If You Want to Do Business in China, Mind Your T’s: Taiwan and Tibet

Consultants suggest firms mind local laws, customs on disputed territories; concerns over censorship and Beijing’s retaliation

A Gap store in Beijing. The apparel company recently apologized for selling a T-shirt depicting a map of China that omitted Taiwan and other China-claimed territories.
A Gap store in Beijing. The apparel company recently apologized for selling a T-shirt depicting a map of China that omitted Taiwan and other China-claimed territories. PHOTO: GILLES SABRIE/BLOOMBERG NEWS

American companies have lately been quick to apologize for offending China’s geopolitical sensibilities, from listing Taiwan and Tibet as countries on their websites to inaccurately reflecting the status of Chinese-controlled Hong Kong and Macau.

The spate of incidents has business and trade consultants suggesting ways companies can avoid getting into the situation in the first place—among them, hiring China experts, understanding domestic regulations about maps and being mindful of Chinese advertising and cyberspace laws.

This week, Costco Wholesale Corp. COST 0.59% became the latest U.S. company to be pilloried on Chinese social media after images surfaced online of a 2016 letter from one of the retailer’s executives to a Washington group supporting Taiwan’s independence. The letter said the company viewed Taiwan as a “country.” Costco, which has long operated in Taiwan and is preparing to open its first store in mainland China, hasn’t responded publicly and didn’t respond to a request for comment.

American companies such as Delta Air Lines Inc., Marriott International Inc. and Gap Inc.and some European firms have apologized and changed or removed content that China has deemed offensive. China’s recent policing of American companies, followed by those companies’ swift capitulation in most cases, adds another dimension to the intensifying trade tensions between Beijing and Washington. China’s actions also reflect a new reality in which companies seeking to tap the world’s second-largest economy must increasingly contend with officials monitoring the internet for perceived slights and political missteps.

“Because of the political system here, there is no real leeway to lobby or argue,” said Linda Du, founder of a Shanghai-based startup that connects brand-management consultants with global companies.

China has controlled Tibet for decades despite some advocating its independence or greater autonomy. Beijing claims Taiwan as its territory even though the two sides separated in a civil war 70 years ago and the island is now a democracy. Hong Kong and Macau are both part of China, but are governed under the “one country, two systems” formula, which allows them to maintain their own legal, political and economic systems.

A spokesman for the Chinese Foreign Ministry in early May said that foreign companies operating in the country should “respect China’s sovereignty and territorial integrity, abide by China’s law and respect the national feeling of the Chinese people.” The ministry didn’t respond to a request for further comment.

Disney in 2005 received angry emails from Chinese citizens for mislabeling Hong Kong and Taiwan as separate countries in an online form users were asked to fill out for updates about Hong Kong Disneyland. Above, the Hong Kong Disneyland Resort in 2017.
Disney in 2005 received angry emails from Chinese citizens for mislabeling Hong Kong and Taiwan as separate countries in an online form users were asked to fill out for updates about Hong Kong Disneyland. Above, the Hong Kong Disneyland Resort in 2017. PHOTO: LUI SIU WAI/XINHUA/ZUMA PRESS

To respect these distinctions, U.S. firms could study how the State Department, as well as the United Nations and others, refers to China’s territories, said Erin Ennis, senior vice president at the U.S.-China Business Council, a nonprofit representing American companies doing business with China. The pitfalls come about because companies often label these places “countries,” a term that suggests independent entities, Ms. Ennis said, adding that some international organizations call them economies or regions.

For Delta, the largest U.S. airline by market capitalization, its website’s listing of Tibet and Taiwan as countries was what drew the ire of Chinese aviation regulators in January. Delta apologized to Beijing and tweaked a drop-down menu on its online destinations form to read “country/region” instead of “country,” a person familiar with the matter said.

In their rush to tap China’s 1.4 billion consumers, multinational corporations sometimes forget to tune in to cultural differences, said Ted Bililies, a managing director at consulting firm AlixPartners who advises CEOs. “If you want to win at cultural globalization it’s still a game of prevention, prevention, prevention,” he said.

