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Miami leaps forward to China business in 2007 10 Apr 2000
Miami leaps forward to China business in 2007 10 Apr 2000
Miami-based companies like Market America are heading for Asia.

Miami companies are involved in a major initiative in 2007 to use Hong Kong as a launch pad to the Chinese mainland and Asian markets, from comments made by Miami trade promotion agencies and corporations canvassed in the past few weeks.

This month sees the Port of Miami send a business delegation to the Chinese mainland, while Hong Kong is taken as a key centre for developing contacts and initiatives for another large Miami delegation in November.

"Utilising Hong Kong as a gateway to Asia in general, and the greater China market in particular, is a 'no-brainer'," says Manny Mencia, senior vice president, International Trade & Business Development of Enterprise Florida, the official economic development agency for that state.

Mencia: consider Hong Kong.

Though he spends his days trying to attract international business to Miami, Mencia says: "I would advise Florida companies that are looking to penetrate the Chinese market to consider Hong Kong as the logical gateway and the location to manage operations."

"Hong Kong has a tremendous service support infrastructure, and a wealth of knowledge-based service providers that specialise in the Chinese market. There's also a labour that speaks multiple languages - not just Mandarin but also the different dialects of China, and the area is a great trans-shipping centre."

These factors can go a long way to facilitate successful market entry for small- and medium-sized companies, particularly if their efforts are not focused on one area of China, Mencia believes.

Xavier Gonzalez' Beacon Council is another organisation that works to bring businesses into Miami. But he says he's seeing more and more of them considering China operations.

"Miami and [other] Florida companies are trying to tap into Asia, particularly the booming China market," says Gonzalez, a Beacon Council communications official for Miami's economic development agency.

And no wonder. Enterprise Florida says the Sunshine State's trade with China grew 31.9% from 2004 to 2005, climbing from US$3.5 billion to US$4.7 billion. The increased trade volume made the Chinese mainland Florida's fifth largest trading partner.

Hong Kong showed a double-digit increase in the same period as well.

The SAR achieved a 15.6% gain with a dollar volume increase from US$319 million to US$369 million, making Hong Kong Florida 46th largest trading partner.

That followed a jump of 23.4% from 2003 to 2004, when dollar volumes rose from US$258 million to US$319 million, Enterprise Florida says.

Trade going the other way is proving to be robust too, according to Enterprise Florida:

  • Top Florida exports to the Chinese mainland are fertilizers and aluminum waste and scrap. China's top exports to Florida are automatic data processing machines, magnetic readers, luggage and handbags.
  • Major Florida exports to Hong Kong are passenger transport vehicles and electronic integrated circuits.

Meanwhile, Hong Kong's top exports to Florida are data processing machines, magnetic readers and parts for office machinery.

China push to increase ties

Miami team: Association plans return.

Gonzalez says the Beacon Council will take part in the Port of Miami's trip to China in April 2007, in preparation for a full-fledged mission later in the year.

"We'll take a full delegation - five to 20 people - to China as part of this business development mission," he reports.

The group will comprise public officials, local business people, and Beacon Council staff.

Meanwhile, the success of business missions to Hong Kong and the Chinese mainland over the past two years has led the Association of Bi-National Chambers of Commerce in Florida to make plans for a return to Hong Kong and China in November 2007.

Haeger: assistance in Hong Kong.

The 10-year-old Miami-based organisation represents 40 national chambers of commerce and has made Hong Kong and the Mainland its lone destinations since deciding to begin taking Pacific Rim trips in 2005, said Lita Haeger, the business organization's CEO/president and representative of the Swedish American Chamber of Commerce.

Korea and Japan lobbied heavily to make their countries the principal destinations, she says. The assistance which the association's 46-member delegation received in Hong Kong on its November 2006 trip, especially from the HKTDC, helped give the nod to Hong Kong and the Chinese mainland, Haeger explains.

The HKTDC, she says, "understands our way of doing business and that we expect to do business" during the trade trips.

