According to IMF’s calculations, China will eclipse the United States as the world’s largest economy in 2016. China has 1.3 billion consumers whose incomes are rising and whose demand for products and services is accelerating. This is a great opportunity for every American business to sell to the Chinese customer.
General Motors, while struggling to keep the company afloat and compete with foreign rivals in the United States, enjoys a rare success in China. In 2010, GM sold more than 1 million Buicks in China, making it the largest market in the world for the model. In 2009, the sales were around 500,000. Buick has become the car of choice for a growing class of businessmen and women in China.
P&G, another great American company, entered the Chinese market in 1998 and now makes around $5 billion in sales in China. Of the 240 or so multinational U.S.-based companies with operations in China, eighty percent of the companies reported a double-digit revenue growth in the market in 2010.
However, it is not just the large Fortune 500 companies that stand to benefit from China’s growth and its immense market. According to the U.S. Department of Commerce, China is the third largest location for exports for small and medium-size enterprises (SMEs). The number of SMEs that export to China rose to 27,518 in 2009 from just 3,143 in 1992. In 2009, SMEs generated 34.5 percent – over one-third – of all known U.S. merchandise exports to China. This is higher than the SME’s share of overall U.S. merchandise exports of 32.8 percent.
China is already the biggest foreign buyer of U.S. government debt with holdings of more than $1 trillion, but very few know that China has $5 billion in direct investments in companies with operations in the United States in 2010, supporting around 10,000 American jobs. This investment is projected to go up sharply in the coming years and expected to create even more jobs. The China Investment Monitor, a website that gives real-time access to all major deals done by Chinese companies in the United States, has tracked 268 deals worth more than $15 billion since 2003.
Many politicians like to blame China for the current ills in the U.S. economy. U.S. businesses should not fall prey to such political rhetoric. If we choose to think of China as the enemy and not understand the opportunities it creates for U.S. businesses, our economy will only suffer more. Economic development agencies need to figure out ways to make their local companies understand the Chinese market. They should send trade delegations to China more often, invite Chinese companies to visit their communities, and encourage their local businesses to explore the Chinese market.