The Real Value of Trade Missions

This spring, Califo
ia’s governor, Jerry Brown, led a delegation of ninety business leaders on a “trade and investment mission” to China. This type of private-public partnership is a common occurrence for states to expand export opportunities around the world. In fact, three more governors and their delegations from Virginia, Iowa, and Wisconsin met soon after in Beijing. Federal law authorizes such trips and requires full disclosure of private-public partnerships to ensure transparency. Unlike some trade missions, Califo
ia’s excursion did not cost taxpayers one dime.

However, not everyone was pleased by Brown’s endeavor. George Skelton, a senior Los Angeles Times columnist, questioned the wisdom of such a high profile trip in a long op-ed piece. “It just looks unseemly—a pack of lobbyists and other favor-seekers paying big bucks to traipse after the governor, schmoozing and gaining invaluable access.” Skelton was also skeptical that any long lasting benefits would ensue.

Overall, Skelton’s assessment can be fairly characterized as cynical. Perhaps he has spent too much time observing politicians in Sacramento to have much faith in the value of these trips. He is particularly pessimistic about the new “Califo
ia Trade and Investment Office” in Shanghai. Its opening coincided with the governor’s trip, and it was funded by the Bay Area Council, a San Francisco-region business group. Skelton quotes another critic, Jock O’Connell, a foreign trade expert for Beacon Economics, who shared his view. “Historically, these foreign offices haven’t accomplished very much. Legislators and governors have mostly used them as political props.”

I would like to suggest that there is indeed immense value in sending delegations to meet with their foreign counterparts, especially in key Pacific Rim markets. My own experience as an international entrepreneur who developed vast amounts of beneficial business outcomes is a testament to this.

In 1988, I was selected to be part of a presidential trade mission to Japan. Nine entrepreneurs were chosen based on their past success in exporting goods to Japan. President Reagan understood the importance of addressing our huge trade imbalance with the Japanese, and this certainly mirrors the huge imbalance we have with China today.

During our weeklong mission to Japan, we attended receptions, toured factories, and met with several industry leaders such as Akio Morita, founder and president of Sony.

Did we actually accomplish our goal of expanding United States exports to Japan? You bet we did.

1. We allowed retailers such as Toys “R” Us to gain a retail presence.

2. We helped the Japanese to better understand the need to modernize their distribution systems so that trade could be expedited.

3. We gained a better understanding of the needs of the Japanese marketplace.

4. In turn, we learned about changes we needed to make in relation to quality control.

5. We learned that Japan was way ahead on computerization and the emerging use of industrial robots.

6. And lastly, we developed stronger relationships with our Japanese counterparts.

Anyone who has ever traded overseas understands the importance of establishing a relationship first before proceeding to business. Knowing your competitors is vital to staying at the top.

Will Governor Brown’s trade mission achieve similar results? Time will continue to tell, but my hunch is that there will indeed be several positive outcomes in 2013 and well beyond. Califo
ia has much to offer the Chinese market including fine wines, high tech expertise (especially green technology), specialty crop products, and movie-making magic (just to name a few).

The trip already seems to be bearing fruit. Governor Brown announced that a Chinese factory would soon be assembling electric buses at a new facility in Lancaster. Orders are in hand with the first fleet of ten buses slated for the streets of Long Beach next year. Golden State entrepreneurs understand that if our state leaders are proactive in the global marketplace, opportunities of real value will open up across a wide spectrum, and I fully support these entrepreneurial endeavors.