China says it's ready to spend in U.S.

San Antonio Express news covers Business China Conference 2007

Web Posted: 10/11/2007 08:16 PM CDT
Meena ThiruvengadamExpress-News Business Writer

China is looking to spend $200 billion and wants to direct some of that cash toward the U.S., the Chinese Embassy's minister and deputy chief of mission said in San Antonio on Thursday.
"The U.S. is one of our primary targets," Washington, D.C.-based Zheng Zeguang said during a daylong seminar on doing business with China. The seminar at the University of the Incarnate Word was hosted by the University of Texas at San Antonio International Trade Center, Free Trade Alliance San Antonio and the U.S. Chamber of Commerce.

China is the United States' No. 2 trading partner behind Canada, according to statistics from the Census Bureau. Early this month, it launched the China Investment Corp., one of the world's largest sovereign funds.

The national trade deficit with China was $57.6 billion in August, a "welcome breath of fresh air on the trade front," according to economist Brian Bethune with the research and forecasting firm Global Insight. The figure is the lowest in seven months.

"It's not the policy of the Chinese government to pursue a trade surplus with the U.S.," Zheng said during a luncheon speech. "It's against our best interest."

Texas energy, high tech and IT businesses are in a particularly strong position to benefit from the investment fund, he said afterward. A group of city leaders and business owners from San Antonio went on a trade mission to China last month.

And a trade delegation from China is scheduled to visit San Antonio later this month, said Kyle Burns, executive director of the Free Trade Alliance San Antonio.

Tindall & Foster Join BC07

Robert F. Loughran, Managing Partner, Tindall and Foster P.C. in Houston, will provide BC 07 attendees with insight and guidelines for business immigration issues with China during the "Big Picture" session. We're excited to welcome him and his firm as a premier sponsor for the event. Make sure to stop by their booth to meet their team for future immigration inquiries and resources.

Tindall & Foster, P.C. is one of the nation's largest law firms specializing in immigration law, and enjoys a national reputation in this field. The Firm's Immigration and Nationality Section handles all aspects of U.S. and international immigration law. The firm specializes in employment-based business immigration and emigration, family-based immigration and naturalization, deportation and removal defense, immigration-related litigation, consular and point of entry assistance, visas for artists and entertainers, foreign investors, deemed exports, and employer audits. Their client base includes major U.S., European, Latin American, Chinese, Japanese and Middle Eastern companies, as well as small to mid-size companies and individuals with both routine and unique immigration-related needs.

A Clear View of China and US Manufacturing

It is a fact that U.S. manufacturing employment is declining. Between 2001 and 2005, 2,677,000 manufacturing jobs were lost according to the U.S. Census. The question is the extent to which job loss is attributable to foreign trade:

➢ The value of manufacturing output in the United States continues to grow, although manufacturing is increasingly a smaller part of the U.S. economy. In constant dollars, manufacturing output for 2005, the most recent year for which full information is available, was about 7 percent higher than in 2001.

➢ The role of technology and higher productivity is a larger factor than imports in overall job loss. The numbers by different economists vary, but the consensus appears to be that two jobs are lost due to higher productivity to every one job lost to imports. Most economists note that the binge spent on capital equipment and high technology in manufacturing in the late 1990’s did not have its full impact until the post 9/11 period when companies actually figured out how to use the stuff.

➢ It is also clear that industries using low skilled labor or having a high ratio of labor to capital are the ones most likely to be forced to close or to shed jobs. Most manufacturing sectors with high valued added and complex production processes have generally maintained their employment levels or have grown in recent years.

➢ From December 2000 through December 2005, the economy added 10,424,000 non farm jobs against the 2,677,000 manufacturing jobs shed during the same period. While some of these new positions were “McJobs” as critics claim, there is substantial evidence that the majority of these new positions paid as much as, if not more, than manufacturing jobs.

➢ A survey by the Conference Board found that most U.S. foreign direct investment going into China is not for the production of products to be exported to the United States. Rather, such investment is primarily for sales to the Chinese domestic market or to South Asia. The substantial majority of U.S. foreign direct investment is still going to advanced countries.

