WisBusiness: State trade missions aimed at expanding markets in Asia

By Brian E. Clark

MILWAUKEE – Tim Sheehy likes a junket as much as the next guy – at least the first time around.

But after his second trip to China in a little more than six months, Sheehy – president of the Milwaukee Metropolitan Association of Commerce – was still shaking the cobwebs out of his brain earlier last week.

His group represents 2,200 companies in Milwaukee, Waukesha, Ozaukee and Washington Counties that employ 200,000 people.

Most observers would say these trips are a necessary part of doing business in the global marketplace. Others criticize them as frivolous. But Sheehy isn’t alone when it comes to traveling abroad to represent the state’s people and businesses.

Business, government and environmental leaders from the Badger State went to Bavaria earlier this month to learn about “green tier” environmental cooperation in Germany. Department of Natural Resources Secretary Scott Hassett headed the trip.

And, thanks to a $25,000 state Commerce Department grant, six companies that deal in water pollution and pollution controls will visit Vietnam the first week of November to search for business opportunities.

Gov. Jim Doyle has gone on two trade missions to Asia this year. Doyle, along with Sheehy and more than 80 others from the Badger State, went to China in March. Doyle headed a group of 29 to Japan in September.

Tony Hozeny, the Department of Commerce spokesman, said there are no plans for Doyle or any cabinet secretaries to go abroad in the near future.

Japan is Wisconsin’s second-largest trading partner, importing $816.7 million worth of goods from the Badger State in 2003. Its economy is rebounding after a decade-long slump and companies are looking to invest abroad, Doyle said.

Doyle said the Japanese trip – during which he met with top government and finance officials – focused on seeking investment for high-tech and biotech firms in Wisconsin.

Though he did not announce any specific initiatives by Japanese firms, he called the trip “incredibly productive.”

Doyle said one potential investor is NPT, the dominant Japanese phone company, which he said is looking for business and investment opportunities in the United States.

During the trip, the governor also discussed the growing trade dispute over outboard motors with Japanese officials. The dispute could affect thousands of state jobs and have a major impact on the Wisconsin’s boating industry. The disagreement is between Fond du Lac-based Mercury Marine Inc. and Japanese outboard makers, including Yamaha, Honda and Suzuki. Mercury Marine has 3,500 employees and is the only U.S. owned outboard-engine company.

The MMAC’s Sheehy described his first jaunt to China this year as “fun.”

“But then it’s work,” he said. “I love my job, but it’s a 17 to 19 hour flight from Los Angeles to Shanghai.”

Wisconsin’s exports to China grew by more than 50 percent in 2003 to $548 million, making it the state’s fastest-growing and fourth-largest foreign export market. Before the March trip, Doyle called China a “fertile market” for Wisconsin businesses, with its middle class expected to triple over the next 15 to 20 years. Sheehy said the second trip was a direct result of contacts made during the governor’s trade mission in March.

Though Sheehy said he could not discuss specific companies, he said he talked with a Chinese firm in Ningbo that may invest in a ball bearing plant in the Milwaukee area. If it comes to fruition, the company might build a 60,000-square-foot plant and hire between 60 to 100 people.

“It might seem counter-intuitive for the Chinese to build a plant here where labor costs are so much higher, but there are a lot of tariff issues going back and forth,” he said. “This could be at least a small opportunity for them to balance things out a bit,” he said. “I should have something solid to report in the next 60 days or so.”

Sheehy said he also met with the mayors of Ningbo and Yuyao, both south of Shanghai, as well as the heads of some industrial parks – including one that was 180 square miles in size. Ningbo alone, he noted has a population of 8 million.

He also linked up with leaders of Milwaukee-area companies who happened to be in China at the same time, he said.

And he talked with Chinese and U.S. officials about establishing an economic development zone in greater Milwaukee in which wealthy Chinese could set up businesses in exchange for receiving permanent resident status for them and their families.

Canada has a similar program in which Chinese citizens who invest more than $1 million and create jobs for 10 people get the special visa treatment, he said.

“There are already some of these economic zones around the country,” he said. “Milwaukee would be a regional center, but we will have to go through the INS and Homeland Security to set it up.”

Even if the trip doesn’t produce any specific deals, Sheehy said it was worth his time.

“China is a huge market for us and a part of our economic development strategy,” he said. “Certainly, it is part of the supply chain.

He said companies that don’t understand how the Chinese do business will be competing at a disadvantage.

“We’ll be left out of the loop,” he said.

“Done in an focused way, trade missions are an effective way to represent Wisconsin, support companies that are already doing business there and introduce others who want to trade with China,” he said.

“If you don’t do this, you are leaving a tool out of your tool kit,” he said. “It’s not a once a week kind of thing, of course.”

In Sheehy’s case, his association paid his expenses.

Taxpayers did not have to foot Doyle’s bill. The cost, around $9,000 for both trips, was picked up by businesses and groups that participated in the trips. Those firms include Harley-Davidson, Johnson Controls, PricewaterhouseCooper, the Quarles & Brady law firm and Wisconsin Manufacturers & Commerce, among others.

The state paid for other state employees on the missions, however. The Japan trip cost taxpayers about $29,000 for Doyle’s entourage, while the bill to the public for the China mission was about $10,000.

Wisconsin also has several trade offices abroad. It has one in Mexico that it funds entirely on its own and shared offices in Canada, the Netherlands, China and Brazil. They cost the state $438,650 annually.

Doyle has defended the businesses’ sponsorship of his portion and said it saved taxpayers money.

But Mike McCabe of the Wisconsin Democracy Campaign complained that by funding the trip, they bought access to the governor that other citizens don’t have. McCabe’s group backs campaign finance reform.

If Wisconsin benefits from the trip through more business opportunities for state companies and more jobs back home, he said taxpayers should foot the bill – just like they did for Doyle’s staffers.

“We might be a little less opposed to these kinds of activities if we didn’t have pay-to-play politics in this state,” he said. “Unfortunately, in today’s political landscape, there is a danger that the financing of these trips is just another way to buy influence and in the end, we believe that costs taxpayers more money.”

McCabe said he is not convinced that sending the governor abroad is absolutely necessary.

“I’ve not seen a lot of evidence that these junkets are indispensable,” he said.

“But if they are, the public and not special interests should fund it,” he said. “Then, come election time, the voters can decide if paying for the governor to be a globe-trotter is a good idea.”