China: An Opportunity Waiting to Happen for U.S. Companies

September 5, 1999

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L. Han of China Market Corp. Examines the Important Attributes of a Successful Importer

New York (USA) -- In the wake of the Asian financial crisis, China has become a major focus of the United States both politically and economically. China is an interesting market for U.S. companies for two reasons -- it represents a great opportunity for those who wish to sell products there and is also a great opportunity for companies who wish to outsource production there.
While everyone might know that China is a huge market, few are aware that China's economy maintained a growth rate of 7.9% during the Asian financial crisis. To sustain this growth countrywide, highly developed areas such as Shanghai and Beijing had to maintain double-digit growth. Subsequently, these are the most opportune areas for Americans today. F&FI has reported on such stories in past issues.
Current events aside, there have always been ideological issues between China and the U.S. Instability and political risks are always present, and have been since the beginning of trade between the two superpowers. But at the end of the day, the two countries simply cannot afford to stop trading with each other. To balance the policies, administrations past and present take a firm stand on espionage and human rights issues (to satisfy the American public), but stand firm on commerce and trade (to satisfy the "big business" lobbies).
While it may still be hard to successfully sell many products into China, it is becoming easier for the Chinese to export. Using imported machinery, more and more Chinese products are showing strong improvements in quality. But as great an opportunity as there is for outsourcing in China, there are still many obstacles to overcome. Many U.S. companies have been burned during the past several years for various reasons, resulting in a total breakdown in communication between the companies involved. Sending technicians to China to try to resolve problems still may not work, and could be very expensive as well.
It will take many years before some Chinese companies learn the necessary American standards of quality, and the importance of on-time deliveries. Miscommunication between Chinese and U.S. companies can be another major problem, and can sometimes take the profit out of a previously beneficial deal. You cannot always tell who is a trustworthy importer at first glance. To assure yourself that you are making a sound business decision, check around before you make a purchasing commitment. A bad track record should serve as a red flag.
Overall, a professional importer should have- high ethical standards; the ability to understand U.S. customers' needs; a local operation run by experienced managers; a business incorporated in China and the U.S. and run by a U.S. staff; and a global organizational structure that allows around-the-clock communication. F&FI


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