EVERETT – Chinese President Hu Jintao declared his country open for business on Wednesday.
“China has a huge market and big demand for America’s advanced technologies and management expertise,” Hu said. “I hope the American companies will seize the opportunities.”
But companies already operating there say American companies need to pack more than their passports and checkbooks when setting up shop in China.
“Success in the U.S. is not an entitlement in China,” Starbucks Chairman Howard Schultz said. “You’ve got to earn it, and earn it the right way.”
Washington businesses already sell a lot of products in China – more than $5 billion worth in 2005 alone. Much of that is due to the Boeing Co., but the state also benefits from trade in agricultural products including apples and wheat.
Highline Community College professor T.M. Sell said there are also great opportunities in new sectors – environmental control technology and finance in particular.
China is “a rolling environmental disaster,” Sell said. The country has industrialized rapidly with little regard for pollution controls.
American financial service companies are better than their Chinese counterparts, Sell said last week.
Forty years of communism has skewed the economy, he said, and the most talented and ambitious people don’t go into business, they go into government administration.
“There are not rewards for what we’d regard as normal commercial activity,” Sell said.
As a result, American service businesses will have an advantage in China.
American financial services companies in particular see China as an expanding market, said Fred Kiga, a spokesman for Russell Investment Group.
“Just phenomenal,” Kiga said. Hu’s visit “hopefully will generate some relationships.”
Flow International chief executive Stephen Light said his company is seeing 50 percent annual growth in sales of its water-jet cutting technology to China.
Flow benefited from conversations with Hu and his entourage, Light said. “We are very optimistic.”
Chinese businesses would buy more American products if U.S. border policies were changed, former Gov. Gary Locke said.
The problem is “cumbersome, inefficient visa problems” that he said prevent Chinese from coming here to do business. Locke said he expects Hu to broach the issue with President Bush when they meet today.
“That’s why this visit is so important,” Locke said.
However, succeeding in China means doing business the Chinese way, state business leaders said. Relationships are key to doing business in all of Asia, but they are particularly important in China, said Larry Dickenson, Boeing’s senior salesman in the Asia-Pacific region.
Boeing may build airplanes, but “we’re in the people business,” he said prior to Hu’s visit. “We’re telling people about what our products will do. There has to be trust … it’s how you feel about each other.”
Schultz noted that Starbucks has grown from a single Beijing shop in 1999 to a network of 238 now. The secret was “respecting the consumer and the culture,” Schultz said.
“Especially in a country like China,” he said, “you have humbly to earn their respect and gain their trust.”
One of Starbucks’ first acts in China was to create a $5 million scholarship fund for disadvantaged children. The company did it “not just to issue a press release” but to show that it was committed to balancing profit and social conscience.
And perhaps Washington companies will have an advantage in that area as well, Schultz said.
“This is what we believe is the right thing,” he said. “That’s part of our Northwest values.”
Reporter Bryan Corliss: 425-339-3454 or corliss@heraldnet.com.
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