Creating the China market

Trade missions educate Chinese buyers, expand export opportunities

BY KRIS BEVILL

It’s the largest country in the world (more than 1.3 billion people and growing) and its rapidly expanding middle class is hungry for everything their newfound money can buy. China represents huge potential for U.S. exporters, but finding a way into the market can be a daunting task.

To help scale the hurdles of exporting to China, groups from throughout the northern Plains have hosted multiple trade missions in recent months for local companies to introduce themselves to Chinese buyers and begin relationship building. In March, the North Dakota Trade Office, along with the North Dakota commerce and agriculture departments, hosted its second annual “Better for You Food Ingredients” conference in Quingdao, Shandong, China, where 14 North Dakota companies and organizations had the chance to showcase their products and help educate Chinese buyers on the nutritional value and ways to apply North Dakota commodities to Chinese foods.

This month, South Dakota Gov. Dennis Daugaard will be joined by representatives from 11 South Dakota companies and organizations on the state’s third annual trade mission to China. The trips are designed to make introductions and help break down cultural and trade barriers that may currently trip up U.S. companies, in some instances prompting trade deals that may not otherwise have come to fruition.

“China is South Dakota’s third largest trading partner,” says Ryan Budmayr, business development representative for the South Dakota Governor’s Office of Economic

Development and coordinator of the state’s China trade mission. “Over the last two trade missions to China, we have developed relationships with business leaders and government officials, while gaining a deeper understanding of the Chinese market. South Dakota continues to realize opportunities in China and we view it as a great market to grow sales for our companies.”

South Dakota’s trade mission takes place May 9-16, with stops in Beijing and Shanghai. While there, some attendees will attend a food show in Shanghai and state delegates will meet with Chinese officials and business executives to help facilitate trade contracts for South Dakota companies, according to Budmayr. The U.S. commerce department and the U.S. Department of Agriculture are assisting in facilitating those meetings.

Budmayr says companies that participated in last year’s trade mission are continuing to see results, including the recent sale of 110 tons of scrap paper to a Chinese company met during the mission. “As with many business deals, we believe that the connections made by the businesses last year will result in future sales and growth in the years to come,” he says.

Companies participating in this year’s South Dakota mission represent a number of industries and include Advanced Sunflower, Badger State Recovery, Concord Grain, Dakota Trim and Steel, Muth Electric, South Dakota State University International Affairs Outreach, Sharp Industries, Valley Queen Cheese Factory Inc. and Vern Eide International.

NDTO’s event included representatives from agbased companies including United Pulse Trading, Specialty Commodities Inc., Soyko Inc., Healthy Oilseeds, Great Northern Ag and JB Global.

Jeff Pricco, president of Burnsville, Minn.-based export firm JB Global, attended the trip as a representative of Breckenridge, Minn.-based Richland IFC Inc., which specializes in non-GMO (genetically modified organism) and organic soybeans and corn. Pricco says he attends NDTO trips like the “Better for You” event because they are a good value for the cost to attend and regularly produce valuable contacts. His focus of this particular trip was to open up the nonGMO food-grade soybean market, which currently faces trade barriers including additional duties imposed on the product compared to other types of soybeans and a lack of acceptance of the product from Chinese buyers. Pricco believes that will begin to change in the next few years, however, as China continues to consume more soybeans than it can produce.

Relationship building and deal-making with Chinese buyers can be a long process, so while Pricco believes his company may increase its exports of certain products, such as dried peas, to China this year, it will realistically be some time before the country represents a large portion of his company’s sales.

“We’re optimistic in the long-term on China, but as to whether for our unique business it’s going to be big right away, I don’t think so,” he says.

China is currently the 12th largest export market for North Dakota, but state representatives are aggressively working to improve that number. The sisterstate relationship recently announced between China’s Shandong province and North Dakota helps to raise awareness in the Chinese market, and events such as the “Better for You Food Ingredients” conference help educate Chinese buyers and food scientists about the state’s products, says Dean Gorder, NDTO executive director. “China is a difficult market to break into,” he says. “Once you break into it, it is a large market and is not just significant in numbers. It’s a relationshipbased market, so once you establish that relationship it tends to go on for a long period of time.”

He says this year’s food ingredients conference was more focused on providing information to a targeted audience of food buyers and food scientists, attracting approximately 125 attendees to the event. The group plans to host a reverse trade mission for Chinese buyers again this fall, where deals begun during the March trip may be finalized. PB

Kris Bevill Editor, Prairie Business 701-306-8561, kbevill@prairiebizmag.com