to open doors in Asia and raise the city’s profile in China.
“The most difficult thing out of the gate is market recognition,” said Matt McCollister, the vice president of economic development at Columbus 2020.
In Sacramento’s case, it relies on a 56-year-old, Hong Kong-born local business agent, Antonio Yung, as its intermediary. Yung sold Sacramento on Chongqing, and every six weeks he shuttles between the cities, arranging trade missions and exchanges while trying to break down barriers for trade and investment on both sides.
Before last week’s visit, Yung and city officials worked to arrange the first direct shipment of fresh fruit to Chongqing from California _ more than 600 pounds of early-season cherries. At the trade fair in Chongqing, Yung used the fruit shipment to garner local media attention. California wine and gifts of cherries also sweetened the mood among local leaders invited to a Sacramento-hosted reception at the Hyatt Regency in Chongqing.
As the trade mission concluded Saturday, several in Sacramento’s delegation declared it a success. Rinehart met with Chongqing Mayor Huang Qifan and said the mayor clearly remembered him from last year’s visit. Sacramento university officials discussed exchanges with their counterparts at Chongqing, and other business leaders reported encouraging discussions with possible investment partners.
It’s too early to know whether Sacramento’s gambit will pay off. Chongqing must be convinced the courtship is real, and Sacramento will need evidence that Chongqing is ridding itself of its reputation for corruption. The Communist Party ousted and jailed the city’s previous party secretary, Bo Xilai, after his wife was accused of poisoning her British lover and Bo was accused of enriching himself.
His replacement, Sun Zhengcai, is said to have steadied Chongqing and raised its profile, pleasing other party leaders. On Thursday, when Sun stopped by the Sacramento pavilion _ the only one hosted by a U.S. city at a trade fair attended by representatives from 46 countries and 1,700 multinational companies _ he immediately made the connection that Yung hoped he’d make.
“Chelizi!” said Sun, using a Chinese word for cherries. In the world of soft diplomacy, it meant mission accomplished.
McClatchy special correspondent Tiantian Zhang contributed to this report.
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