The rise of social media in China has enabled controversies to go viral. Daimler AG’s Mercedes-Benz of Germany in February pulled an Instagram post quoting the Dalai Lama after Chinese state media and social-media users in the country denounced the auto maker. China also ordered Marriott to temporarily suspend its online services in China after the hotelier circulated an online guest survey that listed Hong Kong, Taiwan, Tibet and Macau as countries. And Gap Inc. recently apologized for selling a T-shirt depicting a map of China that omitted Taiwan and other China-claimed territories after an online backlash emerged. It also destroyed the offending merchandise.

Such perceived missteps attracted less scrutiny before social-media use exploded in China. In 2005, Walt Disney Co. drew angry emails from Chinese citizens for mislabeling Hong Kong and Taiwan as separate countries in an online form that users were asked to fill out for updates about Hong Kong Disneyland, a person familiar with the matter said. Disney quickly fixed the problem and sidestepped scrutiny from Chinese authorities, the person added.

Since coming to power in 2012, President Xi Jinping has tightened his grip over the internet, establishing China’s Cyberspace Administration and introducing laws to combat messages that undermine national sovereignty. China added a clause prohibiting advertisements from “damaging the dignity or interest of the state” when updating laws in 2015.

Some business consultants suggest hiring staff who understand local rules and conventions and can review communications before they are made public. That is especially important when companies use third-party vendors to provide some online services, said Washington-based crisis consultant Eric Dezenhall. “Even big companies have some media vendor tweeting stuff…without levels of approval.”

The responses of American companies have raised concerns among lawmakers of censorship and improper retaliation.

“As we have seen with Marriott, Delta, and now Gap, the Chinese government is increasingly extending its ‘long arm’ and economic leverage to interfere in the internal business practices of American companies,” said Sen. Marco Rubio (R., Fla.), chairman of the Congressional-Executive Commission on China, in a statement.

Write to Mike Spector at mike.spector@wsj.com and Wayne Ma at wayne.ma@wsj.com

Appeared in the June 4, 2018, print edition as ‘Avoiding Apologies to China.’

GE to Move Turbine Jobs to Europe, China Due to EXIM Bank Closure


General Electric, GE


General Electric Co (GE) said on Tuesday that it will move 500 U.S. power turbine manufacturing jobs to Europe and China because it can no longer access U.S. Export-Import Bank financing after Congress allowed the agency’s charter to lapse in June.

GE said that France’s COFACE export agency has agreed to support some of the industrial giant’s global power project bids with a new line of credit in exchange for moving production of 50-hertz heavy duty gas turbines to Belfort, France, along with 400 jobs. GE also said in a statement that 100 additional jobs will move from the United States to Hungary and China.

The company said it is now bidding on $11 billion worth of international power projects that require export credit agency financing, including some in Indonesia.

The U.S. jobs will be moved from facilities in South Carolina, New York, Texas and Maine, but no U.S. facility will close, a GE spokeswoman said.

GE Vice Chairman John Rice said the company would soon announce agreements with other foreign export credit agencies to finance GE products.

“If the EXIM bank were open, it would be business as usual,” GE Vice Chairman John Rice told Reuters in a telephone interview.

 Given the bitter fight in Congress over EXIM’s future, Rice said that GE cannot afford to wait and must make other long-term financing arrangements for large industrial projects.

“If EXIM isn’t going to happen, or it’s going to be a regular fight to be reauthorized, we’ve got to make other plans,” he said.

Conservative Republicans in Congress who say that EXIM represents “corporate welfare” and “crony capitalism” successfully blocked renewal of the 81-year-old export credit agency’s charter at the end of June.

EXIM supporters have thus far been unsuccessful in attaching renewal to other legislation, but new efforts are expected to be made this autumn as Congress considers government “must-pass” agency funding, a transportation bill and an increase in the federal debt limit.

