Mr. Schwarzenegger Goes to China
California governor to tout trade, investment, and voice IP piracy concerns
SACRAMENTO - 11/14/05 - California Gov. Arnold Schwarzenegger is in China this week in what his office says will be an all-out effort to promote trade and tourism between two of the world's leading economies, and discuss such key issues to the California economy as agriculture and intellectual property rights.
The six-day, 70-person trade mission "reflects a willingness to promote California nationally and overseas," according to Vincent Soleto, a spokesperson from the governor's press office.
"It is certainly standard for this governor to travel around the country and around the globe to promote California," he said, adding that Schwarzenegger has already visited Israel, Japan, and his native Austria to tout California as a business partner.
China is critical to California's economy, ranking as the state's fourth leading trading partner after Mexico, Japan, and Canada.
Last year, the state exported $6.8 billion worth of goods - or some 6.2% of the state's overseas sales - to China, up more than 25% from the previous year.
According to the San Francisco Chronicle, the governor has plans to focus on several specific issues "critical to the future growth of California's global economy," said Soleto.
Intellectual property piracy leads the list as the International Intellectual Property Alliance (IIPA), a trade coalition, estimates that 95% of motion pictures, 85% of all music, 90% of business and entertainment software, and fully half of all books sold in China in 2004 were pirated copies - a loss estimated at more than $2.5 billion in value.
With high tech and entertainment leaders along for the trip, "Schwarzenegger has to make the case that…a lot of people are waiting in the wings to make their technology plays if China will work cooperatively with our best companies," said author Ted Fishman, who wrote "China Inc.," a study of the rise of a new business superpower.
World environmental groups say that of the world's 20 most polluted cities, 16 are in China.
China "knows the stakes," writes New York Times columnist and author Thomas Friedman.
"It must either clean up its act or cease to thrive" - and California-based companies producing green technology "could be the winners if they can tap a huge new market here," reports the Chronicle.
California's tourism industry - the state's fourth-largest employer with 900,000 jobs - generates $82.5 billion in direct travel spending as well as $5.2 billion in direct state and local revenues.
State tourism officials say they want to attract more visitors from China, which could become the world's largest source of outbound travelers by the end of the decade.
California, "is a gateway for Asian travel because of family and cultural bonds and a destination for half of all Chinese tourism to the United States," according to the California Tourism Board.
Promoting California's vast agricultural sector is also a high priority on the governor's promotion list.
Two dozen agriculture-related industries support the "California Grown" promotion program, and the governor will highlight California wines, nuts, and fruits at a huge trade show in Beijing urging Chinese consumers to "Buy California."
California exported $456 million worth of farm products to China in 2004, making it the state's fifth-largest overseas market. But many agricultural industry officials see this as just the beginning for a country with 1.3 billion people.
"China is extremely important to us as a marketplace as well as a competitor," said Rayne Thompson, who tracks international trade for the California Farm Bureau Federation.
"Our growers are looking at these markets," said Brad Caudill, executive director of the Tulare County Farm Bureau, adding that China and other countries like India also are "increasingly competitors for us."
Clearly, the potential is too great to abandon China without an all out effort, California agricultural officials agree.
Right now, for example, the state's top agricultural trading partner is Canada with 32 million people, compared to just a developing Chinese middle class of somewhere between 100 million and 300 million, said Robert Tse, director of trade for the California Department of Food and Agriculture.
In addition, the governor will sit in on events on energy and sustainable development, attend talks on business with the American Chamber of Commerce, speak at a university, tour several industries, meet with officials including Shanghai Mayor Han Zheng, and conduct VIP diplomacy at a banquet at the Great Hall of the People.
According to author Ted Fishman, China has 320 million people under the age of 14 - "more than the entire population of the US" and "100 to 160 cities with populations of 1 million or more - compared with nine such cities in the US."
The country, he writes, also has more than 300 biotech firms that operate "unhindered by ethical standards boards, religious groups, or animal rights lobbies."
More people use the Internet in China than in the US and, remarkably, China has more speakers of English as a second language than the US has native English speakers.
On average, US companies make a 42% return on their China operations with "massive growth potential."
General Motors, for example, expects the Chinese automobile market to be bigger than the US market by 2025. Some 74 million Chinese families can now afford to buy cars.
Every month, China must build enough urban infrastructure to accommodate a city the size of Houston in order to absorb the 300 million rural Chinese who will move to cities in the next 15 years, wrote Fishman.
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