Nearly one-fifth the world's population resides in China-yet
small businesses have traditionally had trouble penetrating that
market. But a new trade agreement between China and the United
States could change that.
According to Nicholas Platt, president of the Asia Society, an
international relations organization, the new agreement will offer
benefits to small businesses, including:
Reduced tariffs. Industrial tariffs will drop from an
average of 24.6 percent to9.4 percent by 2005, and to 7.1 percent
on U.S. "priority" industrial products, such as wood,
paper and medical equipment. Computer, semiconductor and
Internet-related equipment tariffs will zero out by 2005.
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Expanded opportunities for services. Entrepreneurs in
telecommunications, insurance, banking, securities, audiovisual and
professional services "will have expanded market access under
the agreement," says Platt. Besides benefiting those trading
directly, this also benefits subcontractors with bigger companies
selling to China.
No middlemen. "For the first time, China will permit
the import and export [of industrial goods] without a
middleman," says Platt. This gives companies "trading
rights," or the ability to market directly to retailers or end
consumers. It also lets businesses set up distribution channels and
transportation, and provide for the repair and maintenance of their
own products. (Platt warns, however, "The Chinese distribution
system is very complicated, so you do need partners.")
Predictability. "Once permanent, normal trade
relations have been approved by Congress, you'll have a new
level of predictability of trade," says Platt. He warns,
however, that China may take several months to accede to the WTO.
In addition, Platt points out, the debate in the United States on
normalizing trade relations with China is far from over. "It
may still be put off," he says.
In the meantime, U.S. entrepreneurs can take steps to improve
current business with China. Charlotte Cheung of Chinadotcom, a
provider of Internet solutions, says, "Chinese consumers are
engaging in more online purchasing, particularly for clothes and
manufactured goods." With the number of Chinese Internet users
growing fast, Cheung recommends entrepreneurs "establish brand
presence on the Internet now."
Despite advances in trade, working with China still has its
challenges. Platt advises: "Don't think this is going to
be a quick and easy process."
Moira Allen is a freelance writer in Mountain View,
California, and editor of Global Writers' Ink, an
electronic newsletter for international writers.
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