As more international companies come to ply their wares here, it is clear that China -- and its 1.34 billion consumers -- not only welcome outside brands but also are hungry for more U.S.-made goods and products.
The prospect of reaching the world's most populous nation and fastest-growing economy is a tempting one for U.S. companies still recovering from the recession, but not every company that comes to China succeeds here.
Foreign companies that want to thrive in China need to understand the culture and be willing to "integrate a piece of the Chinese culture in your approach," said Shen Danyang, a spokesman for the Ministry of Commerce of the People's Republic of China, during a recent interview in Beijing.
McDonald's is a very good example. The products sold in Chinese McDonald's are very different from the products sold in U.S. McDonald's," he said. "Not only do they sell Coca-Cola but they also sell porridge" and other foods that appeal to local palates.
"KFC has also done very well integrating the Chinese market," he said. Customers can order their original recipe chicken with traditional sides like fish-cake or seaweed soup or battered shrimp, for example.
While McDonald's and KFC are regarded as more working-class eateries in the United States, in China, they have a higher status as sit-down, special-occasion restaurants and attract a wider range of income levels.
Food and hospitality play a larger role in Chinese culture than they do in America.
Even ordinary business lunches are conducted over lavish spreads meant to convey the generosity and good wishes of the host.
Among the companies that are paying attention in the hopes of expanding its presence in China is the J.M. Smucker Co. of Orrville, which last spring bought a minority interest in Guilin Seamild Biologic Technology Development Co., a family-owned oatmeal company.
Although foods like Jif peanut butter, Folgers coffee and Smucker's preserves are not staples in the traditional Chinese diet, Chief Executive Officer Richard Smucker has noted the Chinese have a rich tradition of celebrating special occasions with food and presenting gifts of food.
He has not elaborated on what the company plans to sell in China, other than saying that if it builds any manufacturing facilities, they will be to produce foods for local consumers rather than to replace U.S. factories.
On Thursday, Smucker's rival, Hormel Foods Corp., announced it was buying Skippy peanut butter for about $700 million, with plans to expand.
In a conference call with analysts, according to the Associated Press, CEO Jeffrey Ettinger noted that peanuts and peanut oil are popular in China. And although peanut butter is not yet a household staple there, he said Skippy is China's top-selling brand and is growing rapidly.
Smucker, as the maker of Folger's, Millstone and Dunkin' Donuts packaged coffee sold in supermarkets, is also interested in expanding its coffee business in China, where Starbucks has built a following in the midst of a traditionally tea-drinking society.
Walmarts in China devote a larger percentage of their floor space to food, including Chinese-style smokehouses and fancy bakeries, because they're a bigger draw than items in the rest of the store. The sheer size of Walmart's stores and the breadth of items they carry stand out in a society where food is still largely sold out of postage-stamp-sized stalls crammed with merchandise.
Chinese companies generally do not conduct the voluntary recalls on potentially harmful items that U.S. businesses do.
In the past there have been well-publicized problems with China's food supply including tainted infant formula and chemical-laden exploding watermelons by those trying to fetch a higher price at market for their foods.
Such stories may have ended up benefiting foreign brands, because many Chinese consumers think foreign standards are more stringent and reliable than local products.
China, already America's second-biggest trading partner after Canada, continues to fare well on the manufacturing front. On Tuesday, the country reported its third straight month of a Purchasing Managers' Index above 50, which indicates continued growth and expansion.
"Both the Chinese and U.S. markets are expanding, which brings new opportunities," said Wang Xu, deputy director-general of the North American and Oceanian Affairs Department for China's Ministry of Commerce. "China welcomes foreign capital and will provide equal treatment for investors in China."
Many foreign companies, including Ford and General Motors, have already established factories in China and are working with local partners to export their goods to other countries, including the United States, commerce officials said.
"General Motors sells one car every six seconds in China," and demand -- especially for renewable-energy vehicles -- is expected to keep growing, said Wang.
About 18 million passenger cars a year are produced in China, and demand continues to rise despite the fact that heavily congested cities like Beijing (which already has more than 4 million vehicles) have instituted a lottery system for those who want to buy cars.
The Ministry of Commerce would like to see not only more investment among U.S. companies already in China, but also more newcomers, especially in sectors that the U.S. dominates, said spokesman Shen.
"From my perspective, huge business opportunities exist in several sectors," including new energy, pharmaceuticals, environmental protection, high-end equipment manufacturing, the financial sector and the insurance industry.
"The U.S. has the most competitive service sector in the world, and they would enjoy a lot of opportunities if they invested in China," Shen added.
He said more U.S. companies should come see what's available in China and conduct more market research to better appeal to Chinese tastes.
"U.S. enterprises do not have a good understanding of what the Chinese market and Chinese consumers want and need," he said. "Over the last 20 years, the Chinese market has changed a lot."
Gary Locke, the former U.S. secretary of commerce who now serves as ambassador to China, favors more trade and better relations between the world's two largest economies.
"We welcome a prosperous China that takes its rightful place on the world stage," he said in a recent webcast from Beijing. "Our peoples have the same goals: a better life for themselves, their children and their children's children."
He pointed out that when Richard Nixon became the first U.S. president to visit China in 1972, two-way trade between the two countries amounted to less than $100 million and only a handful of U.S. jobs had any connection to China.
Now, "more than $1 billion in goods and services flow back and forth every day, and more than 700,000 American jobs" depend directly on U.S. exports to China, including thousands of Americans who work for Chinese employers, Locke said.
Ohio companies already in China include: Invacare, Swagelok, Diebold, RPM International, Sherwin-Williams, MTD Products, Eaton Corp., Lincoln Electric, Materion, Squire Sanders and Jones Day, and Ohio retailers such as Jo-Ann stores and American Greetings rely heavily in Chinese-made goods.
The Canton-based Timken Co. has six factories, a technical center and a distribution center in China and diversified industrial company Parker Hannifin established a division in China in the 1980s, making it one of the first American companies to enter that country.
Locke acknowledges that China needs to beef up its enforcement of intellectual-property rights, reduce its tariffs on imported goods, foster a "more open investment climate, and end distorting currency practices" that make Chinese goods less expensive
Lingering concerns over issues like that are why the American Chamber of Commerce in Hong Kong recommends that American companies access Mainland China through Hong Kong. After years of British control, Hong Kong became a Special Administrative Region under Beijing 15 years ago in what is called a "One country, two systems" arrangement that effectively maintains a large degree of Hong Kong's autonomy.
"If you want to start a business here, Hong Kong is the way to do it," said Richard Vuylsteke, president of the chamber. Because Hong Kong has the rule of law, better enforcement of legal contracts, and a robust financial services sector, he said it's the ideal gateway for foreign companies looking to expand not only to China but to the rest of Asia.