GE last year vowed to add 1,000 jobs in France to gain the blessing of the French government for the U.S. conglomerate’s acquisition of the power business of France’s Alstom. GE won European regulatory approval for the deal last week, and expects it to close by the end of the year.

GE is also seeking to wring out $3 billion in cost savings as it combines with Alstom, including by reducing overlap and consolidating manufacturing operations.

In its statement, GE said the job move “reinforces the need for Congress to promptly reauthorize the U.S. Export-Import Bank.”

Aerospace giant Boeing Co (BA) has also said it was considering moving work overseas due to uncertainty over the future of the EXIM bank.

(Additional reporting by Lewis Krauskopf in New York; Editing by Eric Walsh)

US EXIM releases Annual Competitiveness Report

61ae8-exim-bank1As the Export Import Bank of the United States (US EXIM) fights Congress for its reauthorization and ultimately its survival, the bank released its 2015 Annual Competitiveness Report . Two key trends stand out: more export credit agencies (ECAs) in more countries supporting more of their countries’ exporters, and China ECAs gaining significant market share from OECD countries’ ECAs. To download a copy of the report visit


Eliminating the US EXIM at times like these would be irresponsible unilateral disarmament damaging to US Exports, American jobs and our leadership position in international trade. There is still time to call your Congressional Representatives and urge them bring reauthorization of the US EXIM bank to a vote, BEFORE its charter expires in June 30th.Featured Image -- 2741

For more information on the subject read:

Congressional path to re-chartering U.S. EXIM: Mismanagement, or Crime?


Showing hello: 15 ways people greet each other around the world

A tourist meets a local farmer in Chiang Mai, Thailand, offering a traditional “wai” greeting.  IMAGE: HUGH SITTON/CORBIS

There are a number of ways to say hello around the world, and just as many ways to show them.  These traditional greetings, ranging from region to region, have developed into cultural norms — often to show respect. Take a peek at this helpful infographic made by Two Little Fleas, showing us the different ways people from all over the globe greet one another. And if you’re planning a trip anytime soon, take notes so you’re not lost in translation.READ MORE

Here’s how to properly shake hands in 14 different countries

 Business Insider

In Brazil and the United States, a firm handshake is expected. This would be off putting in the UK, as the British like to greet each other with a lighter handshake.

Every country has a unique set of customs, and it is important to recognize and respect cultural differences, especially when conducting business around the world.

We created a helpful guide for handshake etiquette across 14 countries, thanks to information from BBC and Mental Floss:

BI_graphics_handshaking (1)

(Business Insider)

U.S. Export Volume Expected to Climb in 2015

Written by Michael White, GlobalTrade.com

Baltimore, MD –   U.S. exports are expected to grow by $88 billion or 5 percent, in 2015, despite tepid global GDP growth, according to a research report just released by trade credit insurance provider, Euler Hermes.

According to the company’s latest Economic Insight report, the U.S.’s biggest export gains in 2015 will come from Canada, China and Mexico.

The report also projects strong export increases to smaller countries in Asia, Latin America and the Middle East, “reflecting recent rapid growth in these emerging markets, while also providing the U.S. with more diversification in its export composition.”

Export gains will primarily come from the agrifood, chemicals, energy and mechanical sectors. Textiles and ferrous metals show the smallest increases as the U.S. has become a much smaller player globally within these industries.

As U.S. energy companies are expected to start exporting natural gas globally by the end of 2015, revenues from this sector could be significant, growing from $16 billion in 2012 to $42 billion in 2040 or nearly 1 percent of GDP.

The planned 2016 expansion of the Panama Canal, which may double its capacity, “will also boost U.S. trade by allowing larger ships to carry exports from the U.S. through the canal, significantly reducing costs and making those exports more competitive.”

The U.S.’s largest trade deficit is with China, but several factors could shrink it, especially as China pivots toward a more domestically driven economy, and as the U.S. natural gas boon and favorable labor conditions have reduced China’s competitive wage advantage to the point that a growing number of companies are opting to ‘in-source’ their manufacturing.

