Through this arrangement, Jones Waldo will offer Utah companies access to legal resources and strategic business advice regarding opportunities in China, a rapidly expanding area of the global economy. We are excited to be at the forefront of companies who see the value of thinking globally and look forward to assisting business owners who are ready to benefit from the opportunities that are waiting.

We’ll be posting items of interest concerning doing business in or with China. Let us know if there is a particular topic you’d like to know more about.

From a post by Lane Beattie, President of the Salt Lake Chamber:

The people were welcoming and friendly to our group. We were there long enough to get a real sense of the culture and the attitude of the Chinese people toward the West and their position as a growing economic force. 

Goldman Sachs projects that China will overtake the U.S. as the world’s largest economy by 2027, and be nearly twice as large by 2050. 

Of course, Utah and China share a political link, as well. Most notably, our former governor, Jon Huntsman, is now our nation’s ambassador to China. Recently, for example, Utah and certain provinces in China, including Hainan and Liaoning, have been working together to improve diplomatic and business relationships. The Utah-Taihu Institute of Environmental Research, founded in 2009, functions as a platform to accelerate U.S.-China technology exchange and facilitate business development on both sides. The group brings together government officials, academics, and businesses from Utah and Wuxi to work as partners to build a healthier global environment and promote bilateral economic growth. With funding from local Chinese governments, technologies from the University of Utah, Brigham Young University and Utah State University are being licensed by the institute to help with water and soil remediation in the Wuxi area.

If you have the opportunity to travel to mainland China, don’t pass it up. It will provide you with a new perspective and deeper understanding of the country and its people, as well as the potential for business growth involving opportunities in China.

Enter the Foreign Trade Zone – FTZ.  An FTZ is a location to which imported goods can be shipped upon arriving in the U.S. and treated for the most part as if they have not yet entered the U.S.  They are not just near seaports.  There are 275 U.S. government approved FTZs across the country, including one in Salt Lake City and another in Las Vegas.  Imported products admitted to the FTZ are not entered into the U.S. customs territory until their withdrawal from the FTZ.  Products can be moved from one FTZ to another and still avoid customs (and duty) payments. 

Thus, a product arriving in Long Beach, California, from China can be processed into the FTZ there and then be shipped to the FTZ in Salt Lake City.  If the process takes weeks or even months because the product, for some reason, is warehoused in the FTZ, the products are “Kings-xed” from U.S. Customs.  This allows the importer to pay the duty at a point in time much closer to delivery into the market.  For items that take a long time to sell, such as large equipment and vehicles, this deferral of the payment of duty can be critical.  In fact, it is possible that the FTZ could even be used to move imported products across the country from FTZ to FTZ and then on to Canada without ever becoming subject to payment of duty in the US.

Another advantage is if products are imported into the U.S. but are defective, become obsolete, or otherwise need to be destroyed.  If held within the FTZ, no duty will have been charged to the importer – obviously important to the importer who may be unable to sell the products. 

Now, back to our unassembled goods vs. finished BMW example.  If you arrange to have your product assembled from the imported components (as well as those already here in the U.S.) at a facility within an FTZ you only pay 2.5% duty on your imported components.  This can be a significant incentive to assemble and warehouse your products in an FTZ. 

The benefits of an FTZ to a small Utah-based importer can be significant.  The benefits range from deferring, eliminating or reducing customs duties, improving cash flow by lowering inventory costs as well as inventory levels, and other consolidation advantages.  

The Utah Foreign Trade Zone is located at 1105 South 4800 West in Salt Lake City, not far from Salt Lake International Airport.  The Las Vegas Foreign Trade Zone is at  McCarran International Airport.  For more information go to www.commerce.gov, www.goed.utah.gov or www.expand2nevada.com.

As Governor Jon Huntsman steps on to the world stage as the new U.S. Ambassador to China, he becomes Utah’s newest export.  Given his ability to drive commerce to the State of Utah, even if it is done in his spare time, the State will richly benefit from his presence in China.  He will likely inspire many new small businesses in Utah to move on to the world stage as well and become part of this emerging sector of opportunity.

Why can you sell goods and services from Southern Utah and other perfect places largely in your own language and largely in the way that you are accustomed to doing business? In no small part, you can thank the British.

In 1992, before “the earth is flat” era, Joel Kotkin authored Tribes, a fascinating book about how race, religion and identity determine success in what was then seen as a new world economy. Kotkin’s premise was that notwithstanding the dissolution of national boundaries due to a modern world-wide system of trade, tribalism is still alive and well as certain “global tribes” have been at the center of the world’s economy for hundreds of years and will continue into the 21st century. His thought provoking work focused on five major groups: Jews, British, Chinese, Japanese and Indians. I recommend this book highly to those seeking deeper insight into the longer term influences that shaped our world economy.

