Connecting the dots of international trade

On October 5, 2009, in China, Tennessee Business, by Mark Norris

It is not easy to define in only a few words the complexities of international trade and the synergies of success between untold numbers of Tennesseans and their counterparts in China.

For many years, cotton exports through Memphis firms have maintained Tennessee as one of the largest suppliers of goods to China. While Tennessee cotton exports have recently declined, as many as 20 Memphis-based companies are actively working to expand other business with China.

Two companies here in Memphis have already done so — FedEx and Medtronic. Their stories help “connect the dots” when it comes to understanding the benefits of global trade.

For example, the first thing I saw when landing in Tokyo en route to Beijing was a FedEx jet.

The first thing China’s Vice Minister of Foreign Affairs said when we met and he saw Memphis on my business card was, “Ah, Federal Express.”

The company has become the symbol of global trade around the world, and it employs more than 34,000 people in Tennessee.

Leaving the airport upon my return to Memphis, I pass the local headquarters of Medtronic, which I am told is FedEx’s largest customer in Tennessee.

Medtronic has over 1,700 employees in Tennessee and more than 800 employees in China.

It is the market leader in China for cardiac rhythm management, cardiac surgery, diabetes and neurosurgical technologies. Medtronic has provided lifesaving therapies to more than 500,000 in China.

My first morning in Beijing, I met with Medtronic’s Director of Greater China Healthcare Economics, Camon Sin. According to Sin, the medical device industry in China is at a crossroads.

The Chinese government is undertaking health care reform there, too, and China’s National Development and Reform Commission may be about to impose extremely restrictive price control measures that discriminate against multinational corporations in favor of domestic manufacturers.

Protection of proprietary information and lax domestic regulatory enforcement by the Chinese is a concern for any U.S. Company attempting to compete.

Yet the “momentum of expansion” in China is great, according to Sin. China represents only 2 percent of global sales, and the potential seems unlimited.

Last year, Medtronic announced an agreement to form a joint venture with Weigao to market therapies in the spine and orthopedics sector. Weigao, based in the Shandong Province of the People’s Republic of China, is the leading manufacturer in China of medical devices and single-use consumables.

The joint venture will market Medtronic’s spinal products and Weigao’s orthopedic products which include therapies for the hip, shoulder, spine and trauma.

This is good for Tennessee.

Medtronic’s total expenditure in Tennessee for the 2009 fiscal year was $117 million, which includes all trade vendors. Seventy-nine percent of Medtronic’s direct suppliers in Tennessee are small businesses. Not to mention more than $1.5 million Medtronic has donated to charities in Memphis.

Doing business in China has been good for these companies, who argue that it has also been good for Tennessee. Concerns over increased trade with China are often borne largely of misunderstanding and are often misplaced. The global economy has changed dramatically in the last decade and, as it continues to evolve, so must we adapt and seize the opportunities which lie ahead.

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