Oklahoma Firms Should Look to China for Business

By J. Markham Collins
Associated Dean and Professor of Finance at TU’s Collins College of Business


Courtesy University of Tulsa

If you get a chance to be an honored guest in China, take it. A few weeks ago, it was my privilege to serve as keynote speaker at an international forum at China Petroleum University-Beijing. No host could have been more gracious and no audience more respectful.

China is Oklahoma’s fifth largest export market, according to the state Department of Commerce. Based on my assessment of reported and observed data, I believe the Asian giant will continue to develop as a valuable trading partner.

China is an astoundingly large country in size and population. More than 1.3 billion people — about one-sixth of the world’s population — live there. Any country so huge, with an economy to match, has opportunities that require special attention.

Oklahoma companies should look to China as a market as well as a source of products and raw materials. It is a key export market for the state — our sales to China are just over $100 million a year. Energy products such as pumps, valves, pipe tabs, elevators, insulated cable and lifting equipment make up the largest share of Oklahoma exports to China.

The Beijing conference where I spoke, hosted by the University of Tulsa’s partner university, was called “Carbon Economy and the Development of Energy Related Enterprises.” I was invited because of the renewed emphasis on energy at the Collins College of Business and TU’s world-renowned petroleum engineering program.

The Chinese university places great emphasis on petroleum, but wind and solar energy also have strong government support. Their command economy has directed a high level of resources to both. Anecdotal evidence suggests the West is not far ahead, if at all, in the race to develop “new energy,” those sustainable sources that do not threaten the environment.

Experts predict that China will achieve economic dominance within a short time. However, the country has many challenges with regard to income class, the environment and demographics. Oklahoma companies that want to develop initiatives with China should understand these issues.

Although per capita income has been rising and a middle class has developed, income distribution remains quite unequal. A staggering and growing gap between urban and rural incomes is a source of political and social stress.

Heavy smog is an almost daily occurrence in such major cities as Guangzhou, Shanghai and Beijing, which have a combined population of more than 42 million. With 70 percent of the nation’s energy supplied by coal-fired generators, this smog — along with acid rain — will continue to be a serious health problem. Water quality in lakes and rivers is reported to be dangerously below acceptable standards.

China’s one-child policy has worked to reduce population growth, but the demographic shift leaves too many older people to be supported by too few younger people. In addition, the cultural preference for that one child to be a male has resulted in disproportionately more men, many of whom are having difficulty finding marriage partners.

Tulsa Global Alliance, in partnership with TU’s Center for Executive and Professional Development and its International Business and Entrepreneurship Institute in the Collins College of Business, has conducted three programs about China in the past three years. Another event, “Doing Business With China,” is scheduled Feb. 23.

Representatives of many companies that do business in China, along with a U.S. trade official from Washington, D.C., will be there to discuss business challenges and prospects related to China.

China can be a great source of business for Oklahoma, but as any successful business person will remind us, we need to know our customer, supplier and trading partner.

Updated 02-04-2010

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