Trade mission to China explores business opportunities for American building material companies

Construction Review, March-April, 1988 by Patrick H. MacAuley

Trade Mission to China Explores Business Opportunities for American Building Material Companies

During the 1980's China has instituted major changes to promote economic development and raise living standards for its one billion people. The most dramatic of these changes have been internal economic liberalizations and increased economic dealings with Western countries. In this spirit the United States and China signed the Industrial Technological Cooperation Accord (ITCA) in 1985.

Part of the ITCA agreement allows the Department of Commerce to organize executive-level trade missions to China. These missions enable U.S. executives to make crucial contacts with high-level Chinese officials, to learn about trade opportunities, and to gain insights into the way business is done in China. The Commerce Department is leading a series of these trade missions, which are focussed on specific industries such as computers, scientific equipment, and building materials.

Michael T. Kelley, Deputy Assistant Secretary for Basic Industries, led the first delegation of U.S. building products manufacturers to China in March. The five U.S. companies that participated produce a variety of building products, such as pre-engineered metal buildings, vinyl floor tiles, vinyl windows, wood treatment chemicals, aluminum windows and doors, and silicone sealants. Commercial officers at the U.S. embassy discussed these products in advance with Chinese officials to ascertain that there was interest in them.

The Chinese proved to be exceptional hosts, beginning with a welcoming banquet at the Great Hall of the People that was attended by numerous dignitaries, including Minister Lin Han Xiong and U.S. Ambassador Winston Lord. The delegation was also escorted on eleven plant tours, a variety of banquets, and visits to the Great Wall of China, the Forbidden City, and the Emperors' Summer Palace.

The trade mission concentrated on the Beijing-Tianjin corridor of Northeastern China, which is one of the most logical regions for U.S. firms to start business in. Beijing, formerly Peking, is the national capital with a population of about 8 million. Tianjin, formerly Tientsin, is a major port approximately seventy miles southeast of Beijing, with a population of about 5 million. Beijing is easily accessable, has good support services for Western business people, and is conveniently close to important Chinese officials. Tianjin has excellent port facilities, a very liberal economic development zone, good support services, and is fairly close to Beijing.

In addition to the scheduled group activities, numerous meetings were arranged in which the business participants could meet with key Chinese officials and to discuss business ventures. Most of the businessmen agreed that there are numerous potential opportunities in China, although transactions are greatly hampered by regulations, currency controls, and the different way of doing business in China.

The Commerce Department members of the trade mission also had the opportunity to meet with their counterparts in the Chinese government. These personal contacts are of great importance in China, and the establishment of cordial working arrangements between Commerce officials and their Chinese counterparts is a major long-term benefit of this mission.

A follow-up result of the mission has been to clear the way for a feasibility study for a 40,000 square foot wooden building to be built in China as a demonstration project. This project is intended to stimulate Chinese demand for wood as a building material by showing the efficiency of wooden buildings and demonstrating modern U.S. construction techniques.

Other follow-up work related to the trade mission has included assistance to the U.S. companies who participate in the mission. The commercial section of the U.S. embassy in Beijing has helped U.S. businesses pursue leads they established in China, while ITA staff in Washington have supplied economic data and information regarding exporter assistance. The Commerce Department has also contacted several U.S. firms that the Chinese expressed interest in doing business with.

Impressions of Chinese Business

Most members of the mission were surprised at the huge amount of construction underway in China. China's GNP has increased by nearly 10 percent annually for the past 3 years, and construction has been a major aspect of this growth. The apartment building boom is particularly noticeable, as the nation builds more and better housing. In addition there is considerable activity in building hotels, factories, and roads. The Chinese construction industry employs more than 10 million construction workers, and sustains a huge building products industry.

The 11 factories that the mission visited produce a broad range of building products, including gypsum board, aluminum windows, asphalt shingles, and metal building panels. These plants are among the most modern factories in China, and many of them were using imported technology. Some of the factories were operated very efficiently, while several seemed uncompetitive by Western standards. Most of the factory managers expressed interest in joint ventures or other business arrangements with American companies.