August 16, 2005
Tuesday

WASHINGTON - Memo to U.S. business executives: China is open for business and looking for "made in America" labels.

Lawyers and companies already working there say middle-sized U.S. businesses either aren't aware of the potential of the Chinese market or aren't taking advantage of it because they find it daunting.

UPS, the parcel delivery service, says its surveys estimate there's a potential untapped market of from 200 million to 300 million upwardly mobile young people - UPS branded them "Chuppies" - who have been largely unexploited and want things they can't find in their homeland, like American-made T-shirts, shower gel, fashion and consumer electronics.

The company conducted what it says is the first business poll ever in China's six largest cities and found that demand is high among the emerging Chinese middle class for high-quality toiletries and dental-care products, as well as digital cameras, laptop computers and video recording devices. More than half of the Chinese said they wanted to see more American apparel, such as T-shirts, sandals and blue jeans, and a large number wanted to see American books, music and videos. The items drawing the least interest were American cigarettes and liquor.

Larry Darrow, UPS vice president for international business development, said major American companies have already shown they can do business in China, but that small- and medium-sized American companies haven't joined in.

"There's a lot of consumers there, and they want American products," he said. Darrow said American business should change its approach to the Chinese and look at the opening of China as an opportunity rather than a threat. "This is a consumption market for us," he said.

Kevin O'Connell, a Washington attorney who has worked with companies seeking to do business in China since the country opened its doors in 1979, said medium-sized U.S. businesses are missing out on a major new market.

"It's monumentally easier now than it used to be," said O'Connell, who works with the firm O'Connell & Co., with offices in Hong Kong, Annapolis, Md., and Washington, D.C. He said there are problems, but many regions of the country have established laws for conducting international business and knowledgeable regulators administer them.

O'Connell said the rules differ from region to region, and that makes it hard for American companies to make direct investments in China, but it's not difficult to set up joint ventures with Chinese firms. He said the country is changing and preparing the ground for direct investment, which China hopes will attract companies that will provide jobs when the giant state-run socialist concerns are dismantled.

"You need to be very patient - it takes longer than somewhere else," O'Connell said. "If companies do their homework and get the appropriate professional advice, and don't try to do it on the cheap, they can succeed."

Fei-Ling Wang, an international-affairs professor at the Georgia Institute of Technology, said the opening of China to foreign trade has created a growing population of Chinese with disposable income who are developing an interest in brand-name products and acquiring a taste for foreign goods.

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