State helps small, midsized companies to target China market
September 29, 2010 4:00 AM
Lois McElwee, the regional manager of Busch International, checks her e-mail in her office at the company''s Wexford headquarters.
By Liyan Qi
As a manager of a local equipment supplier, Lois McElwee had four separate appointments one day early this month with Pennsylvania's trade representatives from China, Mexico, Brazil and Saudi Arabia. She didn't need to travel far because they were all gathered at the David L. Lawrence Convention Center during the annual Pennsylvania International Week organized by the state government.
In between two appointments in the morning, Ms. McElwee had a conversation with John Curry, the head of a local telecommunications service company.
The two companies are in different industries but they have something in common: They're both interested in the Chinese market.
Local small and midsized companies have experience and technologies that can be attractive to Chinese companies, but a lack of resources to explore the international market can hold them back. That's why the state is taking a role in helping these companies identify the right market and find the right partners.
"It's well known that large companies like Westinghouse have signed big contracts with China, but what people don't really know is that there are more dynamics going on among local small and midsized companies," said Louis Schwartz, president of the China Strategies, a Pittsburgh-based company that advises on doing business with China.
The state's international trade programs target small and mid-sized companies, according to Wilfred Muskens, deputy secretary for International Business Development, which is under the Pennsylvania Department of Community and Economic Development.
"They're the ones that really need assistance," Mr. Muskens said. "They need assistance on their ground from somebody who can really help them, take them by the hand and introduce them to the right people."
Small and midsized companies may even qualify for state funding, such as the Market Access Grant, which pays for half of the cost to travel to China with a limit of $3,000 per company per year, according to Mr. Muskens.
"It's very small amount, but for small companies it's very substantial. It really helps them make the decision to go to certain trade shows that they probably wouldn't otherwise do," he said.
From June 2009 to June 2010, Pennsylvania's exports to China grew 66 percent, making that nation the state's second-largest export market after Canada, according to the DCED.
"The statistics represent a trend. The past few years have seen leapfrog growth of Pennsylvania's exports to China," said Steven Zou, a state trade representative in Beijing.
Pittsburgh's export sales to China grew 78.9 percent from 2005 to 2008, the fastest among individual destination countries, according to a report from the International Trade Administration. The statistics are available on the website of the Allegheny Conference on Community Development.
"The companies that have been doing sourcing in China begin looking to export," said Daniel Joseph, a global adviser at PNC Financial Services Group, in part because there is strong demand from Chinese manufacturers.
Ms. McElwee said that's true of McCandless-based Busch International, which specializes in environment pollution control equipment for the metal industry.
Busch International has had business relationships with some independently owned Chinese companies, such as Asia Aluminum.
But it wants to work with the government-owned metal companies, said Ms. McElwee, the company's regional manager.
"Actually, I was very fortunate. [Mr. Zou] has experience in the steel industry in China. So he could offer some very good firsthand advice on how we might be able to work with China and made some recommendations on how we could approach the Chinese market," she said.
Busch believes its experience in dealing with environmental issues in Pittsburgh since 1949 will translate well in China.
"There's a parallel between Pittsburgh in the 1940s, '50s and '60s, and China today," said Mr. Schwartz, of China Strategies. "Now it's at a point where it needs to do what Pittsburgh did: to clean up its environment. There are opportunities for companies involved in environment remediation and environment assessment."
Christopher Ryan, president of Geo-Solutions, an environmental company based in New Kensington, agrees.
"Clearly, China is about maybe 30 years behind the U.S. discovering the problems and then treating them," Mr. Ryan said. "The problems are very similar to the ones we had here in terms of former industrial sites that had been abandoned and contaminated and need to be cleaned up and returned to useful production."
This year, Geo-Solutions signed a five-year agreement to help clean up China's industrial sites with BCEG Environmental Remediation, a subsidiary of Chinese construction giant Beijing Construction Engineering Group, and Brisea Engineering Services of Parsippany, N.J.
Despite the benefits of doing business with China, local companies need to do their homework before they enter a foreign market.
"More business will fail if they do it in a rush," said Brent Rondon, manager of the Global Business Program at the Small Business Development Center of Duquesne University.
That's why John Curry from InteleChoice, a voiceover IP service provider in Monroeville, planned to share a list of the companies in China that he's interested in with Jim Curtis, the trade representative from Shanghai.
"He'll find out if they were a stable company or a legitimate company so that I'll feel more comfortable to do business with them," Mr. Curry said.
"For small and midsized companies, it's more about do you have a unique product? If there is a market in China or elsewhere in the world, we can help you explore the market," Mr. Curtis said.
Liyan Qi is a graduate student majoring in journalism at Point Park University.