Traders Play the China Card

Big deals for Big Business in a big new market

Outdoor advertising in the People's Republic of China was once mainly brisk quotations from the works of Chairman Mao mixed with exhortations to work harder for the victory of Socialism. These days the billboard messages might be promotions for such American consumer products as Kodak film and Marlboro cigarettes.

The American ads are vivid evidence of the impressive pace at which U.S. trade with the People's Republic is growing in everything from bread baking equipment to jet planes. Since the normalization of relations in 1978, trade between the two nations has leaped from $1.1 billion to this year's projected $4 billion. Commerce Department officials estimate that by 1985 U.S. trade with China will reach at least $10 billion annually, in contrast with $7 billion or less for the U.S.S.R. The most promising exports from the U.S. to China are agricultural products, which now make up more than half of total U.S. sales, and sophisticated industrial equipment.

Signs of the American trade connection are in many places. In Shanghai, ships of the American President Line unload bales of American raw cotton. In the southwestern province of Sichuan, preparations are under way for an oil drill bit plant to be built under a $50 million contract with the Hughes Tool Co. In the coastal Fujian province, the state-owned Amoy Cigarette Co. will soon be producing Camels under an agreement with the R.J. Reynolds Tobacco Co. In Peking, Bank of America will open a branch in a two-story brick building that was part of the U.S. legation office before the Communist takeover in 1949.

In all, some 50 American companies have set up small but bustling offices in Peking. The throngs of arriving American businessmen, intermingling with the flood of foreign tourists, have made hotel rooms in Peking as scarce, and as expensive, as old jade. If any delegations arrive without confirmed space, they sometimes have to wait for hours while their hosts dispatch messengers to various hotels to snap up rooms as they become vacant. In the coffee shop of the Peking Hotel, the only such Western-style watering hole in town, businessmen often gather to chew over deals in progress and grouse about prices, which for foreigners tend to run two to three times the levels charged the Chinese for everything from restaurant meals to plane tickets.

Businessmen say that one of the biggest frustrations is dealing with its slow and inefficient bureaucracy. Making a deal can often turn out to be an exercise in tedium and sometimes end in disappointment as well. Chase Manhattan Bank last month experienced such problems when its agreement to finance a $250 million trade center in Peking abruptly fell through. The contract was seemingly scrapped after the Peking city government became embroiled in a dispute with China's Ministry of Foreign Trade over the cost of the venture.

But patience and stubbornness pay off eventually. Last week American negotiators were wrapping up final details on an agreement for the Chinese to buy up to 9 million tons of wheat and corn annually for three years. Says Agriculture Secretary Bob Bergland: "This is an indication that the Chinese intend to be a major customer for U.S. exports."

China and the U.S. have also agreed to resume regularly scheduled air service between the two countries after an interruption of 31 years, and last week the U.S. Civil Aeronautics Board recommended that Pan Am be granted the right to conduct three flights a week. The Chinese national airline will likewise fly the trans-Pacific route three times a week.

The business exchange between China and the U.S. also flows from east to west. Approximately 100 Chinese trade delegations visit the U.S. every month in search of deals and sometimes just information about American technology. A typical group is the nine-man committee of Chinese construction officials and architects that has been jetting from New York City to Dallas to San Francisco inspecting construction techniques. This is part of a contract with California's Welton Becket architectural firm for a new 1,000-room hotel in Peking that will start going up in November. The first Chinese trade exhibit is also now touring the U.S. It started in San Francisco in September and was visited by 250,000 people. This week it will open in Chicago, and in early December it moves to New York.

Despite the complications and the cost of doing business in China, American businessmen are still showing great interest in that new market of roughly a billion people. The Chinese government's drive to improve its people's diets and to provide them with a better standard of living offers the U.S. a major new outlet for both agricultural and high-technology products.

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