"We were made very comfortable. Everybody is pretty much looking to [the Chinese mainland] but with the help of Hong Kong."

The Association of Bi-National Chambers of Commerce in Florida serves as an umbrella organisation for the Miami-based Florida China Chamber of Commerce and nearly four dozen other bi-national chambers from around the Sunshine State.

The Florida organisation represents about 8,000 members, says Haeger.

Schutte: strong interest from South East Asia.

Bernhard Schutte, chairman and chief negotiator of business consulting firm EBM International, was the busiest of the mission delegates.

Schutte believes he found strong interest from South East Asian companies wanting to penetrate the US, Latin American and Caribbean markets by establishing offices with South Florida as the hub.

"We had 26 appointments before we got there," says Schutte, whose 12-year-old firm is based in Fort Lauderdale and devotes a lot of its work to Chinese medical equipment manufacturers.

The firm screened each company that asked for an appointment to ensure its finances, infrastructure and business plan were right for international business.

The companies represented a range of sectors, and included a company that makes customised mosaics. Schutte says he likes the prospects for the mosaic maker.

"You can give them a picture of something unique to you. They can make a mosaic picture of it and put it in a swimming pool or on a huge wall," he explains. "We took it on because we see a strong market for it here."

Small- and medium-sized perspective

Companies involved in the China trip in September are both small and large, says Schutte. "Some [have] sales of only about US$5 million a year."

They all had in common a desire to sell their products and services internationally, Schutte notes. "Latin America and the Caribbean are virgin territory for China. The way to get into that is a hub through South Florida."

EBM performs a market feasibility study, sets up a satellite office operation for the companies and puts the necessary logistics in place. "We give them an address and a phone number that can be answered in either South Florida or China," he explains.

Schutte advises his clients to keep a small amount of stock in South Florida for quick delivery. "Americans are very demanding; they want it now," he said. "We can send it out the same day" it's ordered.

EBM team accommodates inward and outward trade.

EBM's fees run from US$50,000 to US$100,000 for a company's first year in the market.

He says the cost is about double for a company to put a full time representative in South Florida - a move Schutte thinks is unnecessary.

EBM International taps a large data base of US and Latin American companies and will initiate contact with potential customers of its clients, Schutte points out.

"The middle negotiator has a lot of interest in ensuring this is a long-term deal. If only one side earns money, the other side goes broke."

In entering the US market, product/price is not the main factor, Schutte advises. "Chinese companies always think they must be the least expensive. That's a mistake," he says. "Quality of production and consistent ability to deliver are more important."

Schutte expects EBM will begin taking on more US clients now that China is in the WTO and has agreed to open more of its markets and allow increased foreign ownership of factories.

Schutte, a South African, said the first thing American companies must learn is that the Chinese insist on developing relationships before making too large of a business commitment.

"The biggest problem we have with Americans is that if we meet, they say 'let's seal a deal.' Americans are too impatient."

Latin American connection through Miami

Chi: flexible and creative.

Another interested party in the China initiative is Joe Chi's China-Latin America Trade Center, which specialises in helping Chinese companies set up Latin American operations.

As a Cuban-Chinese, Chi brings a familiarity with both Latin and Chinese cultures and the business nuances of the two. "I help them get established in the proper channels," Chi says. "I've been doing business in Latin America for 25 years. You just have to be flexible and creative."

In the year since the launch of the China-Latin America Trade Center "we have received the CEOs of some of the top Chinese companies," including manufacturing giant Haier, said Chi, the Trade Center's executive director and former head of the Latin Chamber of Commerce of the United States.

There's one point he emphasises to visiting Chinese executives interested in the markets of the Caribbean and Latin America: base yourself in Miami. "That's the place to be," he says, noting the city has dozens of international chambers of commerce as well as about 40 consulates.

Going directly into the Latin American and Caribbean countries is expensive and carries "a humongous amount of risk," Chi believes.

