Ventura consultant assesses China quake

Written by Laura Ritter, Pacific Coast Business Times
Monday, 16 June 2008

With the deadly earthquake in May and the Olympic games set to begin in August, the eyes of the world are firmly upon China this summer. William Irion, an international trade consultant based in Ventura County, has been gazing in that direction for some time. For the last five years, he’s spent half the year in Kunming, capital of the western Yunnan province.

Irion was in his Kunming office May 12, when the earthquake measuring 7.9 struck less than 500 miles away in Sichuan. The Business Times checked in with Irion to talk about the earthquake, the Olympics, and the state of international trade.

After the quake

“The quake was bad,” Irion said in an e-mail. The 17th-floor office shook and hanging lights swayed for three to five minutes. “I knew from the motion and length that somewhere near had really moved,” he said, adding that friends in Shanghai – more than 1,200 miles away – also felt the quake.

“My staff was frightened and wanted to run outside,” he added, but “[we] old Californians just rolled with the waves.”

The death toll from the initial earthquake stands at 69,000, with 17,000 still missing, according to published reports. Aftershocks continue to rock the region and “quake lakes” threaten to add to the damage with floods.

Irion said that U.S. companies may find opportunities in reconstruction, with international funds opening the work to international bids. The projects could include roads, infrastructure, sanitation facilities and dams. Reconstruction of buildings is less promising, with rural structures of concrete and brick rather than sophisticated high-rise buildings toppled in the quake.

In the long term, businesses might find attractive tax incentives to set up shop in Sichuan, expanding on similar draws already offered to businesses in the western provinces. On the other hand, government spending might be tied up in recovery efforts for some time, Irion speculated.

Simply offering a helping hand might help considering the degree to which Chinese business is predicated on relationships.

“There’s an opportunity for U.S. companies, the government and the people to show the Chinese we care,” he said. He’s talking with his staff about what they can do, Irion said, noting that being one of few American businessmen in Kunming makes him something of a de facto ambassador.

The Red Cross reported raising $6.4 million from some 60 U.S. corporations in the aftermath of the quake.

Goleta-based Direct Relief International was preparing an airlift of specifically requested medical supplies in early June. Two of its staff had visited Sichuan to assess needs and meet with medical partners in the country, according to a DRI press release.

The games begin

The government is more powerful there “in the sense that people tend to obey the government,” Irion said.

Yet one area in which the state seems to be loosening its hold is on the press. “The government does understand the Internet is active. They don’t have total control over it,” Irion said. In response, news is reported more promptly. Reports of the earthquake were published right away.

So has been the situation in Tibet. Although stories still reflect the official point of view, images of the riots were on the news the same day. Protests in other countries are also reported, making national heroes out of Olympics torchbearers facing protests. Irion plans to return to China in July, before the influx of foreign visitors in August. He doesn’t expect much work to get done in China while the games are on, with fans gathering in Beijing or crowding around their televisions.

Although sponsorship of the games is the territory of huge corporations, there may be some auxiliary business opportunities, he said – such as sales of TV sets.

Opportunity abroad

Only 5 percent of U.S. companies export their products or services, instead focusing on the biggest market in the world at home.

But when times are hard in the United States, they may begin looking elsewhere for opportunities.

Irion, who also consults on trade with Japan, sees several reasons for doing business with China.

The economy is growing by 10 percent or more annually, and inflation is offset in part by state-owned companies and resources. Foreign direct investment is plentiful, and up by 50 percent or more this year. The value of the dollar is down.

The 300 million members of the consumer class can afford U.S. products – and want them. “The Chinese people are just as concerned as we are” about safety and quality, Irion said, and are willing to pay more for products from countries with high standards, like the United States and Japan.

“There are a lot of opportunities if you want to learn how to pursue the market,” he said.

That learning ranges from keeping up on the schedule of national holidays, many of which were changed this year, to understanding very different views of business relationships. Older business models are especially entrenched in the western provinces, where people are less versed in the ways of the Western world, Irion said.

But even those familiar with Western business practices may expect their trade partners to be familiar with the Chinese way of doing things.

“As national pride grows, this comes out more,” he said.