Photo showcase: Nebraska trade delegation in China
More China coverage at The World-Herald's China Connection page.
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SHANGHAI — Annette Junck is discouraged.
The Laurel, Neb., business manager has come to China to gauge interest in her company's new product, Bio-Res, a corn-based replacement for the resins used in making plastic.
But her first contact — a government-owned petrochemical company outside Beijing — was a bust.
Her interpreter had trouble describing the product. The Chinese company, with a sprawling compound that includes a hotel and fitness center, seemed too big to deal with a Nebraska startup. And her hosts, while cordial, showed little interest in a “green” product that would replace some of their own resins.
A day later, on a bus trip to visit the Great Wall, Junck is starting to doubt the value of spending 10 days in China as part of Gov. Dave Heineman's trade mission. “I don't know that China is the area we want to be in.”
It's an assessment that will later change.
For Junck and other trade mission delegates, this was more than a journey from Nebraska to China. It also was a time of highs and lows. Of coping with language barriers, traffic, rain-delayed flights, jet lag and foreign customs. Of trying to learn whether their business might find a profitable niche in the world's most-populous nation.
Heineman's trip was spiked with business success stories: a new joint venture for Behlen Manufacturing Co. of Columbus to make steel buildings, a Shanghai food distributor coming to Omaha, a Chinese distribution agreement for an anti-inflammatory cream made in Plattsmouth.
But those were the products of years of effort by those companies and Nebraska economic development staffers. They were deals that came to fruition about the time of the governor's trip, not because of it.
That's because doing business in China often takes years of groundwork.
“We're planting the seeds,” said Joe Chapuran, trade mission coordinator and international development manager for the Nebraska Department of Economic Development.
Junck and others hoping to enter the China market face a long period of cultivation before any harvest — if the payoff comes at all.
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Junck looks shocked. She's at Chicago's O'Hare Airport, nearly ready to get on a 13-hour flight to go halfway around the world. She's just realized that she forgot converters to allow her electronic devices to be plugged into sockets in China.
No worries. Chapuran takes her to a newsstand to buy converters.
But Junck is still unsettled. So much unknown is ahead. Junck, 60, has rarely been out of the country — just a few trips to Mexico, including her oldest son's destination wedding.
Until recently she was economic development coordinator for Laurel, a city of about 1,000 in northeast Nebraska. She and her husband also have a farm.
In April, Junck took a job at Laurel BioComposite, a company that converts distillers grain — a byproduct of the ethanol process — into powder or pellets that can replace some of the petroleum-based resins in plastic. The resulting plastic is cheaper, stronger and uses less oil.
So far the company has made only an initial batch to take to trade shows and give to potential buyers for testing. But a new building is under construction, and the company expects to be in production by this fall.
Junck is going to China to explore the potential market.
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Walking into the lobby of the China World Hotel after traveling for nearly 24 hours, Jack Schreiner is surprised to hear someone yelling his name.
It's a Chinese man who lives in California and works for Reinke Irrigation of Deshler, Neb. They had met years ago but didn't expect to see each other in Beijing.
The world is a small place, Schreiner thinks.
But he knows that already. Schreiner is president of Bruckman Rubber, a Hastings, Neb., manufacturer that does business around the world.
Schreiner has 80 employees making more than 2,000 different molded rubber products: gaskets, spark plug boots, parts used for oil exploration, little seals for lab rats' water bottles.
He got his passport in 2004 and it was supposed to last 10 years, but he has filled the 24 pages with visas and customs stamps and needs a new one before a business trip to India this year.
The day after his arrival in Beijing, Schreiner goes to a meeting with the head of a Chinese rubber industry group, one of the “Gold Key” meetings arranged by the U.S. Department of Commerce.
Schreiner thinks the meeting will be a waste of time — he wants to talk with people who will buy his products, not compete with him.
But the meeting goes well. Schreiner's a friendly guy, and when the Chinese tell him they've never been to an American rubber factory, he's quick with an invitation. “They were surprised we would be cooperative,” he says.
There was a time when Schreiner was more guarded. But he's found that trust builds on itself and leads to solid relationships where people treat each other fairly.
“If you've broken bread with someone, you're much less likely to do something stupid that will cause a problem,” he likes to say.
It's an approach that fits with the relationship-based model that dominates Chinese business dealings. The Chinese term is guanxi, a complex concept that involves the personal connection between two people and the understanding each has of the other's wants and needs.
So a large part of the trade mission is devoted to gift exchanges, formal signing ceremonies to promise even closer ties and elaborate meals.
In Beijing, Nebraska delegates are treated to a 20-course meal. The first course is organized in the shape of a flower: snow peas as the leaves at the base, stems made of asparagus, and flower petals from whole shrimp. The roast lamb is garnished with a lotus flower. The last course includes watermelon — that, the Nebraska China veterans tell the rookies, is how you know the meal is over.
Then it's back on the bus for a wild ride through Beijing's congested city streets. Cars, trucks, motorcycles, buses, taxis, motorized rickshaws, ordinary bicycles — they all vie for space on the road with little concern for lane markings. Drivers edge into slivers of open space. Cars thread through pedestrians in crosswalks. Bicyclists ride the wrong way into traffic.
Amazingly on this trip, no one is rear-ended or sideswiped or flattened.
The journey continues past grimy 20-story apartment buildings that seem to be aging badly, a Lamborghini dealership and the “Silk Market,” a multistory warren of small shops selling silk dresses, T-shirts, toys and — depending on how naive you are — “genuine Rolex watches.”
