Maryland hopes China trade crosses the Chesapeake, too

Marriott, Hughes, Perdue could be among the first to benefit from agreement

November 16, 1999|By Greg Schneider and Mark Ribbing | Greg Schneider and Mark Ribbing,SUN STAFF

Trade flowing from the opening of China could take a while to reach Maryland, but state business leaders yesterday expressed optimism about the new agreement.

"I would say that any agreement that opens up the Chinese markets in a broad way for American exports in general but Maryland ones in particular is going to be for the better for everybody," said George Mickalonis, managing director and chief operating officer of the World Trade Center Institute in Baltimore.

Industrial equipment, agriculture and technology companies could be among the first to benefit from a warmer relationship with the most populous nation in the world, experts said.

James Hughes, who handles international trade for the state Department of Business and Economic Development, ticked off a list of Maryland-related companies already testing China that could benefit from a warmer trade climate: Marriott, Hughes Network Systems, Perdue Farms Inc., the design firm RTKL Associates Inc., dredge-maker Ellicott International and cooling system-maker Baltimore Air Coil.

Maryland's 12-person trade office in Shanghai has worked with more than 100 companies since it officially opened in 1997, Hughes said, and 25 of them have gotten projects up and running. That number will slowly increase, he said -- especially if the new trade agreement cuts through the enormous red tape that enshrouds any transaction in China.

In 1998, the state shipped almost $76.6 million worth of exports to China, up 2.23 percent from the 1997 figure of $74.9 million. Those figures do not count service exports, such as RTKL's work designing a $200 million science museum in Shanghai.

Anirban Basu, an economics consultant based at Towson University, said Maryland stands to gain little initially from improved trade relations with China. He said the big short-term rewards will go to the West Coast and the Midwest's agricultural and manufacturing states.

But the long-term picture could be quite different, he said. "Maryland is a leader in a number of industries in which one would anticipate significant export growth," Basu said, mentioning electronics and software.

Basu said the United States stands to gain far more than it would lose from freer trade with China. But, he added, some sectors of Maryland's economy, such as food processing, could be undercut by China's low labor costs.

One of the industries expected to gain most from warmer U.S.-China trade ties is telecommunications. So far, though, trade restrictions have stymied U.S. firms looking for broad access to the market.

A joint venture between Bethesda satellite communications company Comsat Corp. and a Chinese company took in only $700,000 in revenue last year. But Comsat, now being absorbed by Lockheed Martin Corp., hopes for more.

"Change is going to be good, because there was no opportunity there based on [today's restrictive] regulations," said a Comsat official who requested anonymity.

Tessco Technologies Inc., a Hunt Valley company that sells wireless telephone equipment, does business in various parts of the Pacific Rim, including Hong Kong.

"Given the exponential growth potential of the wireless market in China, we've been evaluating various strategies to penetrate the market there," said Robert C. Knott, a Tessco spokesman.

Other industries could also get a piece of the action. Financial institutions, for instance, stand to capitalize on the new work being done by their banking clients.

"We do feel this is a positive step forward not in terms of banking in a direct way in China, but there are a number of our customers who over time would certainly be interested in selling their products and services in China," said Frank P. Bramble, chairman and chief executive officer of Allfirst Financial.

Similarly, activity at Baltimore's port could increase if companies begin shipping more goods to and from China.

"There's no reason why Baltimore should not benefit," said Helen Delich Bentley, a port consultant and former chairman of the Federal Maritime Commission. For example, Bentley said, she has been working with an Ohio company that wants to sell China a product that dampens dust on dirt roads.

"The holdup has been waiting to see if they can get the tariff over there reduced," she said. If the new agreement takes care of that, "I'd say that an order will be forthcoming and the product will soon move out of Ohio, through the port of Baltimore and on to China."

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