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Doing Business with China Regional Symposium focuses on opportunities to foster trade relationships


By Mark Hansel
NKyTribune managing editor

The “Doing Business with China Regional Symposium” at the Metropolitan Club Thursday provided insights into the opportunities available in the world’s largest-population market and how to capitalize on them.

Kentucky Secretary of State Alison Lundergan Grimes shared insights from her trade mission to China at the symposium (photos by Mark Hansel).

The event was sponsored by the Northern Kentucky Chamber of Commerce, the Northern Kentucky International Trade Association (NKITA) and the Cincinnati Chinese Chamber.

The symposium featured a keynote from Secretary of State Alison Lundergan Grimes, who was a member of a trade mission to China in 2015.

“When I traveled back to China back in 2015, one of the great recommendations that came out of trade mission…was the ability to have symposiums such as this, where we really share ideas, we exchange and help to educate one another about how it is we grow the global economy,” Grimes said. “Not just for Kentucky, but for each of the states that were part of that trade mission and, importantly, China as well.”

Grimes provided an overview of her experiences on the trade mission and talked about ways to build upon the lessons learned on that trip.

“(The mission) was about making sure that the understanding for education, for the rich history and culture that exists in China, the intertwining and mutually beneficial relationship that I think can and should exist in our economies, continues,” Grimes said.

Much of what has been written about the trade relationship with China, Grimes said, has focused on the loss of jobs and money in the United States and the suggestion that the relationship has not been mutually beneficial.

Mark Chi, Business Director with The Strategy Link, talked about the importance of understanding the culture, priorities and attitudes of the Chinese consumer.

With Kentucky’s exports to China totaling$1.8 billion in 2016 and Ohio’s exports to China totaling $3.7 billion in the same period, the symposium and the trade mission that preceded it, were designed to focus on ways to grow the relationship between this region and China.

“When I engaged in this trade mission, it was with the understanding that I can’t change the past, but I certainly can be a part of building a better and brighter future,” Grimes said. “As Secretary of State…it would be negligent of me, not to figure out how it is that we could expand the already numerous businesses that are investing and operating in China. How we could bring businesses from China here to the United States and, importantly, how we could grow jobs here.”

In addition to the study of China’s history and culture, Grimes said the group focused on infrastructure, tourism and businesses from the Commonwealth. It was also important, she said, to become familiar with the accepted business protocol, such as giving gifts and presenting a business card with both hands.

“Many of you know me, I really invade people’s personal space. I hug, I like to make sure there’s a connection,” Grimes said. “In China, the question is not how briefly you shake someone’s hand, but who would ever let go first. So, knowing the etiquette of where you’re traveling, I think as with any global mission, is important.”

Grimes acknowledged that it would be difficult to find two landscapes that are culturally or demographically more different than China and Kentucky.

China is 90 times larger than Kentucky and the Commonwealth has a population of 4.4 million people, compared to almost 1.4 billion population in China.

“Upon closer reflection and inspection, what you’ll find is there is a quite strong economic relationship, intertwining, if you will, of Kentucky/China connections,” Grimes said.” China is Kentucky’s fifth largest export partner. When you ask folks what they think is the number one product, many people automatically think about our agriculture industry. “

In fact, she said, 40 percent of the exports are from the aerospace industry, followed by vehicles, then chemicals.

“I think this shows we have an obligation to reach out and to try to expand upon this relationship,” Grimes said.

There were also presentations by Mark Chi, Business Director with The Strategy Link, US-China Advisory Council and Chao Zhao a vice president with Birtley Industrial Equipment Corp.

Lexington-based Birtley was the first Chinese-owned company to locate in Kentucky.

Chi said to develop an export trade relationship with China, it is important to understand the culture, priorities and attitudes of the Chinese consumer.

In America, for example, he said there is a correlation between income level and a target audience for products, but that is not always true in China.

“When you look at the (income), you will say probably, ‘this guy is not my target,” but they are your target,” Chi said. “You don’t know where they get the money, but they do have the money to pay for what you are offering – that is the difference between China and America. We need to understand the different logic.”

He used the term consumption upgrading to describe the things Chines consumers will buy that suit their lifestyle and that offer opportunities for American companies looking to export products and services.

Business leaders from throughout the region attended Thursday’s symposium on doing business with China at Covington’s Metropolitan Club.

Examples include healthy food (the Chinese spend $750 million on Boston lobsters each year), clean air, better health, medical and senior living services, leisure and entertainment, advanced financial services and education.

“They will never cut the budget for the children, believe me,” Chi said. This is China.”

Finding a good local business partner, he said, can also facilitate a smooth entry into the Chinese market.

“Local partners may take 30 percent of your profits, but they will keep you away from 100 percent of your troubles,” Chi said.

Zhao talked about doing business with China from a Chinese perspective.

He said when buying, it is important to recognize that China still has cost advantages, but that is changing.

“Over the years, I’d say labor costs have come up quite a bit,” Zhao said. “But even with that, a very good worker probably makes $1,000 to $1,500 a month. I think we need to find out how to find a balancing point, how to strike a balance.”

Zhao said here are also still plenty of opportunities to sell in the huge Chinese market because of a fondness for American brands and products. It is also important to know, however, that in China, foreign companies will inevitably have to deal with the government.

“They have much tighter control over the micro-economy, but they can be very helpful as well,” Zhao said. “You’ve got to be close to the government, especially the government officials, but always keep a respectful distance.”

Since President Xi Jinping came to power in 2012, Zhao said there has also been a strict anti-corruption campaign and the penalties for violators can be very harsh.

The session concluded with a brief question-and-answer session that featured the speakers and members of the business community.

The Northern Kentucky Chamber of Commerce is the leading business organization in Northern Kentucky. The Chamber focuses its efforts on education, workforce development, international trade, leadership development, and government relations at the federal, state and local level.

Contact Mark Hansel at mark.hansel@nkytrib.com


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