Oklahoma exports to China on the rise

09.04.2007
by Jerry Shottenkirk, Journal Record

OKLAHOMA CITY – After a down year in 2006, Oklahoma exports to China are flying high.

Dessie Apostolova, director of the Oklahoma Department of Commerce’s International Trade Offices, said the state’s exports to China for the first six months of 2007 are up 37 percent over the same period last year.

That comes as a bit of relief, as the numbers posted in 2006 were down 4.3 percent.

Oklahoma has quite a way to go before it becomes a major player.

“Oklahoma’s share into the national level of exports to China is less than one-tenth of 1 percent,” Apostolova said. “As far as China is concerned, Oklahoma was 46th in 2006.”

The total value of exports to China last year was just over $90 million, and of that, $43 million came in the form of machinery – mostly oil and gas related. Computer and electronic products were second at $9 million, transportation equipment was next with $8.6 million, followed by chemicals at $6 million and fabricated metal production at $5.1 million.

Apostolova said Oklahoma has a chance to move up the ladder, particularly if it can hang onto its current momentum.

“The year-to-date figures are encouraging,” she said. “During the first six months of 2007, exports were already over $58.5 million.”

China is one of four international markets where Oklahoma has an international trade office to assist small- and medium-size companies that want to do business there.

Some items that are exports began as imports, she said.

“The components Oklahoma brings into the state are incorporated into finished products and re-exported to China and other places,” Apostolova said. “The broad category of machinery is the leading sector. Oilfield manufacturing is the leading area of that sector. Other top sectors are aerospace, medical, optical, vehicles, tools and cotton yarn.”

Several companies in the state have either done business in China or have plans on during so.

David Woods, currently chief executive officer of Giant Partners Strategic Planning and formerly with Ditch Witch and Exim Group, said dealing with China is an interesting experience.

“I’ve spent a great deal of time in China, and my ex-partner David Lindberg (with Exim) is still there,” Woods said.

Woods said he took a different view when he became involved.

“The average person sees China and has it in their mind as a source for imports,” he said. “While that’s true, that’s only a small part. Because of tremendous growth, China is a huge consumption model in industrial, retail, and every other aspect.”

The relationship with China has changed drastically. And the Chinese, Woods said, are no longer settling for less.

“They have a real Western appetite for goods and services,” Woods said. “Most people think Chinese put up with products that aren’t that good. As it develops, they desire high-quality, high-tech, good quality goods. There’s an appetite for U.S. products.”

Dealing in and with China requires some effort. The cultural differences are obvious. But the gaps between nations are narrowing.

“It takes a different mind-set and a commitment,” Woods said. “You can’t just shoot a few e-mails back and forth and expect it to be done. You don’t go to China like you go to Texas.”

Woods said America is behind other major countries in supplying China with goods.

“As you look at ranking of U.S. exports to China, you can see other countries do a better job,” he said. “Generally speaking, it’s because of two things. One, we’re later than most getting there and recognizing the development and opportunities. And secondly, we have a perception problem as it relates to China. If a Scandinavian company comes to Oklahoma and buys a company or its products, it’s no threat. If it’s China, some people feel invaded.”

In China, it’s fairly easy to see where products originate, Woods said.

“You’re more likely to see French wine than California wine, because the French were there before us,” he said. “You are more likely to see a Volkswagen than a Chevrolet, because of Germany being there.”

China has improved its oil and gas exploration and production, and Oklahoma is benefiting from it.

Ross Ostenberg, a chemical engineer at C.H. Guernsey & Co., worked with PetroChina, an arm of the state-run oil industry.

“PetroChina is essentially the equivalent of Exxon or BP,” Ostenberg said. “It’s not as big on the E&P side, but they have a lot of pipelines and refineries.”

China has some serious environmental issues with individual facilities, and C.H. Guernsey helped in that aspect.

“With the Olympics rapidly approaching, China has a lot of concerns about the way it looks to the world environmentally,” he said. “We were contracted to go over and help them. We had an environmental strategic plan. Another phase helped them develop a strategic development process to tackle issues, and another was to help them understand a functional excellence plan.”

C.H. Guernsey is an architectural and engineering company that also works in consulting. The fees the company secured were more than $500,000.

Woods said China’s advancement should not be feared.

“We still have a perception issue, a feeling of a threat, like the Chinese are going to come over,” Woods said. “Are they a world force? Yes, absolutely. But there’s a lot more to be gained in dealing in China.”

Woods said the most successful parties in dealing with China are those that take the time to make the trip.

“If I’m in Oklahoma and wanting to sell a product in Chicago, I’d go there, get the lay of the land, and see what it takes to sell there,” he said. “Some people take a different approach with China. Some go with third-party assistance, which is helpful. But it’s best to get on a plane, fly to Shanghai, and see what it takes. You don’t want your business being totally reliant on a third party. You wouldn’t do that here.

“China is not a big a mystery as people think,” Woods added. “There are far more similarities than differences.”

Mike Seney, senior vice president of operations for The State Chamber, said China is to be embraced.

“China is a developing market,” Seney said. “Demographically, there are as many China citizens in the middle class as there are total citizens in the United States. The consumer class is more than 300 million people. That’s who you’re aiming for.”

China exports are relatively new and having some catching up to do when compared to other countries.

Canada secured 39.2 percent of Oklahoma exports last year, and Mexico was second with 11 percent.

The largest gain in 2006 was posted by the United Kingdom, followed by Singapore and Mexico. With a large increase this year, China will undoubtedly be high on that list.