Trade potential is vast, but the pace is deliberate
Salesman have always needed a lot of persistence. But in China they will have to learn to tap new reserves of this virtue. What looked several years ago like a salesman's paradise -- an underdeveloped country of 1 billion people hungry for Western technology and products -- has proved to be a difficult market to enter. The potential is vast. But the pace is deliberate.
Last year, however, British trade with China was "in credit' -- producing more exports than imports -- for the first time since 1975. And Chairman Hua Guofeng's tour of Britain last fall sparked new interest. Businessmen hoping for a share of those exports -- worth L213 million ($490 million) last year -- can take a leaf from the experience of two British firms which recently won substantial contracts: Babcock & Wilcox (not related to the US company of the same name), and Smiths Industries.
"What it takes is patience upon patience," says E. G. Atkins, sales director for Babcock Product Engineering Ltd. "Just when you think you've run out, you're about a quarter of the way there."
Mr. Atkins speaks from experience. When the L5.5 million ($12.7 million) contract for coal pulverizing equipment was signed in December, it came at the end of six years of effort. "Once they move, they move very, very fast," he observes about the Chinese. But they have an eye, he says, for "amazing details": the final team of negotiators had to include not only sales personnel but engineers from the drafting, research, and design departments as well as from the factory.
John Holloway of Smiths Industries agrees. Last October, SMiths signed a L3. 6 million ($8.25 million) contract to supply equipment and know-how for an automated spark plug factory near Nanjing (Nanking).
The selling began in 1970, when the chairman of the KLG spark plug division began, as Mr. Holloway says, "putting a little bread upon the waters" by advertising in the quarterly publications of the quasi-governmental Sino-British Trade Council. From there, KLG executives and engineers made several visits to China, where, Mr. Holloway says, the Chinese were "not interested in salesmen at all" but wanted direct contact with the technical director, the chief spark plug designer, and a ceramicist. Finally smiths hosted a Chinese team for a two-week visit to the firm's factory at Rugby. Only then, amid fierce competition from Japan and West Germany, did they get the order.
For the British, with a century of experience dealing in captive colonial markets overseas, the China trade of the 1970s and 1980s is a different experience. As Mr. Holloway summarizes somewhat ruefully, "You don't just go in with your bag of brushes and come out with the order."
China, as P. A. Timberlake of The 48 Group notes, is "the most competitive market in the world." He views the market from his position as a consultant with a trade association taking its name from the 48 British companies who forged the first Western trading links with the People's Republic of China in 1953 -- the so-called "icebreaker mission." He now sees strong prospects for British trade in aviation and aerospace, mining equipment and technology, and instrumentation. He also foresees scope for firms exporting expertise through consultants.
In general, however, he anticipates increasing challenges. "It will be harder than it was last year," he observes. "Unless people put in more effort, the will go on slipping back." Britain has already slipped to 12th place among nations trading with China -- lower than it has ever been.
From Britain's Department of Trade, Wayne Lewis agrees that competition is stiff. "A number of Chinese ministers have said to me, 'You must be more competitive, you must look to your delivery dates, because your competition are doing better,'" he says. Straightforward cash contracts, he feels, are going to be few and far between since the Chinese have little foreign currency. One promising area may be joint ventures. In these, outside technology, expertise, and equipment combine with Chinese plant and labor to manufacture products for sale to third countries. Profits are then shared with the outsider.
Spokesmen for the Sino-British Trade Council look ahead to other markets as well. Medical, construction equipment, and telecommunications exhibitions in China this year suggests some areas. Another may be in electricity generation -- which, in a country reportedly making do each year on as much electricity as New York City uses in a single month, is open for improvement. Still another is food processing. Each Chinese consumes about 120 kilograms of food a year. Of this, only one-quarter of 1 percent is canned or frozen -- in contrast to 18 percent in the United Kingdom and 37 percent in the United States.
Defense equipment also figures strongly in British plans. British Aerospace, which has enjoyed a friendly relationship with the Chinese since the sale of Viscount airliners in the 1960s, opened an office in Peking in December -- a hard thing to do where office space is at a premium. Having three regional executives on the site, according to a company spokesman, facilitates quick responses. But a particular kind of salesmanship is required in dealing with Chinese overtures. "They will summon you," says the spokesman. "You don't keep knocking on doors and marching in."
One major question: how will the Chinese pay for their imports? British banks have made available $1.2 billion in export credit since December 1978. But so far only $195 million has been taken up. The Chinese, habitually wary of going into debt, prefer to pay as they go.
One form of payment in the future could be minerals. But while these remain unextracted, the more usual exports -- bristles, tea, meats, nuts, shellfish, sporting goods, furniture, and of course textiles -- remain the staples. The European Communities-China textile agreement, signed in July 1979, gives Chinese textiles greater access to the Common Market.
But the British textile industry, facing difficult times, remains sensitive to this sort of barter. One textile union executive, contemplating the proposed sale of British Aerospace fighter planes to China, summed up the problem last summer with succinct wit. "It would take a pile of ladies knickers," he quipped , "to buy a harrier jump jet."