In the coming year, the value of the U.S. dollar is expected to rise in 2015 making U.S. exports more expensive and less competitive with export financing faces several challenges, including tight lending conditions and risk-averse bankers.

Rising rates in 2015, the report says, “may make financing more costly and/or harder to obtain, especially given fragile global growth and geopolitical uncertainty.”

In addition, global business insolvencies “are expected to fall 3 percent, a much slower rate than 2014’s decrease of 12 percent.”

At the same time, insolvencies still remain 12 percent above 2007’s pre-crisis levels, meaning that exporters will need to continue stringently evaluating their partners for insolvency risk.

To further promote U.S. exports, two major trade agreements – the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership – are currently being negotiated.

Both agreements  are being structured to reduce the burden of Customs, regulations, tariffs and taxes, lower barriers to trade, and allow increased access to new markets.

“Demand for U.S. exports is, of course, dependent on the strength of the global economy,” said Dan North, senior economist for Euler Hermes Americas.

“While the global economy is set to enter its fourth straight year of lackluster growth, the U.S. economy continues to grow and many of our industrial sectors are showing strength both at home and abroad.”

Export-Import Bank helps Wisconsin businesses create jobs

As the reauthorization saga of the US Ex-Im bank continues, today we publish yet another opinion favoring reauthorization.  These arguments make sense  and provide a generally correct view of the situation.  Our own view on the US Ex-Im Bank situation will be published in the upcoming issues of this publication.

Milwaukee-Wisconsin Journal Sentinel

House Budget Committee Chairman Paul Ryan (R-Wis.): Ryan opposes the Export-Import Bank.
House Budget Committee Chairman Paul Ryan (R-Wis.): Ryan opposes the Export-Import Bank.
Associated Press

If world markets really worked the way Rep. Paul Ryan wishes they did, he’d be right about the need to eliminate what he calls a “strange collusion of big business and big government,” an obscure little federal agency called the Export-Import Bank.

But world markets do not work that way. Governments routinely support domestic businesses; Chinese export credit subsidies were about 50% higher than those provided by the Ex-Im Bank in 2012. Given the reality of the global economy, the U.S. needs to be in this game to compete. And the U.S. government needs to play a role.

Killing the bank, as critics such as Ryan advocate, would kill American jobs, including jobs in Wisconsin. The bank’s charter expires Sept. 30, and, for the first time, this efficient agency may be in jeopardy. That could be costly to the state.

It’s surprising, all this huffing and puffing about “crony capitalism” and government waste, because this is a tiny agency as measured against a $3.5 trillion federal government. The Ex-Im Bank had a total operating budget in 2013 of a mere $90 million, the Congressional Research Service reports, and it costs taxpayers exactly nothing to operate; the cost of running the bank is paid by fees and interest charged to its private customers. In fact, the bank returned $1.1 billion to federal taxpayers last year.

We might be more willing to listen to Ryan and his cohorts in this venture if they were more willing to carve up some of the fatter budget hogs — say farm subsidies — but lawmakers of both parties have been loathe to touch those sacred cows. As columnist Robert J. Samuelson of the Washington Post concluded recently, this is “mostly political grandstanding.” We quite agree.

“In a perfect world there’d be no need for it, but the Ex-Im Bank prevents the U.S. from facing a competitive disadvantage with our trading partners based on policies put in place by their governments,” Republican U.S. Rep. Reid Ribble told Journal Sentinel reporter Craig Gilbert.

The Ex-Im Bank is a reasonable way to help American companies climb over such hurdles. The bank, which was created in 1934 by President Franklin D. Roosevelt, makes loans and provides loan guarantees and credit insurance to help foreign buyers purchase American-made products. The bank estimates it supported about 205,000 export-related jobs in 2013.

And while it’s true that the overall effect of the bank’s work is sometimes hard to gauge, that’s hardly a reason to eliminate it and put jobs in Wisconsin and elsewhere at risk.

