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China-US relations

Trump’s China trip a big deal for US firms but worries linger

Companies joining president’s trade delegation are eyeing billion-dollar contracts, but many still harbour concerns over market access and intellectual property rights

PUBLISHED : Monday, 06 November, 2017, 9:33pm
UPDATED : Tuesday, 07 November, 2017, 3:16pm

US waste water treatment company Viroment has one big mission this week during US President Donald Trump’s trip to China.

It aims to seal US$900 million worth of deals with building contractor Guangye Guangdong Environmental Protection Industrial Group and Chinese manufacturer Hangzhou Iron and Steel.

“Right now we have no footprint in China, so this is our kick-off,” Viroment’s chief executive Paul Koenig said. “The stress [on this mission] is on getting big deals … if Trump wasn’t coming, I don’t think we would have pushed to have [such] large deals in writing.”

Once the ink is dry, the agreements will allow more than 800 textile companies in eastern China’s Zhejiang province and 80 waste water treatment plants in southern Guangdong province to install Viroment technology to help them comply with China’s environmental regulations.

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“Everyone’s excited and everyone’s motivated … you can pretty much always add one or more zeroes when you’re dealing with China,” Koenig said.

Viroment representatives will be among the executives from dozens of US companies – from energy giants to technology firms and soybean sellers – who will join Trump on his first presidential trip to China, betting he will ease trade tensions and remove hurdles for foreign companies as they eye further expansion on the mainland.

The mission will allow the firms to broaden their footprint in China, translating into billion-dollar deals for some and high-profile market debuts for others.

Koenig will attend three more trade missions to China later this year, with ongoing plans to work with companies in Hebei province and major port city Tianjin, and eventually “tackle all of China”.

Other companies have similar agreements lined up for the trip. Smart city developer The Digit Group plans to sign deals worth US$4.85 billion this week, including one to build a 200-hectare virtual reality theme part in the eastern city of Qingdao.

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Green energy firm SolarReserve is gearing up to work with Chinese contractors for several projects under China’s solar thermal pilot programme. IM Systems Group (IMSG), an environmental data solutions company, is hoping to sign an agreement with China’s air traffic management bureau to help with weather forecasts and reduce flight delays.

But while firms are eager for a slice of China’s market, many harbour concerns about doing business in the country, including fair access and forced transfer of intellectual property to Chinese partners.

Trump has railed consistently against China’s “unfair” trade practices and the “embarrassing” trade deficit, which reached US$34.6 billion in September. Bilateral trade tensions have escalated in recent months amid his administration’s rhetoric and investigations into Chinese intellectual property theft.

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The US Soybean Export Council said Beijing warned earlier this year that US soybeans, which account for about 37 per cent of China’s imports of the crop, could face retaliatory action if tensions ramped up.

But Paul Burke, the council’s North Asia regional director, remained optimistic this would not happen as it would shift extra costs onto Chinese soybean processors.

“Soybeans are very, very important to the Chinese food and agricultural economy,” he said. “It probably should not be one of the top commodities to be targeted.”

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The council aims to sign a letter of intent for purchases with the China Chamber of Commerce of Foodstuffs and Native Produce during the trade mission, while highlighting the importance of the soybean trade for both nations.

Tim Tangredi, president and chief executive of nanotechnology company Dais Analytic, said it was still “next to impossible” to transfer funds from China, and that foreign companies faced “unfair” operating conditions and limited protection of intellectual property.

But he was hopeful Trump and Chinese President Xi Jinping would “see eye to eye” on trade issues, including addressing the US trade deficit with China.

“The trade deficit is not a good thing, we all know that,” Tangredi said. “It’s not fair the way it is. I really do have a hope that something will change.”

Still, the company has had a positive experience in its eight years in China, and is eager to tap into the significant potential for its heating and cooling equipment and clean water system products.

“China’s water market is huge,” Tangredi said. “The growth could be incredible, the numbers could be just stunning.”

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Le Jiang, vice-president and chief scientist of IMSG, said there were still “unfair terms” for intellectual property rights in China.

“President Trump has talked about IP issues, which are real from our standpoint,” he said. “The language in some of the contracts we see is that you have to share the IP, which is an issue.”

But his hope is that the upcoming deal and the company’s continued expansion in China can help bring both countries and economies closer together.

“[As] companies doing business in China, we are bridges for the two countries,” he said.