Some fresh, new opportunities are coming to light for local small businesses via World Trade Center Tacoma. Rising on the foundation of Tacoma’s longtime sister city relationship with Fuzhou, China, and thanks to changes in government policy in that country, doors are beginning to open in China for Tacoma entrepreneurs to engage in cross-border business-to-business and business-to-consumer e-commerce. Michael Fowler, senior consultant for the China Trade and Investment Program at World Trade Center Tacoma, is helping to secure these opportunities that could well benefit those in our area who make and sell local products.
“For makers of high-quality, regional organic products, including some that are sold in our farmers markets, there is an overseas market in China right now,” Fowler said. “(The Chinese) have the money, they want higher-quality, safer products, and thanks to changes that have come about to make online purchases cheaper and deliveries faster, there’s great potential for us in cross-border e-commerce.”
Fowler said that an example of the perfect types of products that Chinese consumers are most interested in can be found at the Northwest Shop in Proctor District and at Tacoma farmers markets – American made and locally sourced organic and health related products ranging from cosmetics and soaps to confections, packaged snacks, beverages, gifts, nutritional supplements, cheese, wine and salmon.
“The market is ready, they’ve simplified the system and now you can do this virtually,” Fowler said. “You don’t need a Chinese bank account or to worry about currency exchanges. This was all very complicated a few years ago, and now it’s being made much more simple.”
At the heart of this burgeoning business opportunity is Chinese business magnate Jack Ma, founder and executive chairman of Alibaba Group, a family of successful Internet-based businesses. Fowler said Alibaba is bigger than Amazon and Ebay combined.
“He told President Trump that he wants to create one million jobs in America and that would be done by small and medium sized enterprises marketing their products through his e-commerce network,” Fowler said. “The fact is, Chinese e-commerce makes up 40 percent of the world’s e-commerce. Theirs is slated to grow astronomically and right now they already have a larger e-commerce retail market than we do.”
Free trade zone pilot projects in China are also making an impact on e-commerce where local and international consumers can touch, taste, smell, or feel a host of showcased products before choosing what to purchase. Tacoma’s sister city Fuzhou is the site of one such free trade zone. “Our sister city wants us to have a Tacoma pavilion inside their free trade zone,” Fowler said. “They tell me that it’s an important part of the multi-point plan to work with our City and Port to further promote our relationship.”
There are two options for getting products to the Chinese e-commerce consumer: either ship direct from America or, once it is determined which products are really selling quickly, a pallet of products can be put in a free trade zone and a China-based fulfillment company can ship it out of the free trade zone upon receiving orders. The latter is much faster and cheaper.
In addition, Fowler said that the Chinese government has made some changes to customs clearance by automating it. This mean that when a Chinese consumer pushes a button to buy something from abroad or from a free trade zone in China, the order immediately goes simultaneously to customs and the warehouse so that when it gets to customs they already know about it, which can cut down delivery time by 50 percent. At the same time the Chinese have simplified their tariff structure so that a consumer buying a certain amount of product only pays 10 percent tariff in certain categories. This 10 percent tariff is very small compared to what it used to be – an automatic 17 percent value added tax plus what was often much more than a 10 percent tariff.
There is assistance available for American entrepreneurs who wish to export, and Fowler and World Trade Center Tacoma can help those interested to navigate these. One is the State Trade and Export Promotion (STEP) Grant, a three-year pilot trade and export initiative to make matching-fund grants for states to assist eligible small business concerns enter and succeed in the international marketplace. Services under the STEP Program are funded in part by U.S. Small Business Administration, but are provided to eligible small business concerns – or “STEP Clients” – by STEP grant recipients located in most states. Through a reimbursement program, STEP pays up to $5,000 and up to 75 percent of costs of promoting products for export. There is also the Western US Agricultural Trade Association (WUSATA) that will give up to 50 percent back on funds spent to export your product.
From May 15-23, Fowler plans on being part of a World Trade Center Tacoma contingent taking a group of small and medium sized enterprises to Shanghai for the largest food trade show in China. “We have a partner there who has a booth and we’re going to do match-making for potential buyers in China,” he said. “Then we plan on going to Alibaba to tour their campus and learn more about it. My hope is to get more people excited about it so that we can open a virtual store on Alibaba and everybody can have their own showcase and put their product in.” The group will also visit Fuzhou and its free trade zone to get a first-hand look.