Mission explores Chinese prospects

  • Article by: ADAM BELZ , Star Tribune
  • Updated: July 7, 2012 - 11:13 PM

Smaller Minnesota firms were among those testing the waters on a trade visit with Gov. Mark Dayton.

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Robert Sanberg, chief operating officer of Windrider, went on the trade mission to China, where he hopes to find a market for his sailboats.

Photo: Kyndell Harkness, Star Tribune

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Windrider builds sailboats in blue, yellow or white. After visiting China, the small Minneapolis company might add a fourth color: red.

Robert Sanberg, Windrider's operations chief, was one of 50 delegates who visited the world's second-largest economy with Gov. Mark Dayton in June. Now Sanberg is talking to two Chinese companies who want to sell Windrider's trimarans -- three-hulled boats -- in Beijing and Shanghai.

Sanberg is hopeful: "It looks like we will be getting some new distribution."

Dayton's 10-day trade mission to Shanghai, Beijing and Shaanxi province helped companies find potential customers in China. It also revealed that the future of commerce between Minnesota and China will be broad and varied, not just the domain of giants like Cargill, General Mills, 3M and Medtronic. Small firms that make sailboats, sell laboratory equipment, and offer legal, design and engineering services are pushing for new business in China, and that will help drive the exports so crucial for Minnesota jobs.

The strength of the state's economy will hinge on the ability of Minnesota companies to win market share in countries with an emerging middle class, said Bill Blazar, an executive at the Minnesota Chamber of Commerce.

"Developing those markets is a big part of the state's formula for growth," Blazar said. "You have limited resources, so you be strategic, and you recognize that developing a market takes more than one trip."

China is Minnesota's No. 2 trade partner, behind Canada. Minnesota is the 17th-ranked state for exports to China, shipping $1.9 billion in goods there in 2011. That number has multiplied eight times since 2000, however, outpacing national growth.

Minnesota-made machinery and medical devices already sell well in China. But commerce is beginning to ripple out in surprising ways.

Christopher Larus, a partner at the Minneapolis office of Robins, Kaplan, Miller & Ciresi, specializes in litigating intellectual property cases. That line of business should grow as American companies export patented products to China, he said.

"There is a history -- one that's getting better, but there is a history -- of poor enforcement of [intellectual property] protection laws," Larus said.

Larus traveled to China with Dayton to find law firms that can help his firm litigate intellectual property cases in China, and to find Chinese firms that need help with trademark disputes in the United States. Larus is not the only lawyer who sees an opportunity. His law firm was one of five represented on the delegation.

"The economy is very much maturing from what had been a manufacturing base," Larus said. "We're seeing a lot more innovation in China. The Chinese patent office is projected by many to be the largest patent office in the world in terms of where companies are filing patent applications."

Governor's presence the key

Also on the trade mission were a certified public accountant, two engineering firms, a real estate broker and two investment firms.

Delegate Dennis Nguyen runs a Minneapolis and Shanghai-based private equity firm called New Asia Partners, which in the past 10 years has backed several Chinese companies, generating $35.9 million in capital gains for investors. Now Nguyen is trying to get Chinese companies to invest in the United States.

"Asian capital is now coming back to the west," he said.

His firm invests in Guangyou Food Holdings, a Chinese sweet potato instant noodle company, and is planning to take it public on the Hong Kong stock exchange in 2013. He suggested that after the initial public offering, the owners of the company should open a plant in southern Minnesota to make instant noodles for sale in the U.S. and maybe even open an international headquarters in Minneapolis.

"There's a huge Asian population in the U.S. that would love this," Nguyen said.

Dayton is the fifth straight Minnesota governor to visit China, and the key to these trade missions is the governor's presence, Nguyen said. The delegates gained credibility by association, more than they would in other countries.

"Asians are more enamored of prominent politicals," Nguyen said.

Dayton appeared on television with Chinese Vice Premier Li Keqiang in front of half the population of China, said Katie Clark, the executive director of the Minnesota Trade Office, which organized the trade mission. He exchanged gifts with Chinese officials and attended elaborate receptions at every stop, including Xi'an, capital of Shaanxi, Minnesota's "sister province."

Delegates each paid $3,300 to go on the trip, plus airfare and hotels. Sponsors like Cargill, Dorsey & Whitney, and the Minnesota Corn Growers Association helped foot the overall bill. The cost of the trip to taxpayers won't be known for a month or so, but "the general idea is to try to pay for everything with private dollars if we can," Clark said.

What's the value of a trade mission? University of Minnesota economist Art Rolnick said the marketplace drives sustainable export growth, but a governor-led delegation to China doesn't hurt, and it doesn't cost a lot.

"Getting people together always has that potential for some economic sparks to fly," Rolnick said. "You do a cost-benefit analysis on it, and my guess is it comes out OK."

State officials can encourage trade, and help connect businesses, and help overcome cultural barriers. That said, it's difficult to say after a trade mission whether it created new business, he said.

"I don't think you should expect a lot, especially in the short term, but I think there's a role for them," he said.

Shanghai showroom

Sanberg thinks Windrider's boats will sell in China. They're stable, good for beginning sailors and relatively inexpensive. The most popular model, the Windrider 17, sells for about $9,000.

Windrider has an assembly room and offices in a warehouse just southwest of Target Field.

Aside from the sail, which is made in China, all of the parts that make up the boat are made in Minnesota.

The U.S. market for sailboats has been soft since the Sanberg family bought Windrider in 2010. The company has already turned its attention overseas -- to Aruba, Australia, Canada, Chile, France and the Netherlands. Next up is China -- the potential distributor's Shanghai showroom would be just a few miles from the East China Sea.

Adam Belz • 612-673-4405

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