Keeping Up In The Global Economy

May 5, 2008
| By Pete Daly |
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GRAND RAPIDS — Staying informed is a 24/7 endeavor for companies doing business in other corners of the world — especially when the other end of the deal is in China.

"The New Realities of Doing Business in China" is just one of several forums taking place at GVSU Thursday morning as part of World Trade Week 2008. Craig Meurlin, a partner at Warner Norcross & Judd, will moderate the 9:15 a.m. panel discussion on the changes taking place in China.

Meurlin, chairman of the Michigan District Export Council West, said two major types of issues have been cropping up in the last year or two in meetings he has had with companies doing business in China. One category, he said, is HR issues — hiring and retaining good people in China.

The HR challenge in China is not a new one, he said, but with all the foreign countries active there now, "the competition is huge for people who can be effective managers of Western-owned operations in China. It is repeatedly (cited) on surveys of U.S. businesses in China."

Chinese education differs from education in the U.S. because it tends to focus on a lot of fact learning, he said. Graduates of business schools there "are not used to the fluid kind of management, the flexibility and adaptability, that U.S. companies want" in their managers.

Another major issue in China is rising prices.

"Employment costs are rising, commodity prices are rising, energy prices are rising, and the marketplace is so fluid that price competition becomes severe," said Meurlin.

The supply and demand curve can shift dramatically — almost overnight sometimes. "Chinese companies can spring up very quickly and disappear very quickly," he said.

That is due partly to the fact that local governments in China try to support their local companies and industries — "even where it may not be particularly economically advantageous to have a company in that industry."

As an example, Meurlin said China used to produce so many household appliances that the prices went down year after year. The result was that many of those manufacturers dropped appliance production and started making automobiles.

"Now they are over-capacity in the automobile business," he said.

Sometimes political connections with Chinese government officials "are hugely relevant in the marketplace," which leads to inefficient allocation of capital.

Chinese industry was decentralized by Mao years ago for national security reasons, but now China is trying to consolidate industries so that its companies will survive in a global marketplace, Meurlin said. But, he added, there is still a lot of decentralization in the economy in China.

The half-day series of informational meetings on "The New Realities of the Global Economy" begins at 8 a.m. Thursday at the GVSU Eberhard Center with a keynote address by Thomas Travis, a managing partner at Sandler, Travis & Rosenberg, an international trade and customs law firm. Travis is also the author of "Doing Business Anywhere: the Essential Guide to Going Global."

Attendees can choose among three programs running concurrently in three tracks: Emerging Markets, Experienced Global Business and New to Export. A total of nine presentations or panel discussions will take place between 9:15 a.m. and noon. Topics include cultural and human resources matters, legal issues and U.S. export regulations, risks in foreign currency exchange, NAFTA and CAFTA, and setting up sales through international agents and distributors.

Other events this week in connection with World Trade Week include a talk by Congressman Vernon J. Ehlers at noon Monday at the Economic Club of Grand Rapids. Haworth Inc. of Holland also will be honored as the World Trader of the Year. On Wednesday evening, the World Affairs Council presents its WorldQuest International Trivia Game at Aquinas College, and Friday is WTW Student Global Awareness Day, with an event starting that morning at the GVSU Pew Campus downtown.

World Trade Week is an annual project of the Michigan District Export Council West. District Export Councils have been set up by the U.S. Department of Commerce throughout the U.S. to assist small and medium-sized firms that want to enter or expand in foreign markets. Council membership is composed of experienced international business executives from the manufacturing and service sectors, who offer their expertise and insight on foreign distribution, international logistics, franchising and licensing, dealing with foreign sales agents, patents and trademarks, and other legal issues.

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