"In Miami, you can pick and choose the countries you want to go to. Many of the companies have a presence here or their executives have second homes here."

Chi's clients want to establish a beachhead into Latin America that the online economics magazine the Globalist says has seen a 900% increase in overall trade with China over the past five years.

In 2004, nearly half of China's direct investment overseas, almost US$20 billion, went to Latin America, the Globalist reports.

Argentina, Peru and, to some extent, Chile see China as an insatiable buyer of commodities and therefore a guarantee of their economic development.

Brazil - a seller of soybeans to China - likes that part, too, the Globalist reports.

As a consulting agency, the China-Latin America Trade Center handles the more complex set ups, Chi says. "For the simple transactions, we delegate to the local chambers."

Sales centre in Hong Kong

Market America product line.

Miami Beach-based Market America, a product brokerage and Internet marketer of vitamins and other health products, plans to inaugurate a Hong Kong trading platform in June 2007 to serve the Hong Kong market and enhance its Pacific Rim presence.

The privately held Market America estimates demand for its products in Hong Kong alone will produce sales of at least US$7 million the first year. Expansion into the Pacific Rim tops a 5-year-plan initiated two years ago, company executives say.

The Hong Kong move follows Market America's launch of a branch in Taiwan in 2005, where in less than two years it has recruited 35,000 seller/distributors and posted sales of US$55 million. Company-wide, Market America claims accumulated annual retails sales of US$2.1 billion.

"We had great success in Taiwan, so expanding into Hong Kong is the logical next step," said Joe Bolyard, executive vice president, international development.

Direct seller to market.

Specialising in direct marketing and mass customisation, the company sells what it calls "innovative products" that range from health elixirs and vitamins to laundry soap and a US$249 kit that analyses the buyer's DNA to determine what customised nutritional formula to follow for optimum health.

As a product broker, Market America must have near-total accuracy in gauging what the customer wants. To achieve that, the company relies on what it says are sophisticated surveying methodologies to determine customers' preferences and then sources and provides the most desired products.

The knowledge gained from mining the accumulated customer data is the foundation of Market America's Mall Without Walls, where more than 700 products are sold. It offers another 2 million-plus products through a setup the company calls the Endless Shopping Experience.

The Shopping Experience has enlisted such retail giants as Wal-Mart, Target, Macys, Dell and even eBay as affiliate retail partners.

Oriental Logistics Miami Inc executive Anly Liu has taken part in the China-Miami trade boom since arriving in Miami nearly three years ago.

He is helping to strengthen trade ties through his work with the Florida China Chamber of Commerce, with a focus on companies in Hong Kong.

Liu's company is an arm of Hong Kong-based Oriental Logistics Group and sees Miami as a rival to New York and Los Angeles for commercial ties with China.

The opportunities in the China market are beginning to be realised, according to Howard Ullman, CEO of Florida-based China Direct Trading Corp, which brokers sales of products ranging from souvenirs to construction materials.

"Many US companies are making the shift to China," says Ullman.

Such companies as China Direct Trading, Oriental Logistics and Market America are making efforts to create a bridge that could see 2007 as a watershed year for Florida-China trade.

from special correspondent Terrence Carter, Miami

Company/Contact Person

Association of Bi-National Chambers of Commerce in Florida
Lita Haeger

Tel: (1) 305-365-7247

China Direct Trading Corp
Howard Ullman

Tel: (1) 954-252-3440

China-Latin American Trade Center
Joe Chi
Tel: (1) 305-636-0904
Bernhard Schutte
Tel: (1) 954-333-7777
Enterprise Florida
Manny Mencia
Tel: (1) 305-569-2650
Market America
Joe Bolad
Tel: (1) 336-605-0040
Miami-Dade Beacon Council
Xavier Gonzalez
Tel: (1) 305-579-1300
Oriental Logistics Miami Inc
Anly Liu
Tel: (1) 786-845-0781