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Beyond Virginia
 
Pole Vault the Great Wall - Exporting to China

Although many companies have avoided China because of concerns about marketing their products, many others have vaulted the Great Wall and are enjoying lucrative sales. In fact, China was ranked America's 3rd largest trading partner in both imports and exports in 2004.

Just like the building of the Great Wall, China's economic gains have come brick by brick over a long time. Here again history repeats itself showing how once the serious risk-takers established trade routes, many others are able to take advantage. The high growth areas of China are around Guangdong province, Shanghai, Beijing, and N.E. provinces.

Did you know?
  • China aspires to quadruple its GDP to US$4 trillion by 2020.
  • In 2004, China was ranked 3rd worldwide behind the USA and Germany for both exports ($593 billion) and imports ($561 billion).
  • Fueling their rapid economic growth, China's principal imports are:
  • electrical machinery, equipment, and parts
  • machinery and mechanical appliances and parts
  • mineral fuels & oils and products of their distillation
  • optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments/apparatus; parts & accessories
  • plastic & plastic articles
  • fabric, fiber, staple, wadding, tow, etc.
Virginia-based exporting companies should consider:
  • The United States is China's 4th largest supplier with exports of $34.7 billion in 2004.
  • China was Virginia's 5th largest export market with $608 million, but the trend for 2005 has China up 19.5% ranking fourth.
  • Leading exports via Virginia to China consist of: machinery, paper, fibers, iron & steel, electrical machinery, base metals, wood, and plastic.
  • In Hong Kong, there is an office of the VEDP Division of International Trade staffed by a local international trade professional supporting Virginia exporters.
Want to know more? Click here to download China FastFacts 2005

Why now?
The Summer Olympics of 2008 is only 3 years off and many Chinese companies will require resources to satisfy the tremendous effort to prepare for the Beijing Olympics.

Since China joined the WTO in 2001, the government is effecting regulatory changes that will allow it to fulfill its obligations and ultimately improve its socio-economic structure while increasing GDP. Beijing will be focusing on Western China which has been migrating into the Eastern coastal cities. A U.S.-based company establishing itself now will have in-roads into the upgrading of this western region.

In July 2005, after years of contention, The Bank of China has revalued the Yuan in response to pressure from several countries including the U.S. Compared to the U.S. Dollar, the fixed exchanged rate appreciated by 2.1% and will be managed based on a basket of world currencies. Although some analysts saw this as a first step, the BOC remains ambiguous on any further increases, but will now allow a float range of 0.3% daily. An increase of the Yuan compared to the Dollar is seen as benefiting exporters because it makes their Virginia products cheaper to Chinese companies.

In order to export so many "Made in China" products, Chinese firms need to buy machines and raw materials from abroad. Virginia companies can provide these inputs. Also, the Chinese population is becoming more affluent. As their income rises, preferences for U.S.-branded products will increase.

How do you get started?
If you do not already have sales in China, you should consider streaming into the vast amount of inputs and resources. Now is the time to open a channel with help from a VEDP Trade Manager here and in China.

Drop by Drop Makes the Lake

If you are serious about exporting to China, consider these four steps.

First, get background data on your product going into China. The VEDP's research staff can help you understand what is going to China from the US and other countries. Contact your local International Trade Manager or email ITR@YesVirginia.org.

Second, complete a Global Market Research project to confirm market information and survey prospects. A GMR is primary research done by in-country consultants within 70 days. It is subsidized and guaranteed by the VEDP! For more details, visit the programs tab of our website at www.ExportVirginia.org or click here:

Third, in September, at our annual Virginia Walkabout, meet our Hong Kong-based International Trade Manager, Hailey Fong, who will be visiting Virginia companies. Take this opportunity to meet with him and ask questions. Click here for more details:

Fourth, join us on a Trade Mission to Shanghai and Hong Kong, November 4-12, 2005. Let the VEDP international trade professionals coordinate your travel, pre-screen prospects, and schedule meetings so your investment is fruitful. Click here for more details:

Kim Weir will be the Trade Mission leader for this upcoming trip to China and she will gladly provide you with more detailed information about the Trade Mission opportunities. Kim has led many previous missions and is also the Assistant Director of International Trade Division of the VEDP. Feel free to contact her at: kweir@yesvirgina.org or 804-371-0630.

Don't miss this opportunity - space is limited! Click here for more details: You can Register online for this event before September 9, 2005.

Export success in China will follow four easy steps.

"The journey of a thousand miles begins with one step", said Chinese philosopher, Lao Tzu.

For more information on the VEDP, please visit our website at: www.ExportVirginia.org

Sources:
  1. World Trade Atlas. U.S. State Export Edition. Annual 2004. Global Trade Information Systems. www.gtis.com/state
  2. Comtrade. Commodity Trade Statistics Database. Annual 2004. United Nations Statistics Division. http://unstats.un.org/unsd/comtrade/
  3. World Economic Forum. "China Next Phase of Modernization: Creating Scientific and Sustainable Solutions - Executive Summary". May 2005. www.weforum.org