Asia Trade Mission Update: Day 2

Monday, September 7, 2009

My first full day in China. Beyond jet lag, the learning curve is steep, but fascinating. When is it safe to be in the cross walks and which end of the chop sticks do you hold for reaching into the bowl? Even more important, however, is learning about and understanding the needs of Chinese business. This is necessary if we expect to attract their investment to our region.

I was fortunate to meet with an officer today from an international bank located in Shanghai. He guided me to focus on the business sectors where we are strongest and to understand what we offer as an opportunity to corresponding firms. His guidance was practical and an important reminder: "Know yourself and know your investors." He explained that international work is not a strength for Chinese. They are impeded by strong cultural differences which go well beyond simple language barriers. The differences in cultural history, legal and business practices produce hesitant reactions to overtures for foreign investment. Despite this reservation, many Chinese firms understand they must grow beyond their own markets or ultimately be left behind in global competition. While these firms are talented, well educated and willing to learn, they are not yet confident outside their borders.

This hesitance can be noted even with current suppliers to US firms operating in China who may not be comfortable in operating beyond their state borders. One long term supplier to Cummins was heard to say that they do not foresee operating in the US for several years.

This leads me to believe that the Chinese may be much more likely to acquire or merge than to start new. They will value partnerships that offer market experience to manage their direct risk exposure from uncharted business systems. Such was the case for CIMC which we visited today. This company is the largest overseas shipping container manufacturer in the world holding enormous shares of the dry and refrigerated container markets. Several years ago they acquired Vanguard National Trailers in Indiana to leverage not only their manufacturing skills but their presence in the US markets.

The central point in today's experience was the necessity to continue our mission of answering the question: What is it that northeast Indiana offers as a strategic advantage to Chinese firms when they are ready for US market entry? This is the question we are here to explore.

-John Sampson