Wednesday, September 20, 2000

Trade with China will take a long time

Despite easing rules, barriers remain

By John J. Byczkowski
The Cincinnati Enquirer

        The Chinese found Bill Hogan's Willow Ridge Plastics in Erlanger, and he hopes they come back for more.

        But Mr. Hogan has this advice for others seeking to follow his company: “Plan on a long haul.”

        The tiny company, with 10 employees, makes a chemical additive for plastics that makes them biodegradable. The Chinese have a problem with “white pollution” — plastic food containers strewn along railroad tracks — and located Willow Ridge to buy its technology.

        “We made a technology transfer, and set up a plant for people in China,” Mr. Hogan said. “They're making product now in China.”

Rough road remains

        The trade bill passed by the Senate on Tuesday, normalizing trade with China, will open doors for U.S. businesses. But there may be some bumpy roads beyond those doors.

        Willow Ridge's local agent for international sales heard the Chinese were looking for the technology that the company developed. “We worked three to four years on a contract,” Mr. Hogan said. “It took several visits, interpretations and misinterpretations.”

        The language and cultural differences caused a few problems, but “we found the people to be very warm and friendly,” he said. “We're very happy with the profitability, the exposure we're getting worldwide, and with the relationships we've formed over the years.”

Cultural differences

        Few expect a rush of trade into China, in part because of the way business is done there.

        “Contracts are made, signed and then rewritten on a regular basis,” Mr. Hogan explained.

        “It takes some trust. You have to understand their culture, and work with them. There is some natural mistrust between the people of the United States and the people of China.”

        With the plant up and running, Mr. Hogan said, he's working on other technology sales to China. “We're quite proud of being just a small company in Kentucky (and) being able to do business that far away,” he said.
       Impact of the bill

        China currently is not an important market for Cincinnati companies. Exports were just $53.3 million in 1998 — less than 1 percent of the total annual exports by Cincinnati area companies of $6.7 billion, according to the International Trade Administration.

        But when all the changes under the trade bill are made around 2005, trading with China will be little different than dealing with Germany or England or Japan, supporters say.

        The pact will:

        • Reduce tariffs for goods coming into China.

        • End the Byzantine distribution system that prevented foreign companies from selling directly to customers in China.

        • Allow stronger legal protections for intellectual property.

        • Abolish Chinese import quotas and licenses.

        • Allow businesses to invest in Chinese banking, telecommunications and Internet companies.
       Sources: Enquirer research, Seattle Post-Intelligencer

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