LEXIS-NEXIS® Academic Universe

Search Terms: Permanent, Normal, Trade

Document 122 of 334.

October 2, 2000, Monday

SECTION: SPECIAL REPORT3; Pg. 60

LENGTH: 645 words

HEADLINE: Seeing the big picture

BYLINE: By William Armbruster

BODY:
Less than a decade ago China was the 17th-largest market for Eastman Ko-dak. Today it's the second-largest.

Kodak declines to give sales figures for China, but spokesman Paul Allen said the company has opened 5,000 retail outlets around China where consumers can buy film and get their photos pro-cessed. Scores of other U.S. companies would love to replicate Kodak's success, a goal that should become much easier once China joins the World Trade Organization. Distribution was one of the key issues in the agreement that the U.S. negotiated with China last November as a condition for Beijing's expected entry into the WTO this winter. The accord includes a provision that gives foreign companies the right to control distribution of their products in China three years after Beijing officially joins the WTO.

""Control of distribution has long been at the top of foreign companies' list of priorities for increased market access in China,'' said Karen Sutter, director of business advisory services for the Washington-based U.S.-China Business Council. Sutter said that this power will apply not only to goods that foreign companies manufacture in China, but also to products that they import.

""It's going to make a big difference,'' said John Holden, a former Cargill executive in China who is president of the National Committee on U.S.-China Relations. ""If you can't present your products to your customers and get it to the market in an efficient way, you're at a big disadvantage.''

Companies looking to enhance their presence in China as distribution becomes easier include General Motors. The giant automaker predicts that demand for private vehicles in China will quadruple over the next 10 years. A policy paper by GM cites restrictions on direct distribution and servicing as two of the major barriers the automaker has faced in China.The approval by Congress of permanent normal trade relations with China is expected to pave the way for U.S. companies to reap benefits of market-opening measures in China once it joins the WTO.

But because distribution systems in China are so undeveloped, particularly outside the major trade centers like Beijing, Shanghai and Shenzhen, it will take time before the real benefits of the WTO agreement are realized, analysts caution.

Meanwhile, the ""million-dollar question,'' as one analyst put it, is whether the Chinese will actually live up to the agreement. It may be one thing for Premier Zhu Rongji to sign off on the deal, but another for officials in the provinces and at lower government levels to comply, particularly if it means ending local monopolies.

""They're going to live up to it,'' said Peter Morici, a senior fellow at the Economic Strategy Institute and professor of economics at the University of Maryland. ""But they're going to cheat on the edges and drag their feet, which developed countries do, too. But in the case of China we're going to have more cheating on the edges and more foot-dragging.''

David Cunningham, Hong Kong-based president of the Asia-Pacific division at FedEx Corp., describes the WTO deal as a broad and complex agreement that draws China into the global economy. ""I think the government is fully committed to living up to its agreements, just as it has with Hong Kong,'' he said. ""The real boon is for U.S. exports to China. You'll see barriers coming down and tariffs coming down.''

Kodak's Allen agreed. He said that WTO membership and the September Senate vote granting China permanent normal trade status will make it easier for Kodak to export raw materials as well as finished products to its factories and its 5,000 independently owned retail outlets in China. Just as FedEx is hoping to deliver millions more packages to China, Kodak is hoping that increased sales of its products will produce millions more ""Kodak moments.''

GRAPHIC: Photo - Special Report: CHINA TRADE;

LOAD-DATE: October 3, 2000

Document 122 of 334.


Search Terms: Permanent, Normal, Trade
To narrow your search, please enter a word or phrase: