Global Impact

A New World of Opportunity
Changes in China mean potential profits for Tennessee

A significant number of Tennessee-based businesses have managed to tap into the burgeoning Chinese marketplace, which now represents the second-largest economy in the world with a purchasing power adjusted GDP of $8.5 trillion.

China’s booming economy has led to a surge in export goods – with everything from toys to cars and computers making their way to consumers around the world.

With a 1.3 billion population that is growing increasingly affluent, China also is emerging as a promising market for exporters of American-made products, something Tennessee business leaders are eager to explore, says Mark Drury, assistant commissioner at the state Department of Economic and Community Development. Drury was part of a delegation of Tennessee civic, government and business leaders who traveled to China for a week in April 2007 to learn more about the potential market for Tennessee-made goods and other business opportunities there.

“We talked with Chinese government trade officials, as well as with some Tennessee companies that are already doing business in China,” Drury says. “We want to be able to provide Tennessee companies who want to enter that market with a clear picture of what it takes to be successful.”

A number of Tennessee-based businesses are already tapping into the Chinese market – most notably FedEx Corp., which has announced plans to construct a new $150 million Asia Pacific hub at the Guangzhou Baiyun International Airport in the Chinese province of Guangdong.

The total value of products shipped to China from Tennessee has risen significantly in recent years, from $184 million in 2001 to $1.8 billion in 2006, Drury says.

Along with opening its market to exports, China recently has begun loosening some of its restrictions on Chinese investments in foreign companies, says Lori Odom, Asian business development director for the state. A Deutsche Bank study released in January 2007 showed that China’s overseas investments are likely to grow by 20 percent annually over the next five years.

“That’s a hot topic right now, and we are trying to position the state to be where we need to be when that business actually comes,” Odom says. “We want to make sure that the right people have heard about Tennessee, and so we are working to build those relationships and knowledge.”

China is also now allowing some foreign-owned companies to operate there independently, without making it a joint venture with the Chinese government as had been previously required, Drury says.

“The reality is that it’s a complex market to enter because the government has so much of a stake in the business enterprises there,” he adds. “Yet it is a market growing by leaps and bounds.”

In-depth knowledge of the legal and governmental regulations affecting businesses is key to doing business in China, and so is an understanding of the intricate social forces in play.

“The personal relationships have to be in place before the business relationship can exist,” Odom says. “They are more likely to do business with people they know and trust.”

Strong business relationships can result from exchanges like the 2007 visit by a delegation of trade officials from Guangdong province and by the growing relationship between Tennessee and the China Council for the Promotion of International Trade (CCPIT). Both organizations presented at a forum hosted by ECD in Nashville.

Story by Renee Elder

Additional Global Impact Articles