Devalued Dollar Lifts CT Exports | State exports up 632 percent to China since 2000
With the dollar in a value nosedive, it’s as if everything made in Connecticut is on sale. And China is on a serious shopping spree.
A new report from the U.S.-China Business Council shows that exports from Connecticut to China in 2007 totaled $565 million. That is up 53 percent from 2006, when such exports amounted to $369 million, and up 632 percent from 2000.
During the same time period, the state’s exports to the rest of the world increased only 65 percent.
And in a CBIA survey conducted last spring, companies were asked where they were exporting and where they intended to start exporting. China was the No. 1 market.
If it had been an election — China vs. the rest of the world — China would have won hands down. One reason for the landslide is the state of the dollar.
Currency Exchange
“There has been some improvement in terms of currency exchange,” said Peter Gioia, economist with the Connecticut Business & Industry Association. “U.S. goods are about 20 percent cheaper than they used to be.”
And with currency values playing such a key role, “the best is yet to come” for the Chinese export market, Gioia said.
Chinese currency is controlled right now, Gioia said, meaning it doesn’t float in value like the dollar. But according to Global Insight, which is an economic forecasting and analysis company, by 2010, China will begin to float its currency.
“That will lead to a significant reduction in the cost of U.S. goods to China,” he said, adding that he expects state exports to China to double in the next five years.
Gioia said about 75 percent of state manufacturers are introducing new products every year. That innovation coupled with American quality, he added, is garnering international attention and widespread appeal.
High Tech Demand
“And they need our high-tech goods,” Gioia said. “They’re leaders in low cost, and their low cost is eroding.”
The Seitz Corp. is one Connecticut company responding to that need.
The manufacturer, which makes a variety of products including plastic gears and gear trains, is headquartered in Torrington but also has operations in Changzou, China. Company Chairman Alan Seitz said that 50 percent of the company’s business revolves around China.
“They’re after quality components,” Seitz said. “The first thing you need to sell over there is quality.”
Seitz said his company, which has 160 employees in Connecticut and 60 in China, started taking advantage of the Asian opportunity when a customer, with operations in China, advised him to plan a trip and take in the sheer power of the market firsthand.
The establishment of Seitz’s China division, he said, has brought the company “tremendous success,” he added. “Our China part of the business will more than triple this year.”
And since he’s been involved in business over there for several years now, he’s beaten some of his competitors to the punch. Now, he said he’s getting a good share of their potential business too.
Market Conditions
Paul Edelberg, an attorney with the International Business Practice Group of statewide law firm Murtha Cullina, said he isn’t surprised that the Chinese are taking advantage of the current market situation.
Our economy’s down, he said, and Asia is hot.
“The purchasing power of Chinese companies has increased,” Edelberg said, as has their wealth.
Also, the Chinese system is becoming more and more conducive to doing large export business, he added, thanks to a change in both export laws and attitude to the business.
Since China joined the World Trade Organization in 2001, it has worked, slowly but steadily, to morph into a more friendly market for foreign goods. Becoming more accessible has meant eliminating practices that have historically kept out foreign goods, dropping duties and opening itself up to branches of foreign-owned companies.
“Frankly, if [U.S. companies] don’t take advantage, they’re going to fall behind,” Edelberg said.
American companies in general have to capitalize on the potential with China, he said, adding, if not, other countries could pounce — and capture a meaty market.
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