➢ The growth in U.S. exports has also been a substantial factor in sustaining U.S. manufacturing and the impact of trade agreements has been critical to export growth.

o During the last five years of the 1990’s, when the United States effectively only had the NAFTA Trade Agreement, exports to NAFTA climbed by 52 percent versus 25 percent for overall U.S. exports. The data is similar when applied to subsequent trade agreements.

o U.S. exports to Singapore climbed by 19.4 percent during the first full year of the Treaty.

o Exports to Australia climbed by 11.4 percent the first year of the treaty (2005) and by another 12.3 percent in 2006.

o U.S. exports grew by 42.2 percent between 2001 and 2006. A cheaper dollar is important here, particularly during the last two years, but the impact of trade agreements is also a major factor.

➢ As to whether the Chinese currency is fairly valued, what is the fair value? The Economist sites Goldman Sachs, the investment bank, as having 14 different methodologies to value currencies on a bilateral basis. Of these, twelve indicated the Chinese currency is not overvalued against the dollar and the other two did not present major shifts.

What all of this suggests is that manufacturing job loss is more complex, given technology, labor-capital ratios, and the beneficial effect of export growth. There are shifts occurring within manufacturing and certainly many communities have been adversely affected. But, the U.S. manufacturing sector is now producing more than it ever has.

Concerning China, the country has considerable room for improvement, witness toy recalls, theft of intellectual property, and other maladies. But the loss of 46,000 jobs in August 2007, if correct, is not necessarily China’s gain. Some of these jobs may end up in China. Some may end up in other countries. Some may not end up anywhere else because they are no longer needed. Job loss is far more complicated than a zero-sum game.

- Doug Smith, Sr. International Business Consultant
International Trade Center

Judge Wolff & Governors Office Join Chinese Embassy at Business China 2007

­ Bexar County Judge Nelson Wolff and Aaron Demerson, Executive Director, Office of the Governor, Economic Development & Tourism are joining Chinese Deputy Chief of Mission, Zheng Zeguang, at the Business China 2007 conference in San Antonio, Texas on October 11th.

China's booming economy provides many economic opportunities and prospects for the rest of the world, especially for Bexar County companies across the Pacific. Business China 2006 was a tremendous success and laid the foundation for this year¹s expanded program. The US Chamber of Commerce¹s Senior Trade Advisor, Leslie Schweitzer, will address US-China trade policy which will add exclusive insight for Texas companies attending.

Business China 2007 conference is expected to have over 150 attendees and guest speakers ranging from logistics experts, export specialists, and government officials from around the United States and China.

This full-day seminar is designed to provide key information and resources for any business interested in developing supplier and export opportunities with China. The seminar will begin by highlighting the fundamentals of doing business with China followed by lunch and will eventually progress to deeper topics and issues in the logistics, exporting, and supplier environments.

One of the main highlights of the event includes a keynote luncheon presentation by Minister Zheng Zeguang, Deputy Chief of Mission with the Chinese Embassy in Washington, DC. who will address US-China trade relations. The conference will also host a VIP reception the night prior with the Chinese Embassy, US Chamber of Commerce, and key community business executives to strengthen the region's ties to China.

For more information on the event or on U.S.-China trade, please contact The International Trade Center at (210) 458-2470.

Latest Conference Update

Well phones have been off the hook here and keyboards typing away as our team is preparing the top China business conference of the year for Texas on October 11th in San Antonio, Texas. Check our latest line-up below or on the website at www.businesschinaconference.org.

Welcoming

* 7:30 am - Registration and continental breakfast

* 8:30 am - Welcoming Remarks
San Antonio Mayor Phil Hardberger

* 8:35 am - US Chamber Trade Campaign
Leslie Schweitzer, Senior Trade Advisor, U.S. Chamber of Commerce, Washington, D.C., USA

Theme: The Big Picture

* 8:40 am - Talk: China Economic Foundations and Global Implications
Daniel Rosen, Principal, China Strategic Advisory, New York, New York, USA

* 9:25 am - Talk: China Business Fundamentals: An On-The-Ground Perspective
Moderator: Leslie Schweitzer, Senior Trade Advisor, US Chamber of Commerce, Washington, D.C., USA
Jeffrey Bernstein, President and CEO, Emerge Logistics Co. Ltd, Shanghai, PRC
Jeremy Haft, Author, All the Tea in China: How to Buy, Sell, and Make Money on the Mainland and Chairman of BChinaB, Washington D.C., USA
Mark Duval, Director of Business Operations, Motorola Governor, AmCham China, Beijing, PRC
Bill Weidner, President & COO, Las Vegas Sands, Las Vegas, Nevada, USA

* 11:00 am - Wén huà: Chinese Business Culture
Betsy Neidel, Founder, Blue Heron Holdings Inc., Austin, Texas, USA

