May 24, 2011

O’Malley’s Asian trip can build important relationships, experts say

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By Megan Poinski
Megan@MarylandReporter.com

Shanghai shopping district on Nanjing Road, 2005.

Shanghai shopping district on Nanjing Road, 2005.

Marylanders familiar with Asian cultural dynamics all agree: Gov. Martin O’Malley’s 10-day trade mission to China, South Korea and Vietnam that begins next Tuesday will be worth the time, effort and money spent, because the trip will reap both economic rewards and “guan-xi.”

“Guan-xi” (pronounced gwanshi) is a crucial element to doing business with China, said TowsonGlobal Business Incubator Director Clay Hickson. In addition to his day job trying to lure innovative new businesses to take root in Maryland, Hickson is the chair emeritus of the Maryland-China Business Council. He will be accompanying O’Malley on the trip to the East, as will more than 60 others.

“In simple terms, ‘guan-xi’ means relationships, but it’s more than that,” Hickson said. “It means reciprocal relationships. Not relationships made on the fly, but made over time. The governor is going to be building that ‘guan-xi,’ having the time to spend with them, and being able to build those relationships. That’s what it’s all about.”

Robert Goodwin, who is on the board of directors of the Maryland-China Business Council and a longtime veteran of China trade formerly with Chindex International of Bethesda, agreed with Hickson. The upcoming trade mission is important, and will quickly bring results to the state.

“Sometimes, I see these trips coming up and I dismiss them as vacations,” Goodwin said. “But definitely not the China trips.”

And this isn’t just because China is one of the state’s largest strategic partners, with six Chinese and Korean firms opening offices in Maryland in the last year, and 75 Maryland companies earning $65 million in sales from goods exported to China. It is because of the rapidly growing economy of the East Asian nations, and strategic partnerships that can be built upon in the technology and medical fields.

Finding opportunities for China to invest here

“China holds billions of dollars in U.S. currency, so it is in our mutual interest to find opportunities for Chinese entities to reinvest in activity here,” Hickson said.

David Iannucci, a former secretary of the Department of Business and Economic Development and an economic development adviser in Prince George’s County, said that he is a “huge believer” in economic missions taken by governors to increase investment and partnerships in the state. Trips like these have been taken by different chief executives of the state for more than a quarter century, and often bring immense benefits to the state. The return on investment, he said, is worth the “modest sums” spent by the state in order to make the trip happen.

In today’s global economy, Iannucci said, trips like this are especially important.

“Maryland is not competing with Virginia and Pennsylvania,” he said. “The U.S. is competing now with China and India.”

O’Malley announced that he was taking the trip in late April, as he and Seoul, South Korea Mayor Oh Se-hoon signed a memorandum of understanding to increase trade and investment opportunities, between the state and Seoul. At meetings with the governor in Annapolis last month, Se-hoon was playing a role similar to the one that O’Malley will be playing on the trip.

“The status of government officers there is different from ours in totality,” Goodwin said. While major private sector deals can get struck in the United States without government involvement, that is not always the case in China.

“Having an important person from the state involved is extremely culturally important,” Goodwin said.

The governor’s office released the details of his Asia trip Tuesday.

Increasing biopharmaceutical ties

O’Malley has said that he wants to focus on strengthening and increasing biopharmaceutical ties between Maryland and Asia. He is scheduled to be one of the main speakers at the Shanghai Bio-Forum, he will participate in a bio-capital leadership luncheon in China, and he will be speaking at the Global Bio and Medical Forum in Korea.

The participants in the trip include private sector representatives from biomedical and technology companies.

“The state of Maryland will go out of its way to represent Maryland,” Iannucci said.

Other business and educational leaders will also be making the trip to forge new Asian partnerships, or to check on old ones. Hickson said that TowsonGlobal is scouting companies that may be interested in coming to Maryland and making a “soft landing” through the business incubator program. Meanwhile, interim Towson University President Marcia Welsh will be visiting with existing Chinese partners.

A lot can be done over modern telecommunication equipment, Hickson said, but to truly finalize a deal in Asia, it is culturally important to make face-to-face contact. “For them, knowing who they are dealing with is important.”

Iannucci predicted that the trip will positively impact Maryland’s economic prospects, both immediately and looking into the future.

“Huge opportunities still lie in Asia, especially China, Korea and Vietnam,” Hickson said. “If this trip builds new relationships and allows the state to strengthen old ones, it will be successful.”