As the Journal Sentinel article noted, the bank last year authorized a $694.4 million loan to help an iron ore mine in Australia with the condition that it buy hundreds of millions of dollars of equipment from Caterpillar Inc. and two other companies. While the bank claimed that the loan would bolster 3,400 jobs in the U.S., critics of the deal say production at the Australian mine will put downward pressure on prices and harm producers in this country.

One of the loudest critics of the bank has been Delta Air Lines, which competes against foreign airlines that buy their American-made Boeing jets with subsidized loans backed by the bank. Delta may have a reasonable concern, but it’s one that the bank and lawmakers could address, as U.S. Sen. Tammy Baldwin (D-Wis.) has noted. Killing an agency that has helped to support so many other jobs is not the way to address those concerns.

Since 2007, the bank has worked with 183 Wisconsin companies and supported $4 billion in exports in the state, according to statistics provided by the bank. That translates into an estimated 25,500, many of them with small businesses.

If the Export-Import Bank were closed, “it would have a ripple effect throughout the U.S. economy,” says Tim Sheehy, president of the Metropolitan Milwaukee Association of Commerce. He told Gilbert that the argument against reauthorization “crashes on the rocks of reality when it comes to competing in a global market.”

Lawmakers need to face that reality. They should have a healthy debate because no government agency is above tough scrutiny. And if loan procedures need to be tightened to address unintended consequences and legitimate complaints, then they should be tightened. But don’t kill the bank. If the Ex-Im Bank goes away, jobs will go away, too, and some of them will be in Wisconsin.

How to Sell Garbage Disposals in China

Emerson’s InSinkErator Rejiggered to Munch Kitchen Favorites Like Eel, Bullfrog Skin and Duck Heads

Emerson Electric hopes China’s housing market will open up for its kitchen disposals. Pictured, workers at its Racine, Wis., InSinkErator factory. Rob Hart for The Wall Street Journal


RACINE, Wis.—About half of all U.S. homes have garbage disposals gurgling under kitchen sinks to grind up food waste. The rest of the world generally doesn’t share Americans’ enthusiasm for this gadget.

That’s a problem for Emerson Electric Co. EMR -0.15% ‘s InSinkErator unit, the world’s largest disposal maker, whose founder invented the device 87 years ago. The U.S. market for disposals, totaling about $1 billion at the retail level last year, is mature and slow-growing. Despite decades of overseas promotion by InSinkErator and others, the U.S. still accounts for more than three-quarters of global demand for disposals.

So InSinkErator has staked its growth hopes on China, where it sees big potential even though the product is almost unknown there.

“We are turning the dial up in China,” said Dave MacNair, vice president of global marketing at InSinkErator. The company in November 2012 opened a plant to make disposals in Nanjing, China, its only manufacturing site outside the U.S. It is pitching its product to the Chinese via online marketing and in-store displays, while working with home builders and local building-code and waste-handling officials to explain its benefits.

While browsing at Jiahe Jiamei Furniture City in Beijing recently, Wang Chao, an office worker, was skeptical about the disposals on display, costing 1,000 to 4,000 yuan, or $161 and $645. “I don’t know much about that,” she said, “and I’m not interested in buying one either.”

But James Liu, an antique dealer who studied in Britain, was interested in one to avoid blocked drain pipes and “disgusting” smells. “Not many of my friends have this at home,” he said.

So far, sales in China are tiny. InSinkErator won’t provide data but says sales are growing quickly—more than 30% a year—from a small base. The company is competing against several Chinese rivals, including Beijing Becbas Technology Co. and Ningbo Oulin Kitchen Utensils Co.

China is attractive partly because it has more housing construction than any other country. InSinkErator executives also believe the Chinese have a greater need for disposals because they eat less processed food than Americans and have more leftover vegetable peelings, fish bones and other items that can be ground up.

InSinkErator redesigned its disposals for the Chinese market, angling the grinding teeth differently so they could handle tough waste, including eel or bullfrog skin. The device also grinds more finely so leftover rice or noodles won’t clog pipes.

At InSinkErator’s labs in Racine, workers test disposals by feeding them with cow ribs and pinewood blocks. They also now test food more likely to be found in China, such as white radish (whose density presents challenges) and duck heads.