* 11:35 am - Resources for Texas Businesses
William Zarit, Regional director, East Asia/Pacific, US Commercial Service, US Dept. of Commerce, Washington, D.C., USA
Robert F. Loughran, Managing Shareholder, Tindall & Foster, Houston, Texas, USA

Keynote Luncheon

* 12:15 pm - Judge Nelson Wolff, Bexar County Texas (confirmed)
Executive Director Aaron S. Demerson, Office of the Governor, Economic Development & Tourism (invited)
Honorable Zheng Zeguang, Deputy Chief of Mission, Chinese Embassy, Washington, D.C., USA (confirmed)

Theme: Precision & Velocity, Moving Boxes To and From China Panel

* 1:15 pm - Logistic Trends Panel
Fed Ex Global Services
David Mak, CEO, H&T International Transportation Ltd, Guangzhou, Guangdong Province, PRC
Jorge Canavati, VP Business Development, Port San Antonio, San Antonio, Texas, USA


Simultaneous Panels

Theme: Close-up: Successful Supplier Relationships Panel

* 2:30 pm - Finding the Right Supplier, Ed Novess, President, Port 2 Port Inc., Austin, Texas, USA
Agreements and Navigating Legal Issues by Cox, Smith, & Matthews (invited)
Foreign Exchange Risk & Impact on Your Chinese Transactions by Alberto Bilton, VP Foreign Exchange & Derivatives, JP Morgan Chase, Dallas, Texas, USA
Manufacturing Relationships & Quality Control, Alan Wm. Radke, CEO, Greener Bags, San Antonio, Texas, USA

Theme: Close-up: Selling US Products in China Panel

* 2:30 pm - Market Research: Children of Mao vs. Little Emperors, Betsy Neidel, Founder, Blue Heron Holdings, Austin, Texas, USA
Payment Methods & Risks in China, Lori Reeder, Global Trade Services, VP, Southwest Regional Manager, JP Morgan Chase, Austin, Texas, USA
Key Industry Opportunities in the Middle Kingdom, Austin Zhao, Director, Pathway to China, Houston, Texas, USA
Perspective & Experience, Brenda Hall, CEO, Bridge360, Austin, Texas, USA

4:30 pm - Networking Mixer: Business Generation and Connections

How Microsoft Conquered China

In the CNN Money July issue, it featured an article “How Microsoft conquered China”. In this article, the senior editor David Kirkpartick discussed the story how Microsoft gain its success in China in the past couple decades. For sure it was not an easy task. Microsoft tried to use the business model in China they used everywhere else but they failed miserably. They had to deal with different business customs, intellectual properties rights, government regulations and such. These are common problems that businesses have to deal with nowadays doing business with China.

Intellectual properties rights are one of the most concerned issues when it comes to business with China. ‘As Ya-Qin Zhang, who heads Microsoft’s Chinese R&D, puts it: “In China we didn’t have problems with market share. The issue is how do we translate that into revenue.”’ The problem is not that Chinese do not like to use branded products; Chinese would rather look at the dollar value. Because of that, counterfeit products are very popular. In order to solve the problem, most companies would try to take it to court but most usually result in failure. Microsoft started work with the Chinese government after legal approach has failed on them. “If a foreign company’s strategy matches with the government’s development agenda, the government will support you, even if they don’t like you.”

It is a very different game play when is comes to doing business in China. The Chinese have a unique way of doing business. Without basic understanding, billions of dollars can be lost. “It took Microsoft 15 years and billions of dollars of lost revenues to learn how to do business in China” Kirkpartick quoted Sigurd Leung in the article. Microsoft might be able to afford losing billions of dollars but most small and medium size businesses cannot afford that. Microsoft served as a very good example why research about a new market is so important.

Full article: http://money.cnn.com/magazines/fortune/fortune_archive/2007/07/23/100134488/index.htm

Judge Wolff & Bexar County ED Join BC07

BC07 is excited to confirm the participation of Bexar County Judge Nelson W. Wolff at the conference. Judge Wolff has been a great advocate in encouraging two-way international trade between Bexar County and Asia. At BC07 he will  highlight his team's efforts on increasing the County's global competitiveness as the first speaker during our luncheon.

Bexar County's Economic Development team will also actively participate in the conference as a marketing sponsor. Make sure to visit their exhibit table to meet learn about business growth opportunities and meet some of the most dynamic and global-minded economic development professionals in South Texas. In the interim, you can also visit them online at www.bexar.org/economicdevelopment.

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