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Exporting to China: How the US Commercial Service can Help

By Thomas Moore

When Ditmar Gorges, executive vice president of Falcon Waterfree Technologies, was looking to establish critical partnerships and to develop sales in China, he received help from the U.S. Commercial Service, a unit of the U.S. Department of Commerce.

A Los Angeles-based manufacturer of patented waterless urinal systems, Falcon’s unique products reduce water usage in buildings with public restrooms, translating into significant cost savings for building owners in terms of water treatment.  Utilizing export assistance from Commercial Service offices in Newport Beach, Calif.; Shanghai; and Beijing, Gorges benefited from customized market-entry strategies and intensive market research and promotion. This included meetings with senior Chinese government officials in Nanjing, the capital of Jiangsu Province, where he discussed ways of incorporating his product into their existing environmental plans. As a result of this high-level exposure, Gorges signed an agreement in December 2003 with JohnsonDiversey China, a subsidiary of Sturtevant, Wis.-based JohnsonDiversey for a guaranteed minimum sale of 225,000 urinals valued at more than $3 million.  Falcon also expects to sell housings for the porcelain basins and other accessories to American Standard in the near future.

These are just some of the very successful outcomes for Falcon Waterfree Technologies.  With the help of the Commercial Service, Falcon was able to get a foothold for the retrofit of Beijing’s Capital Airport and Worker Stadium. It continues to develop strong sales in China by leveraging its product offering with assistance from the U.S. Commercial Service worldwide network.  Many U.S. firms continue to explore new opportunities in China, the fastest-growing export market for U.S.-made goods and services. U.S. exports to China grew more than 22 percent in 2004 to $34.7 billion. Meanwhile, China’s economy grew 9.5 percent and is expected to grow 7 to 9 percent annually over the next four years.

With statistics like these, it’s easy to see why some U.S. companies leap into the China market without first doing the necessary homework. Doing business in China can be more challenging than many people might ever imagine. Gorges knew this and that’s one of the main reasons Falcon has been so successful in China. That’s why the U.S. Commercial Service is here to help you determine whether China is the right export market for your business at this time.

The Commercial Service’s primary mission is to help small and medium-sized companies export. Now in its 25th year, the Commercial Service network has grown to include 108 domestic U.S. Export Assistance Centers and more than 150 overseas posts in more than 80 countries. The Commercial Service offers a wide range of services from export counseling and pre-arranged overseas appointments to customized market research, trade missions, trade fairs and so much more. We have five posts in China: Beijing, Shanghai, Guangzhou, Shenyang and Chengdu.

Some of the concerns of doing business in China include the sanctity of contracts, repatriation of profits, government interference and overall lack of market transparency. The exact set of laws that can apply to your company might not always be easy to find, or drafted in a way that make these laws easy to understand. Commercial Service officers can assist in this regard by identifying relevant regulations and referring you to a reputable local attorney who can offer an opinion on the interpretation and application of Chinese law to your transaction and business objectives.  China’s web of regulatory requirements is complex. U.S. companies are required to obtain various safety, health and quality assurance licenses if they want to export their goods to China.

Products that require some kind of regulatory approval in the U.S. will almost always require some kind of similar regulatory approval for sale in China.  However, to be certain your product needs regulatory approval for export to China, you should contact your nearest U.S. Export Assistance Center.  You can do some of your own due diligence on any potential Chinese business partner’s financial circumstances, local reputation, trade experience and other matters through our International Company Profile and International Partner Search programs.

China Business Information Center

Last fall, the Commercial Service launched the first comprehensive federal government resource for doing business in the China market: the China Business Information Center. This initiative was introduced to American businesses through outreach seminars across the U.S. and the creation of a dedicated Web site that averages thousands of hits per month. The  China Business Information Web site, www.export.gov/china, provides businesses with everything from market information and trade leads to best prospects for exports to China, upcoming trade missions and trade shows, domestic outreach events and much, much more. The online China Business Information Center clearly details all the Commercial Service programs and services referenced in this article.  U.S. exporters can use this Web site to assess market readiness. Visit the site’s home page and click on “Are you China ready?” We look forward to helping you determine whether China is the right export market for you. And if it does end up being the right market for you, we’ll be there to help you through it and to help you maximize your sales.

Thomas Moore is acting director-general of the U.S. Commercial Service.  For more information on the Commercial Service, including where to find the Export Assistance Center nearest you, visit the organization’s Web site at http://www.export.gov/china.

Webmasters note:

This article appeared in the July 4th edition of Shipping Digest, www.shippingdigest.com.

For additional information on the China market, please see:

  • China: Look Before You Leap - Since adopting market reforms in 1978, China has been among the world's fastest growing economies. This has led to dramatic developments in America's commercial relationship with China. 
  • Exporting to China: New Opportunities, New Resources  - On February 1, China celebrated the Chinese New Year: the Year of the Sheep. U.S. companies that export to China also had reasons to celebrate. In 2002—China’s first full year as a member of the World Trade Organization—U.S. exports to China increased significantly. U.S. exports to China in 2002 rose 12 percent in comparison with the previous year. Since 1990, American exports to China have more than doubled to over $21 billion a year.

  • Marketing in China: Opportunities and Challenges  - The opportunities present in the China market are real; as real as the challenges the market presents to American companies looking to grow sales.

  • Turley's Tips - Written by former US Senior Commercial Officer, Alan Turley, this handy series of tips will help assure your success in this difficult market.
  • China WebGuide - The following is a web-enhanced article that appeared in the US Department of Commerce publication, "Export America".  The WebGuide, compiled by the Ypsilanti Export Assistance Center, is meant to provide an overview into the many sources of information which must be considered in making a business decision. 

Date Updated: March 27, 2007

 
 

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