As U.S. exports continue to increase and expand, China comes into focus

St. Louis Post Dispatch - Saturday, December 30, 2007
By Angela Tablac

At hospitals in five Chinese cities, patients with spinal cord injuries sit on therapeutic wheelchair cushions. And when patrons to several Chinese gas stations fuel up, their gas includes a fuel additive that reduces wear and tear on car engines.

The products weren't made in China. Companies in the St. Louis area manufactured and exported them, navigating a multistep process to deliver their goods.

With U.S. exporting on a torrid pace, especially given the weak dollar, fast-growing China is one of the top spots.

The country has intricate product registration requirements and other liabilities, but that hasn't stopped Missouri and Illinois companies. Shipments to mainland China from the two states have grown substantially, according to data collected by World Trade Center St. Louis. The center, which links local companies to global opportunities, is a nonprofit agency whose board members are businesspeople selected by St. Louis city and County.

Of the $52.5 billion in U.S. exports to China from January through October, Missouri's totaled $843.2 million. That's up about 35 percent from $625.9 million over the same period last year. In Illinois, exports to China through October totaled $1.6 billion, up 26 percent from $1.2 billion in 2006. Data were not available on exports from the St. Louis and Southern Illinois regions.

Randy LaBounty %u2014 director of the U.S. Export Assistance Center in Clayton, a federally funded agency that helps small- and medium-sized companies develop international markets %u2014 said reasons for the exporting boost include:

China's expanding infrastructure and construction, which requires electrical power and transportation equipment parts. Missouri and Illinois companies manufacture those pieces.
The country's entry into the World Trade Organization in 2001, reducing trade barriers on goods coming into China.
In both states, opportunities in China seem endless.

"It was too big of a market to ignore," said David Graham, chief executive of The Lubri-Loy Co. in O'Fallon, Mo. His company, a maker of fuel additives, started the process of exporting to China five years ago.

It's not easy, trade advisers said.

Although the weak dollar created a favorable exporting environment, "that doesn't mean you rush into it and you do it on the cheap," said Tim Nowak, executive director of World Trade Center St. Louis in Clayton.

It requires time, money and face-to-face meetings in China to set up and oversee distribution.

First, U.S. companies need to find distributors who will buy the U.S. products and, in turn, sell them to end users in China. The starting point is working through a key federal agency, the Commercial Service, and the network of public-private export assistance groups that operate under the World Trade Center banner.

Rick Dreyer, vice president of international sales for Gundlach Equipment Corp., said although the Belleville-based company has been exporting to China for three decades, a distribution partner is crucial when exporting to any country.

"You can't just open a U.S. office, staff it with U.S. people and hire an interpreter," said Dreyer, whose company makes size-reduction equipment for coal and industrial materials. "Any country we go to, customers are more comfortable speaking to someone who has grown up in their country, knows the language, knows the system."

After two years of searching for a Chinese distributor, Tom Borcherding and his company, The Roho Group, chose the same company they'd been using in other foreign markets: Germany-based Otto Bock HealthCare, which has an office in China.

The Roho Group, producers of therapeutic wheelchair seats and mattress overlays, also consulted a patent attorney to protect the company and its products from intellectual property violations.

Such breaches are worse in China than other countries because it has a high-production capacity for counterfeit goods and local enforcement of intellectual property is difficult, said Fred Bartelsmeyer, a partner in the downtown St. Louis office of Bryan Cave LLP who has experience with intellectual property transactions.

The Roho Group's measures included changing its product name from English to Chinese characters.

After companies address intellectual property issues and select distributors, they must register their products, depending on the type of good, with the Chinese government.

"You want to sell a product (in China), you might need two or three approving agencies," said Barry Friedman, senior commercial officer for the Commercial Service at the American embassy in Beijing.

The Roho Group worked with its distributor to gather information needed for registration. The company submitted results of its U.S. flammability tests, its European Union certification and its Food and Drug Administration registration, said Jim Collins, director of corporate compliance. Otto Bock then found Chinese labs to test whether the cushion material would cause skin sensitivity, and submitted the application packet to the Chinese government.

That process, which also included writing a report in Chinese about the products, took about a year, said Borcherding, executive vice president of global sales.

Nowak, who heads World Trade Center St. Louis, said exporting requires one more component: success in the United States. Companies shouldn't rely on one market, domestic or foreign, to survive, but selling to foreign countries isn't a solution for falling sales on the home turf.

"If your product is successful here in the U.S., then it's time to look abroad," he said.

atablac@post-dispatch.com | 314-340-8140