The Albany Times-Union
By BILL MARCUS
SHANGHAI – Oliver Lu, the general manager of Niskayuna-based SI Group’s plant here, was outlining plans to Shanghai environmental protection bureau officials last July when he said he thought he saw the blood run out of his listeners’ faces.
“They heard ‘formaldehyde,’ and they said, ‘Oh, it’s a dangerous chemical!,”’ Lu recalled. The inspectors, unfamiliar with the century-old company’s record of compliance back in New York state, didn’t want to lose face, he said. “So they checked the rules to find the most strict one.”
Had New York State had a trade office representative, Lu said, it could have intervened and cleared up the authorities’ concerns. Instead, it took months of dinners, office visits and other efforts to get the necessary permits for a new production process.
SI Group, the former Schenectady International, has plants throughout the world, including the one in Shanghai, that produce resins and other advanced plastics. The Shanghai plant last year contributed $25 million of the company’s overall revenues of $1 billion.
If all goes well, other companies seeking to do business in China may be able to avoid the hurdle SI Group faced, thanks to a new trade representative’s office that Empire State Development Corp. plans to open there later this year.
Helping New York companies, such as SI Group, bring their products into China and encouraging investors to look for opportunities in New York, especially its real estate, will be the office’s goal, said Daniel Gundersen, chairman of Empire State Development’s upstate operations.
The state Legislature appropriated $200,000 last month to establish the office.
Gundersen, who steered similar China efforts for Maryland and Pennsylvania, said New York’s China trade representative will help local companies research the market, find suppliers and distributors, and get paid.
“Sometimes it’s as simple as providing translating services or introducing a company to a trade show where their product can be introduced to market,” he said.
China won’t allow states to represent themselves, so the states must contract with local consultants, said Jonathan M. Heimer, acting principal commercial officer for the U.S. consulate general in Shanghai.
New York has sought the China trade representative “for a long time,” said Jinshui Zhang, international program manager for the New York State Small Business Development Center in Albany. Small and mid-sized entrepreneurs … the people for whom he finds counterparts in China … pressured lawmakers for the appropriation, Zhang said.
“A trade rep would be a huge benefit for us in the Shanghai area. It would be a conduit to help us find some oversea buyers,” said Jim Dalpe, of WAM Trading Co. LLC of Ballston Spa, which markets jeans in China designed by Recycled Jeans Inc. of Latham and manufactured by Standard Manufacturing Co. of Troy.
But New York is a late arrival. The number of American states, cities and authorities represented in China grew from zero to more than two dozen during the last 10 years as China’s economy ballooned.
Its gross domestic product grew by 10.7 percent last year alone, the equivalent of more than $2 trillion, putting it on course to eclipse Germany as the third-largest economy in the world, after the United States and Japan.
“The state government has never really capitalized on the history of relationships between New York and China with any kind of organized economic development strategy,” said Kathryn S. Wylde, president and CEO of the Partnership for New York City, a nonprofit business organization founded in 1979 by David Rockefeller.
Wylde said the financial community began lobbying for a New York trade office in China after the Sept. 11 attacks, fearing that clients, customers and business relationships were slipping away from New York.
When Chinese companies began to be listed on the stock exchange of London, which, unlike North America, shares its business day with Asia, “that got everybody’s attention,” said Wylde.
A corporate task force assembled by New York City Mayor Michael Bloomberg argued for the state to sell Wall Street as the Western “capital of capitalism” so companies from China would headquarter and raise capital there, she said.
After returning from a trade mission to China in late 2005, then-Gov. George Pataki promised to establish an ESDC office and added a China expert to its staff.
A consortium of states called the Eastern Trade Council represented New York in China but produced negligible results, ESDC officials said.
Another downstate push came from Senate Minority Leader Malcolm Smith, who led his own China trade mission for mid-sized Chinese retail merchants in his Queens district.
Upstate dairy farmers, meanwhile, are represented through offices operated by the U.S. Department of Agriculture at the U.S. embassy and consulates in China.
And Agri-Mark Inc., a dairy farmer-owned cooperative whose 725 New York members make up more than half the organization, also represents their interests in China.
“A New York trade office in China would be of limited value because we’re veterans in the marketplace,” said Peter Gutierrez, Agri-Mark’s international sales director, from his Onalaska, Wis., office. “We know who the players are and the players know who we are.”
While dairy products are perishable, some cheeses do get exported, mostly from the West Coast, where manufacturers face lower shipping costs.
Trade offices usually focus on durable goods, not agricultural products or commodities, Gutierrez said. However, he added that he did see opportunities for agricultural joint ventures and a market that would fill the seats in upstate university agricultural programs.
“In the U.S., we have many generations of family in the dairy business. These kids start up early learning how to handle milk,” Gutierrez said. “In China, there are such families, but there aren’t very many of them.”
And the education market isn’t limited to agriculture.
“Education here … it’s a growth industry. Year over year 25 percent,” said the U.S. consulate’s Heimer, whose office reported a 34 percent growth in 2006 applicants over 2004. Last year the United States rolled out the red carpet for 17,000 Chinese students … approximately seven out of eight who applied, visa officials at the consulate said.
But, in part because the state’s university systems are decentralized, consultants representing New York in China won’t be selling SUNY, CUNY or the state’s private college and university sectors, said ESDC’s Gundersen.
“One of the things that we’d need to be concerned about is that we don’t encourage too much relationship that is one way,” said Gundersen, where “the Chinese would come and profit from the knowledge that we have to offer without our businesses and institutions receiving some gain as well.”
Also, unlike Vermont, Nevada and Hawaii, New York’s China office won’t market tourism, he said.
Link to original Albany Times-Union article: Sending Trade Reps Far East