The Chinese economy is the world’s second-largest, and the country has the world’s fastest-growing middle class—currently 400 million people out of a total population of 1.4 billion. China imported more than $120 billion worth of products from the U.S., and more than $1.6 billion from Wisconsin, in 2018.
Chinese customers have a strong affinity for U.S.-made products, since they consider those products to be of high quality. Even with recent tariff concerns, demand for U.S-made goods in China remains strong. When Costco opened its first retail location in China in August of 2019, the store was forced to close early due to overcrowding on opening day, and announced it would limit the number of shoppers allowed in thereafter. And when Shake Shack opened its first China location in Shanghai earlier in 2019, scalpers reportedly hawked spots in line and resold burgers at a huge markup.
An upcoming global trade venture to China, organized by the Wisconsin Economic Development Corporation (WEDC), will help connect you to potential buyers, distributors and other partners in the Chinese market. With logistics, interpretation and lodging arranged for you, you can focus your energies on meeting and vetting potential partners.
Demand for Wisconsin products
China is Wisconsin’s third-largest export destination, with more than $1.6 billion in Wisconsin goods and services purchased by Chinese buyers in 2018. The top categories for Wisconsin products exported to China in 2018 were medical and scientific instruments (22%), industrial machinery (19%), electrical machinery (10%), aircraft/spacecraft and parts (6%) and wood products (6%).
Given the size and importance of the market, Wisconsin companies across many different sectors are encouraged to consider participating in this trade venture. However, companies considering exporting to China should first develop a general understanding of exporting, and should have some prior experience before entering the Chinese market. In addition, companies should consider cultural factors and consumer preferences unique to China and should adapt their offerings accordingly. With the stiff competition in this market, Wisconsin exporters need a strong value proposition and distinct market differentiators.
Companies in the following sectors are especially encouraged to consider taking part in the trade venture:
- Advanced manufacturing: China is focused on upgrading its manufacturing sector, and Wisconsin companies can play a part in implementing the latest developments in connected systems, automation, artificial intelligence, big data and cloud technologies. Products in these subcategories are particularly highly desired: robotics, automation, additive manufacturing, advanced materials, precision machine tools, sensors and instruments.
- Water technology: China’s water and wastewater treatment technology market is experiencing rapid growth; in addition, the industry is under increasing pressure to improve efficiency and reduce pollution. These trends are creating opportunities for Wisconsin companies with technologies relating to water filtration and reclamation, as well as moving, metering, treating and using water in a sustainable manner.
- Food and beverage: China has the world’s largest consumer market, making it an excellent export target for processed foods as well as food processing and packaging Wisconsin cheese, cranberries and ginseng are familiar and well-liked among Chinese consumers.
- Energy, power and control: Electrical machinery and controls is one of Wisconsin’s fastest growing and most competitive industrial sectors, and is also a priority sector for China.
- Biohealth: As living standards improve, China’s population is paying more attention to health care. Subsectors of particular opportunity include medical device manufacturing, bioscience, digital health, diagnostics and biopharmaceuticals.
The global trade venture will take place April 10-22, 2020, and will include stops in Shenzhen, Shanghai and Beijing. For each participating Wisconsin company, WEDC’s in-market trade representatives will pre-screen potential distributors, agents and customers to find the best matches in each program city. WEDC will make all the logistical arrangements to get Wisconsin participants from one meeting to the next, and will also arrange for interpreters to provide their services during the meetings. Training on the etiquette of doing business in China will also be provided.
Shenzhen is ranked first among Chinese cities in terms of overall economic competitiveness. Located in Guangdong Province in Southern China, it is regarded as one of China’s most important high-tech research and development and manufacturing bases. In 2018, Shenzhen was the world’s fourth-largest container port and China’s fourth-largest cargo airport. Shenzhen is China’s third-largest city in terms of GDP and is considered the third-wealthiest city in China.
Shanghai is the most populous urban area in China, and the second most populous city in the world (after Chongqing). It is the commercial, financial, trade and transportation center of China. Located in eastern China, it is home to the world’s busiest container port. Six pillar industries—retail, finance, information technology, real estate, machine manufacturing and automotive manufacturing—account for about half the city’s GDP. Shanghai is China’s largest city in terms of GDP, and is considered the second-wealthiest city in China.
The program will conclude in the capital city of Beijing. Beijing is the political, cultural and educational center of the country, as well as the headquarters location for most of China’s largest state-owned companies. Among Chinese cities, it houses the largest number of Fortune 500 global company headquarters. Beijing is China’s second-largest city in terms of GDP, and is considered the wealthiest city in China.