Heidi Schumann wants to market her small company's English training program to Chinese hosting the Beijing Olympics. Michael Zhu wants to...
Heidi Schumann wants to market her small company’s English training program to Chinese hosting the Beijing Olympics. Michael Zhu wants to persuade Chinese officials to change a ruling imposing high tariffs on a multinational giant’s paper products.
They will confront both opportunities and obstacles as they take part in Gov. Christine Gregoire’s first trade mission to China.
With its vast market potential, China is enticing for local companies, but finding success there can also be daunting.
Gregoire left yesterday on an 11-day trip aimed at promoting Washington’s ties with two of its biggest trading partners, Japan and China.
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She is counting on face-to-face interaction to build relations with government leaders and open doors for companies.
Trip at a glance
Yesterday: Leave for Tokyo
Today: Arrive in Tokyo
Monday: National holiday, no events planned
Tuesday: Visit Aichi World Expo, aerospace supplier meeting
Wednesday: Meet with government officials in Kobe
Thursday: Meet with agriculture, airline officials in Tokyo; travel to Beijing
Friday: Meet with officials representing agriculture, the port, commerce, Olympics
Saturday: No official meetings
Sunday: No official meetings
Monday: Visit state trade office, meet with Shanghai 2010 World Expo, reception
Tuesday: Return to Seattle
Source: Governor’s office
Following in the footsteps of former Gov. Gary Locke, who enjoys rock-star status in China as the first Chinese-American governor, has some distinct advantages.
“I intend to fully use that rock-star status and see if a little bit of it won’t rub off on me,” Gregoire said. Locke led five state trade missions over eight years, helping companies capture the spotlight and seal deals in China and spreading the word about Washington products from Mexico to Vietnam.
This time, Gregoire is leading a delegation of 56 representatives of business, agriculture and education. The group also includes 21 government employees and the First Gentleman, Mike Gregoire. Locke, now a partner in the law firm of Davis Wright Tremaine, will accompany the delegation in Beijing. The estimated cost of the trip for each delegate is from $5,000 to $6,500.
Schumann is counting on the trip to open doors that otherwise would be closed to her testing and training firm, FluencyGroup. “If your name isn’t Boeing or Microsoft and you don’t have that instant name recognition, can you get the meeting (with Chinese officials) when they’re literally getting hundreds of phone calls?” she asked.
In China, Gregoire will focus on new opportunities the country’s rapid growth presents for local products and services.
But she’ll also address potential barriers to Washington agriculture and paper products and problems with intellectual-property protection.
For instance, Gregoire plans to meet with China’s minister of commerce to dispute anti-dumping tariffs she says are unfairly penalizing Weyerhaeuser and other Washington paper companies.
The visit won’t be quite as dramatic as it might have been if a billion Chinese people had watched their president tour Seattle two weeks earlier.
Chinese President Hu Jintao canceled a two-day stay in Seattle planned Sept. 4-5, including a tour of Boeing and dinner with Microsoft Chairman Bill Gates. The Seattle stop was to precede a state visit to Washington, D.C., which Hu postponed in light of the post-hurricane disaster.
In different ways, in both China and Japan, the government is connected more closely to industry and plays a more direct role in the economy, says Chang Mook Sohn, executive director of Washington’s Economic and Forecast Council.
For that reason, it’s important to visit regularly and communicate closely with policy-makers in Asia to help Washington companies that trade there, he said.
The group will visit Tokyo, Nagoya and Kobe today through Wednesday, and travel to Beijing and Shanghai Thursday through next Monday.
In Japan, Gregoire will meet with aerospace-supply companies at the Aichi World Expo near Nagoya and with government officials in Kobe, Seattle’s sister city since 1957. Last year more than 18 percent of Washington’s total exports went to Japan, its largest trading partner.
In China, the mission includes meeting with inspection and quarantine administration officials to discuss a two-year delay in pest-control procedures that would allow more Washington farm products into the country.
The group will also meet with officials preparing for the Beijing Olympics and hold a sales seminar for Washington companies that make building materials.
Gregoire said she is concentrating on helping small and medium-sized businesses and farmers enter China’s vast market. FluencyGroup’s Schumann said the trade mission helped the company secure a meeting with officials of the Beijing Olympic Committee. “If I had tried to get in touch with this person myself, I wouldn’t have that meeting. It’s still going to be competitive, but now we have a seat at the table and a chance to present our products.”
For Weyerhaeuser, the mission has a different goal in China. The company wants China’s Ministry of Commerce to reverse a preliminary decision in an anti-dumping investigation.
The May 31 decision found that kraft linerboard from the United States and three other countries was damaging China’s domestic industry. The product is used to make corrugated boxes and other packaging material. China imposed duties on imported linerboard from 16 to 65 percent, far above the standard tariffs of 2 to 5 percent.
Such duties cost Weyerhaeuser about $2 million a month, said Michael Zhu, Weyerhaeuser’s director of international sales for container-board packaging and recycling.
“This is a critical product for us,” he said. “China is a growing market and many customers are using it for products they export here.”
The company’s sales of linerboard to China grew from $20 million in 2003 to $35 million last year, he said. But since May the company has lost millions of dollars because of the anti-dumping tariffs. The problem is also affecting Longview Fibre and Port Townsend Paper.
Zhu said he thinks the tariffs are in retaliation for U.S. attempts to limit textile imports from China.
There’s no evidence that imported linerboard has hurt the Chinese industry, Gregoire stated earlier this month in a letter to the Chinese ambassador to the U.S. The market share of imported linerboard from the U.S. declined over the period in question, while Chinese domestic production and market share increased.
Gregoire said she plans to ask China’s minister of commerce to drop the tax and let the Chinese know “their concerns are not with the state of Washington.”
At a time when low-cost labor is driving some companies and industries overseas, competing effectively means knowing what goods and services give Washington an edge, she said.
In the case of farm products like apples and cherries, “It’s not going to compete in quantity,” Gregoire said. “But it surely is at the top of its game in quality.”
State leaders also intend to promote alternative energy, tourism and biotechnology.
A few years ago, people in Asia had no idea Washington produced high-quality wine, said state economist Sohn, but now they’re buying it.
“Washington is still a small state, yet we are competing against California and New York,” he said. “I think it’s really important that we keep up.”
Kristi Heim: 206-464-2718 or email@example.com