While the upper echelons of the Communist Party of China were endorsing an expanded market role in their economy this week, some of Atlanta’s corporate heavy-hitters were also laying out their reform wish lists at the Carter Center‘s Forum on U.S.-China Relations.
China has become a key market for United Parcel Service Inc., which has air hubs in Shanghai and Shenzhen and has increasingly invested in warehousing across the country. But the company has struggled to compete within China’s borders thanks to rules that prop up domestic delivery firms, said Laura Lane, president of global public affairs at UPS.
UPS would like the private sector to have more say in opaque postal regulations before they’re adopted, said Ms. Lane, who also urged changes to the role of state-owned enterprises in the economy and to customs regulations.
The U.S. and China must find a way to work together to reduce red tape and smooth the way for broader interaction in a trade relationship that already eclipses $500 billion annually, Ms. Lane said during the forum, held at the Carter Center Nov. 11-12.
“In reality we all do thing because of our own self interests, but if we can find the commonality between those self-interests and advanced policy objectives … we have the potential … to create rules that are beneficial to the whole global trading system,” Ms. Lane said.
Now is the “ideal time” to do so, as both countries are in need of sweeping but complementary reforms to swing their economies back into balance, Charlene Barshefsky, who was U.S. trade representative under President Clinton and handled the agreement on China’s accession to the World Trade Organization.
China needs to grow consumer spending and trim investment and exports while increasing the role of value-added services, she said. The U.S. needs less debt and better infrastructure, which Chinese cash could help fund if the countries would work together.
Ms. Barshefsky also called for rejuvenated talks on opening up government procurement contracts.
“We can’t sell to the Chinese government; Chinese companies can’t sell to the U.S. government. Why?” she asked.
Though not a customer, the government has been Coca-Cola Co.’s “de facto business partner” since it re-entered China in 1979, said Clyde Tuggle, Coke’s chief of public affairs.
Coke works with three bottling partners in the country, the biggest being one state-owned. In October Coke announced that it would spend $106 million to build its 43rd bottling plant in the country with that partner,COFCO, in Hebei province. Coke also unveiled a plan to invest $4 billion from 2015-17.
Companies looking to make inroads in China must exhibit patience with the government and take a long view, Mr. Tuggle said.
“When we go into a market like that, we go with an attitude of forever,” he said. “It is not, go in, make a profit, export the profit and move on. It is build and build and build.”
The company has heavily invested in earning its “social license to operate” in a country where it employs 50,000 people, nearly all of them Chinese.
“The DNA of how we build our brand is not just about building factories, having trucks full of our products and shipping them around the country, but it’s actually about the success of the country itself in every sense,” he said.
Coke has donated money for Project Hope schools and environmental campaigns while building a $90 million innovation center in Shanghai that is becoming part of the conversation on food safety in China. It’s also a proponent of the 100,000 Strong initiative, which aims to send more Americans to study in China, Mr. Tuggle said.
He joked that Coke executives have a vested interest in seeing their China bets pay off.
“My retirement fund is sitting in China,” he said.
Widely expected to introduce groundbreaking reforms, China stuck to general messages in the communique issued Wednesday after the third plenum.
While noting that the market would play a “decisive” role in the economy, it seemed to also reaffirm the role of state-owned enterprises.
Speaking before the document was released, Ms. Barshefsky said there had been a troubling resurgence of state-owned companies in the 2000s after a promising wave of privatization in the 1990s.
That trend needs to be reversed if China is to allocate resources more effectively and boost productivity as it seeks a new phase of growth, she said.