The opportunity for the small business person in rural America of today to be a participant in international trade was shaped, in part, years ago as the British undertook a form of conquest somewhat unique to world history at its greatest period of expansion. Kotkin points out that the march through history of the British certainly confounded the other seekers of global power such as the Germans, Italians, Spanish and most of all, the French. Even as late as the 1780’s, France had surpassed Britain in overseas colonial trade. The population of France was four times greater than that of Britain. French industrial power was superior and the French language stood second to none throughout Europe. It was the language of kings.

Yet today among the nations that were spawned by the British Empire, the United States, Canada, Australia, India, Britain and New Zealand, you have over half of the world’s GDP and by far the largest block of overseas foreign investment on the globe. You have English as the first language or the second language of preference virtually everywhere. What the English did to accomplish this phenomenal result was varied, but among the most important reasons is that when the British moved around the globe with their navies and armies, they did not merely go as the conqueror. To the contrary, legions of administrators and business people followed. Often it was the British East India Company or some other major commercial entity that helped guide government objectives and policy. The result is that a society was installed wherever possible that had perpetual mercantilism and trade at its heart. It stood to reason that war was disruptive to commerce and that good was more apt to flow in times of peace than in time of conflict. The British did not do a perfect job. They can’t forget that little mistake of getting the American colonists upset, but they did undertake a much more comprehensive effort in building community and commerce as opposed to mere conquest.

The result is that great empires, rather than falling, merely took on new custodians like the Americans and the Indians who continued the practices of government laid down and established by their British ancestors or conquerors. Moreover, other emerging economies have found success in adopting the British commercial models installed long ago. You see it in China, Japan and many of the prosperous Arab states. You see it in Hong Kong, Singapore and New Delhi, which retained much of their British traditions and architecture. British law, customs, commercial practices and business language are replete throughout the world – and even in the small towns of America.

When you, as a small business person in America have something to sell, the rest of the world is to some degree already prepared and waiting, thanks to the British. They often speak English or desire to. They are already experts at supply chain models established by the traders from the British Isles who came and in many cases stayed until their story was well understood, and until their story was part of the local history.

So, if you wonder why I can encourage you to put together a strategy for selling in foreign lands and actually lay out a process for doing so, it is thanks in part to the British, one of the great “tribes” who two centuries ago, built the economic core of today’s global commerce.

NOTE: Next Post - Some Nuts and Bolts for International Selling from Southern Utah and Other Perfect Places

Take the example of one of my Utah-based clients, Stampin’ Up! Inc. About six years ago, the company embarked on a strategy to move out into the world in anticipation of a slower United States market. Now, roughly a fifth of its entire revenues are realized by sales in such near foreign countries as Canada or the United Kingdom and from such distant places as France, Germany, Australia and New Zealand.

You would think Stampin’ Up! was selling a consumable that consumers could not do without, but guess what? The company sells decorative rubber stamps and accessories through in-home parties. These products are hardly consumables but nevertheless something that the scrapbookers, arts and crafters and lovers of card making cannot do without. While the world markets quake a bit, Stampin’ Up!’s international sales continue to grow.

This is a prime example of how a company with its manufacturing plant in the remote southern Utah town of Kanab (where many of the great John Wayne westerns and the tv show “Gunsmoke” were produced), has succeeded in bringing its product to the world markets.

The key to selling globally is simple–you have to think globally. You need to identify those opportunities elsewhere in the world where margins are sufficiently high to justify tackling the foreign regulatory boggy and doing what is required to bring your “made-in-America products” to those who want them, appreciate them and are willing to pay for them. This can sometimes be daunting.

For those who shy away from additional regulatory complexities today, you need only get a whiff of Business Administration 101 to find out that the regulatory infrastructure of the EU, Canada, Japan and other key markets is the soon-to-be regulatory structure of domestic sellers in the United States. The trends are clear, especially as those who love government regulation are now occupying the halls, walls and byways of the White House and our nation’s capital. So don’t shy away if you are serious about finding new places to sell your stuff. You either stay in the game or stand outside the stadium hoping that a ticket scalper will be kind to you. It is your choice.

In subsequent articles, I will address the basics of selling internationally. Whether it is belt buckles from southern Utah, saddles from Texas, Noni Juice from Hawaii, heritage products from North Carolina, or Native American jewelry from the reservations of Arizona and New Mexico, there are opportunities for the perfect small town American places to sell in the global main street.

NOTE: The next article – a brief history lesson. I will tell you about the greatest empire in the history of the world that has made it easy for you to sell globally. And it is not the United States of America.