Resident: China Trip "Complete Waste of Money"
Sunday, August 19, 2012 • 8:02am
It was with the keenest interest which I read your article of August 15, “In Search of Business Opportunities, City Officials Weigh Trip to China in September”.
I have been visiting China and doing business there since 1986, representing dozens of United States companies. Although both my Cantonese and Mandarin are limited, three decades of almost daily communication with Chinese business people has given me a clear perspective on Asian business. Based on these experiences, my only question to the Paterson administration is, how do you expect the city to benefit from this trip? Let me try to explain this in a way that citizens who don’t do business overseas can understand.
The reason the United States has a yearly “debt” (official name is negative trade balance) to China in the hundred of billions of dollars (yes, that number is correct) is because China wants to sell goods to the United States, not buy them from us. We have bought so much product from China over the past decades that the Chinese government now owns approximately one trillion (that is $1,000,000,000,000) worth of U.S. bonds.
They can invest this money is in the world marketplace because the Chinese are largely sellers and have millions of laborers who work for two dollars a day! They are clothed, housed and fed with government subsidies and there is absolutely nothing, not solar panels or anything else which could be manufactured competitively in Paterson. Anyone reading this knows that ‘made in China’ has become the standard for manufacturing virtually every product imaginable. So, the question again becomes how can Yulin Province benefit Paterson? Sadly the answer is almost certainly that they can’t, and sending 12 Paterson residents to a trade show in China is well, politely, a complete waste of money.
Every day of the year, somewhere in China there is a trade show. The reason they invite people from all over the world is because they want to show and sell their products, not buy from anyone else. In reading some of the comments from potential Paterson attendees, I found myself musing time and again. As someone who has attended dozens of trade shows on behalf of my clients throughout China, Hong Kong, Taiwan, Tokyo, Seoul, Bangkok, Kuala Lampur, Singapore and elsewhere, I am very aware of why these are being held. They want to sell their products. Because there is obviously a lack of understanding on the part of some of the potential attendees, let me respond in an orderly fashion to some comments in the article:
1. The trip stems from an invitation extended when Yulin officials were here last Fall. Of course people from all over the world will attend. Yulin’s not paying for these trips and they want many attendees so they can show and sell their products. And by the way, business leaders from around the world will not attend as Yulin’s trade shows are not of the same caliber as the one’s in Canton, Shanghai, Hong Kong, Las Vegas or many other world class “convention” cities.
2. Paterson being “open for business….. to become the city of old again” is great, but it will not be by competing with China manufacturing. Remember, the average daily minimum wage (plus benefits, what employers call burdened costs) paid to someone in Paterson for one days work is equal to 1-3 months pay for a semi skilled Mainland China worker.
3. Those officials who felt that China has become the world’s leading economic power, need to take a refresher course in economics. Regardless of what economic figures one uses, the United States remains far and away the world’s leading economic power. China has become the world’s leading manufacturing country, largely due to their labor costs, but is still decades away from surpassing U.S. in GDP, the usual way to assess economic success.
4. “They knocked on our door and they have the money to invest”. I have not had any part in these negotiations, but what would China invest in Paterson? The only possible answer is some kind of warehousing facility where China product would be distributed to other areas in the region, but even a huge distribution site would not produce many jobs, and the Chinese would have to invest in the construction or refurbishing of a facility. Why bother when they can ship directly by boat and truck to their customers with no overhead? Of course I’m aware of European or Asian automobile manufacturers opening up plants in the U.S., but those are for entirely different reasons and my assumption is that Yulin is not producing cars.
5. “I think we should be there if they’ve invited us” - Football fans will recognize the name Plaxico Burress. He too went somewhere because he was invited. Not always a good idea.
6. “I think this can be an economic boom for the City of Paterson” - Based on what I’ve written above, if this trip leads to such a boom, I shall publicly apologize in a full page ad in this newspaper to every person whose judgment I have questioned today.
In conclusion, I must add just a few disparate thoughts.
There are unique cultural and language issues when doing business in China, and unless the entourage has someone familiar with these it makes the trip even more difficult, especially the language differences. Many Chinese people in business do speak English, but the group would be better served, if they do go, with their own Chinese interpreter.
Clearly, it seems to me, the delegation must have a clear idea of what they can offer these Chinese businesses, but unfortunately competitive labor is not one of them. Final assembly of some component parts allowing a “made or assembled in USA” might work, but there is a limited market for this.
Lastly, the cost of this trip. Ideally any delegation sends people with special expertise, not because they want to go. My experience from many many trips is that flying coach and staying in Holiday Inn quality hotels is a $3,000 - $4,000 a week per person trip, including meals, transportation and incidentals. Flying business class and staying at better hotels can easily double that to $6,000 - $8,000 or more a week. If twelve people travel, the expenditure is somewhere between $40,000 and $90,000 depending on the above variables. It seems to me for that expenditure of money one should have a firm plan on how you’re going to get your money back, not just to attend a trade show because you were invited.