The technicians have found shark skin nearly impossible to grind up. Mango pits are equally tough. “They’re like nature’s Kevlar,” said Dane Hofmeister, a lab manager.

InSinkErator regularly seeks meetings with local Chinese officials to explain how disposals could reduce the amount of household waste that needs to be hauled away and buried in landfills. One victory came in early 2012 when the Shanghai Urban Construction and Communications Commission, under a pilot program, recommended use of disposals in certain types of housing.

The disposal was invented in 1927 by John Hammes, an architect in Racine, who got the idea while watching his wife clean up after dinner and built a primitive grinder from sheet metal and a small electric motor. He obtained a patent eight years later and formed the company in 1938. InSinkErator sales didn’t take off until after World War II, when housing construction boomed.

Sales depend heavily on new construction because it is expensive—often $400 to $800—to retrofit disposals into old homes. For that reason, they’re far more common in the Western U.S., with its newer housing stock, than in the Northeast’s older cities.

In the 1970s, InSinkErator used wild-haired comedian Phyllis Diller as a pitchwoman. Her lines included: “Every woman needs a leftover lover.” It diversified into trash compactors, which squash refuse into smaller bundles, but quit making them because they weren’t a big hit. It found more success with kitchen spigots that provide instant hot water at temperatures near boiling.

Still, disposals are the company’s mainstay. “We know kitchen waste solutions better than anyone,” says a banner hanging from the ceiling in the company’s bustling Racine factory, which has about 900 workers and 24 robots, including one nicknamed Wilma after the “Flintstones” cartoon character.

In the U.S., InSinkErator disposals retail from about $80 to $340. The company competes against General Electric Co. GE +0.50% and the Waste King brand of Anaheim Manufacturing Co., both of whom import disposals from Asia.

For now, InSinkErator is focusing efforts on China’s high end, but it may eventually have to offer lower-cost versions, Mr. MacNair said. “We think it will become a mass market [good],” he said. “The question is how long it is going to take.”

—Lilian Lin in Beijing contributed to this article.

Write to James R. Hagerty at bob.hagerty@wsj.com

Think you’ve got a strategy to enter the Chinese market? Think twice

By Yu Yongfu, TheNextWeb

Yu Yongfu is the chairman and CEO of UCWeb, whose mission is to provide a better mobile Internet experience to billions of users around the world. Earlier in his career, he was a VP at Legend Capital. Yu graduated from Nankai University in 1999 with a bachelor’s degree in economics.
Whenever I visit the US, one question mobile entrepreneurs always ask me is ‘How can my startup break into China?’
The short answer is simple: Partnership. But finding the right local partner isn’t easy, and even if you do find one, gaining a foothold in the massive Chinese mobile market takes patience, insight, and strategy.

Seeing double

The biggest mistake most US entrepreneurs make right off the bat is in thinking of China as one market. In fact, in the mobile market, China is made up of two distinct markets.

Cities such as Beijing, Shanghai and Guangzhou are similar to the US; consumers in these urban centers are tech savvy, and there is a high percentage of iPhone and tablet ownership.

But outside of these cities, China’s mobile market is made up of millions of less affluent consumers who use low-cost Android phones and often don’t have access to high-bandwidth mobile connectivity. Market demand for this sector is best seen in the rapid growth of Xiaomi, a Chinese cell phone manufacturer who reported online sales of 100,000 mobile phones in 90 seconds for its sub-1000 yuan phone (about $130 US).

two chinese markets Think youve got a strategy to enter the Chinese market? Think twice

Such extreme differences between the two markets have made it difficult for US mobile startups to successfully enter China, even if they manage to partner with top local players.

But in order to succeed, US companies must have a winning strategy for both markets or risk losing out on huge opportunities.

The good news is US mobile startups often have an advantage over larger players in breaking into the Chinese mobile market. Startups are willing to explore a variety of partnership and strategy options to enter the market, and are more nimble and flexible to react to ‘hurdles’ when they appear.

