China has its share of well-documented trade barriers, from undervaluing its currency to weak protection of intellectual property. But before you write it off as a trade bandit happy to sell you its stuff but unwilling to buy yours, consider this nugget.
German companies export three times as much to China as U.S. firms do, when adjusting for the size of the German economy. Japanese companies do even better, sending five times as much to the Middle Kingdom as their American counterparts.
In light of the ballooning U.S. trade deficit, that's a very interesting figure. It leads to the obvious question: Why do firms in those two countries seem to have more success in penetrating China's opaque market?
According to the American Chamber of Commerce in Beijing — which put those German and Japanese figures in its May 16 white paper on U.S.-China trade policy — those countries are simply much better exporters than the United States.
They have much stronger government agencies to help their firms, and they have visa and export rules that are much easier for the Chinese to deal with, particularly since the U.S. government tightened up its borders after Sept. 11.
“U.S. exporters are trailing the competition in capturing China market share,” the AmCham bluntly warned. “We believe that is partially due to systematic government and private sector promotion agencies. For example, Japan and Germany each have substantial government offices and industry organizations to promote trade.
“America ends up ceding market share to competitor countries because those countries devote substantially more to the task,” it said.
In particular, the AmCham said understaffed U.S. visa offices and cumbersome rules “unwittingly” drive potential customers away. The group said a survey of members had 44 percent of respondents claiming U.S. visa issues cost them “significant sales” in China.
The chamber said U.S. export restrictions put too much emphasis on potential military concerns without considering commercial implications. And it cited the U.S. government's own 2005 National Export Strategy report, which said the U.S. ranks next to last among competitors in spending on export promotion.
Of course, that's just part of the report, and the AmCham devoted a lot of ink to critiquing both governments. It offered plenty of on-the-money criticism of China, including continuing weakness on intellectual property protection.
As well, the comparison with Germany and Japan is multilayered. A lot of German exports are machinery, where that country is particularly strong, and Japanese firms probably enjoy an advantage in China because of proximity and cultural familiarity.
For America, security issues are a high priority, and that's going to impose more complexity on dealing with these issues than other countries face.
But clearly, one way to read the AmCham report is to see it as a call for the U.S. to improve itself by shoring up serious deficiencies in trade promotion and rethinking its visa policies.
Unfortunately, large U.S. budget deficits make that tougher. And personally, looking at the big picture, I don't think a government that passes tax cuts while its misplaced priorities force it to spend billions on a war in Iraq has the focus it needs for that. But I'd like to be proved wrong.
Steve Toloken is a Plastics News correspondent based in Hong Kong.