Foreigners who live in China have a phrase to sum up, if not quite explain, the things that seem chaotic or curious: T.I.C.
This is China.
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The Nebraska trade mission is in Xi'an, a city in the central China province of Shaanxi.
It's the place where the emperor Qin Shi Huang buried an army of thousands of life-size terra cotta warriors to guard his tomb some 2,000 years ago.
Now the province is a sister state to Nebraska, Heineman and Shaanxi's governor agreed the night before.
In the cold light of day, however, Ken Risk isn't seeing the benefits of a sister state.
Risk has come to find Chinese distributors who would sell the electronic components his company makes in Kimball, Neb. For example, George Risk Industries — founded by Ken's father — makes switches and other devices for the burglar alarm industry.
Risk has 160 employees and sales around the world, including in places such as Dubai.
Risk just came from a meeting where Shaanxi businesses outlined the relationship they have in mind, and he doesn't like it.
“They want our products manufactured here,” he fumes.
Risk has no intention of moving his factory to China. And he hasn't been impressed with the Chinese businessmen who have talked to him about distribution deals.
Basically they don't understand his niche in the market. His company can't be the low-cost manufacturer. Chinese manufacturers already make many of his products cheaper than he does.
But Risk's company has loyal customers who want reliability. They don't want to redo a security system installation because they tried to save 50 cents on a $3 contact switch.
Chinese factories often are unwilling to modify a product unless a customer will order 10,000 units. Risk's company will do smaller jobs.
It's looking like Risk won't be lining up any China sales.
“I can deal with it,” he says. “I'll go back with a lot of good ideas.”
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Junck, on the other hand, is feeling more optimistic.
Sure, the Xi'an meetings didn't work out particularly well, but she had more success in Beijing after that first meeting with the petrochemical company.
One session involved the Chinese plastics association as well as a scientist who has his own resin-alternative product. Both had seemed excited about BioRes and wanted to have a trial sample to work with.
Junck turned them down, partly because she wasn't comfortable that protections against stealing intellectual property would be understood, honored or enforced in China.
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John Friesen marvels at his good fortune.
The organist is on the trade mission for the Bedient Pipe Organ Co., which would like to sell in China the custom pipe organs the company crafts in Roca, Neb.
His initial strategy: bid for big organ projects that are to be installed in some of the new concert halls and theaters that Chinese cities are building. The most elaborate instruments can cost more than $1 million. That plan quickly fizzles.
He's too late to bid on one big job, and he can't get an appointment with a woman who is considered one of the top organists in China. She is out of the country.
So in Shanghai, Friesen decides to go small. He and a friend who lives here started to go to music stores to talk about organ playing.
One store refers him to a man who repairs organs and tunes pianos. When Friesen tracks him down, they find they have much in common: Both have lived in Taiwan, and the man has done maintenance on the organ at the Presbyterian College in Taiwan where Friesen once worked.
They talk, and now Friesen has a new strategy: try to sell smaller pipe organs to well-to-do people in Shanghai or elsewhere in China. A house-scaled pipe organ would run $160,000 to $200,000.
The organ technician who had worked in Taiwan may help Friesen's company find customers.
“If you believe in Providence, there it is,” Friesen exults.
Then he heads off for a fitting of the new suits he is buying in Shanghai.
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Junck finishes one meeting at the U.S. Consulate and heads next door to the five-star Portman Ritz-Carlton Hotel, where the Nebraska delegation is staying. She doesn't notice that the gray marble floor drops down two steps, and she lands hard, her ankle giving way with a pop.
People rush to help her. They take her to a health clinic in the hotel complex for an X-ray. Her ankle is not broken, thankfully, so it's wrapped and she's given some medications, a wheelchair and a bill for $380.
The mishap causes Junck to cancel some appointments, but she makes it to the reception that Nebraska and some of its companies host in the hotel ballroom.
The following day, Junck resumes her meetings, moving gingerly but rejecting the wheelchair. She has her best interpreter yet, and the meetings go well.
In the evening, on her last night in China, she joins fellow delegation members at a farewell dinner in a restaurant overlooking the Bund, a riverfront promenade that has been a center of commerce and entertainment since the days when colonial powers controlled Shanghai.
Across the river from the Bund is Pudong, Shanghai's new financial district, built since 1990 on what once was a swamp. Now it's a collection of stunningly modern buildings, one as much as 101 stories tall and another with two giant spheres called the Oriental Pearl Radio and TV Tower.
At night, they all glow.
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The trade mission is over, and most of the delegates are on their way home or will be soon.
Schreiner has a long list of possible business partners for his rubber business, and he's eager to work on those relationships.
One company from Xi'an is having trouble getting its U.S. business started, and Schreiner thinks he may be able to make a new and useful friend by tapping his contacts to help.
Risk, the Kimball manufacturer, also is in a good mood. Several promising distributors are interested in handling the more unique parts of his product line.
Friesen, from the Roca organ company, finally is able to get a meeting with that top organist. So he's extending his trip, taking a bullet train from Shanghai to Beijing and meeting for Sunday dinner.
He's wearing his new gray suit, and it looks sharp.
And Junck has her foot elevated as she waits to head for the airport. She ponders the trade mission, using words like “fascinating” and “enriching.”
She thinks it might work to do business with some of the Chinese companies she met, although nothing is certain. No matter what, she has a better idea of how international trade works and what issues her company will need to consider. She may want to do more international travel.
“This certainly broadens your horizons.”
Contact the writer: 402-444-1114, email@example.com
Tai chi with Chairman Mao statue