Lexington, KY - After a couple of sluggish years, Kentucky is again selling goods to world markets in record numbers. In 2011, the top three export markets for Kentucky were Canada ($6.5 billion), United Kingdom ($1.5 billion) and Mexico $1.5 billion). But rising fast at number six is China with $907 million in Kentucky exports, according to the U.S.-China Business Council and the U.S. Department of Commerce.
The council estimates that from 2000-2010, Kentucky’s growth in exports to China grew by 1,300 percent.
Kentucky’s top exports to China are not thoroughbreds, bourbon and KFC, but more mundane yet important products like chemicals, transportation equipment, machinery, waste and scrap and computers and electronics.
Last May, World Trade Center Kentucky and the U.S. Department of Commerce, with offices beside each other in downtown Lexington, collaborated to take a delegation of small business leaders to China.
“We’re already seeing contracts being signed as a result,” stated Sara Moreno, director of U.S. commercial service – Lexington, for the Commerce Department. “Companies in that delegation all had fewer than 50 employees. So this was a big deal for them to go to China and meet face-to-face with potential business partners. They came away with a good start to negotiations and some signed contracts,” she added.
For reasons of confidentiality, Moreno could not identify the companies involved in that trip. She hinted they were firms dealing in “cutting-edge science and research and development with products developed in Central Kentucky and ready to sell.”
Moreno says numerous large Kentucky companies already trade heavily with foreign nations. But the real growth for the U.S. economy will come with small and medium-sized businesses exporting, “whether they’re getting into three or four of those markets or into 40 or 50,” said Moreno.
Later this year, the Global Products Trade Centre will open in Shanghai. Backed by the Chinese government, this 3.5 million square foot, permanent trade fair site will be a one-stop, multi-functional trading platform showcasing imported products and technology from around the world. China has 1.3 billion consumers.
“With a massive, continuously-growing population, China has emerged as the world’s top spender on consumer goods across the spectrum. Statistics show the country is now the third largest importer in the world. Capitalizing on this insatiable market demand, a vast number of international companies are successful here. Today, your turn has arrived” is the promotional pitch on GPTC website.
The Chinese are interested in acquiring a large range of consumer products. Could this be an opening for Kentucky companies that make what the Chinese want?
American Will Solomon works for a small market-entry consulting firm in Beijing called US-Pacific Rim International. Its focus is to help American companies market and sell their products and services to the Chinese.
“With the American economy slowly rebuilding, I can imagine that companies are slightly risk adverse right now,” said Solomon, in an email from China. “However, the GPTC program has taken a lot of the risk out of entering China by serving as both the buying and selling agent of these products. We think this is a very exciting opportunity for American companies in general, and sincerely hope to see a lot of Kentucky companies represented.”
Brenda Foster, president of the American Chamber of Commerce in Shanghai, told Business Lexington: “I believe the Global Products Trade Centre, as envisioned, certainly could offer a ‘one stop shop’ for companies wishing to enter the China market. Companies will still need to do thorough due diligence on the market segment they wish to penetrate.”
Bob Quick, president and CEO of Commerce Lexington, said several years ago, 57 people from Central Kentucky took an eight-day familiarization tour of China, visiting four cities, including Beijing. He says Central Kentucky has some business relationships with Chinese companies but could certainly use more.
“A number of Chinese groups came over here and we met them. Hopefully, we’ll be able to establish more relationships with Chinese firms and government leaders to produce good situations here,” exclaimed Quick. “We can’t just talk globalization. We’ve got to think it and do it. We’re trying to broaden people’s exposure to the world.”
Quick touted the Kentucky Chinese American Association as a way for Chinese arrivals to get accustomed to us and perhaps make business contacts. KYCAA provides opportunities for interaction, networking, and collaboration among its members and between members and their communities.
“Chinese who come to the U.S. and Lexington know there is a group to welcome them. It’s a really good entity,” Quick said.
Moreno said China is an important market for Kentucky, but not the only one. “We have a group of companies that recently went to Brazil and sat down with a group of potential buyers. Brazil is another growing market and is important for Kentucky exporters.”
Canada and United Kingdom have a culture and language similar to the U.S. and could be easier to deal with, added Moreno.