Here are three steps can US mobile startups take to successfully grow their businesses across China.

The right partners

The first step is finding the right partner – one that understands your startup’s unique offer, has proven success in both Tier 1 and 2 markets, and is committed to growing your business alongside its own.

When partnering in China, don’t be afraid to get creative. GGV Capital matched a leading US player in the SaaS space with an emerging leader in China. The US company not only struck up a partnership but also ended up investing along side the venture firm in the Chinese company.

youku 520x345 Think youve got a strategy to enter the Chinese market? Think twice

Technology collaborations along the lines of the Qualcomm-Tudou partnership are another example of creative US-China partnerships.

Last year, my company, UCWeb, teamed up with Evernote in a ‘marketing partnership’ to help the US company gain a deeper understanding of the Chinese mobile web consumer in advance of its formal China launch later that year. These strategic relationships may not be traditional, but they have delivered positive results for all involved parties.

US startups can also gain a foothold with the Chinese government through strategic partnerships. For example, Microsoft is the first major US provider to launch a public cloud in China through a three-way strategic partnership with 21Vianet, China’s largest carrier-neutral internet data services provider, and the Shanghai Municipal Government

Cultural immersion

In order to understand the vast and complex Chinese business landscape, you must see and experience China for yourself.

Once you have tapped into all your US connections, the next step is to build your own relationships on the ground in China. There is no substitute for spending a regular and significant amount of time there.

156305046 520x346 Think youve got a strategy to enter the Chinese market? Think twice

When visiting China, it is essential that you forge your own path, both literally and figuratively; if you follow someone else’s agenda, you may miss the chance to discover an untapped opportunity.

Take the time to explore both Tier 1 and Tier 2 cities. Not only will firsthand knowledge of Chinese business strengthen your position as a partner, but it will trigger your creativity so you can develop fresh, unique approaches for different segments of the Chinese market.

Strategy shift

Finally, US startups must adapt their business strategies to the Chinese market. For US entrepreneurs, this requires parting with assumptions and accepting input from local partners when it comes to marketing, competitive analysis and cultural trends.

This could mean making a significant departure from your company’s US strategy, or a radical pivot from your current China strategy. Either way, without an open-minded attitude, US companies will fail in China.

One example of a US mobile company that is successfully adapting its product strategy to the Chinese market is Appcelerator. Thanks to its partnership with the China Software Developer Network (CSDN), the largest developer community in China, Appcelerator is building the next generation mobile platform for China’s mobile market.

With more than a billion mobile subscribers, China represents an irresistible opportunity for mobile-first companies to grow exponentially. In order to successfully incorporate China into a global mobile strategy, US entrepreneurs must drill down to the local level to reach both Tier 1 and Tier 2 markets.

This two-tier strategy may involve greater effort, creativity and flexibility, but it will surely result in richer rewards.


U.S. Growth Picture Brightens as Exports Hit Record

Energy Boom Helps Narrow Trade Gap

WASHINGTON—A booming U.S. energy sector and rising overseas demand brightened the nation’s trade picture in November, sharply boosting estimates for economic growth in late 2013 and raising hopes for a stronger expansion this year.

U.S. exports rose to their highest level on record in November, a seasonally adjusted $194.86 billion, the Commerce Department said Tuesday. A drop in imports narrowed the trade gap to $34.25 billion, the smallest since late 2009.

The export gain “is an encouraging sign that the global economy is recovering along with the U.S.,” said Michael Soni, economist at BBVA Compass.

Domestically, the economy has been showing improvement beyond the trade situation. Companies have been hiring at a steady pace across a wide range of industries amid stronger consumer spending, builders trying to satisfy demand for new homes and rising manufacturing output.

Oakworks Inc., a maker of medical, massage and spa tables in New Freedom, Pa., added a second shift in the fall to meet rising demand, said Joe D’Antonio, vice president for international sales.

“That’s related to the fact that demand is increasing, and a good deal of that is from international markets,” he said, citing sales to India, China, Brazil, South Korea and elsewhere.

Oakworks, which has about 125 employees, saw its exports increase about 10% last year and is targeting a 20% to 25% gain for 2014. The company’s tables—a spa table can cost around $5,000 and a high-end medical table as much as $27,000—face competition from less-expensive products made overseas. But many buyers now appear willing to shell out more for higher-quality, higher-priced goods.

“Clearly that is a function of the economy getting better,” Mr. D’Antonio said. “And as a result people have a little more money to spend, to invest in quality. In the past if they didn’t have that money, quality might not be at the top of their list.”

The trade figures led many economists to sharply raise their forecasts for economic growth in the final quarter. Morgan StanleyMS -0.32% economists raised their estimate to an annualized 3.3% from an earlier forecast of a 2.4% pace. Macroeconomic Advisers boosted its fourth-quarter projection to a 3.5% rate from 2.6%.

Fourth-quarter growth at that pace, following a 4.1% annualized increase in the third quarter, would mark the fastest half-year growth stretch since the fourth quarter of 2011 and the first quarter of 2012.

The falling U.S. trade deficit in large part reflects rising domestic energy production. U.S. crude output has increased about 64% from five years ago, according to the U.S. Energy Information Administration. Drillers have unlocked vast amounts of oil from dense layers of rock, notably shale in Texas and North Dakota, giving refiners a closer, cheaper supply of crude.

At the same time, the U.S.’s thirst for petroleum fuels has stalled as vehicles become more efficient. As a result, refiners are shipping increasing quantities of diesel, gasoline and jet fuel to Europe and Latin America.

“Not only is the American energy boom underpinning export growth, it is reducing American demand for foreign oil,” said Jay Bryson, global economist at Wells Fargo.WFC -0.04%

Petroleum exports, not adjusted for inflation, rose to the highest level on record in November while imports fell to the lowest level since November 2010.

If recent trade trends continue, Mr. Bryson said net exports could add one percentage point to the pace of GDP growth in the fourth quarter. That would be the biggest contribution since the final quarter of 2010.

Rising domestic energy production also helps in other ways, by creating jobs, keeping a lid on gasoline costs and lowering production costs for energy-intensive firms. As a result, consumers have more to spend elsewhere and businesses are more competitive internationally.

But it isn’t yet clear that the momentum is sustainable. Economic growth has been choppy since the recession ended in June 2009, with consumers and businesses often jittery.

Some economists already are warning about runaway expectations. “I think 2014 will be better than 2013,” said Michael Moran, chief economist at Daiwa Capital Markets America. “But my view is we are not ready to break out into vigorous growth.”

One impediment has been weakness in Europe, Japan and some emerging markets, which had held back U.S. exporters during different parts of the recovery. Net exports made big contributions to the economy in 2008 and 2009, but more recently have made only modest additions or been a small drag on growth.

Still, the global economy has shown signs of stabilizing in recent months, leading to more orders for American petroleum and other industrial supplies, capital goods and autos.

U.S. exports are up 5.2% from a year earlier, led by rising sales to China, Mexico and Canada. U.S. exports to China from January through November rose 8.7% compared with the same period a year earlier. Exports to Canada, the nation’s largest trading partner, were up 2.5% in the same period.

Some companies have used overseas sales to offset a weak U.S. market for their products. “For the last two years, international sales have been good,” said Anthony Sexton, director of international sales at Kanawha Scales & Systems. “Not so much domestic.”

The Charleston, W.Va., manufacturer makes machinery to weigh and load commodities like coal, iron ore and potash onto railcars and trucks. Each system typically costs between $2 million and $8 million.

Last year was a tough one for U.S. coal production. But Kanawha’s international sales rose about 8% to 10%, with Colombia, Canada and India all big markets. “Kanawha has been exporting since the mid-1980s…to diversify, so we don’t live and die on the U.S. coal market,” Mr. Sexton said.

—Daniel Gilbert and Ben Lefebvre contributed to this article.

Write to Jeffrey Sparshott at jeffrey.sparshott@wsj.com

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