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Chinese Businesses Favoring Washington over Oregon by Staff Mail Tribune, September 5, 2005

PORTLAND -- The growing economy of China is expanding its influence to the Northwest with an emphasis on Washington state rather than Oregon, officials say.

"That's indisputable, sad to say," said Ronald Ragen, chairman of the Oregon International Trade Commission. "We need to put a much more serious emphasis on China."

When a top Chinese official scouted the United States last July for a presidential visit, former Washington Gov. Gary Locke showed him a sunset view of Mount Rainier and the Olympics from Seattle's plush Columbia Tower Club.

Locke, a Chinese American who has led high-profile trade trips to China, sealed the visit for Seattle, overcoming bids from Chicago, Houston and California cities.

President Hu Jintao had been scheduled to start his first U.S. trip as China's leader in Seattle on Monday and Tuesday with tours of Boeing and Microsoft, but postponed the trip while President Bush deals with the aftermath of Hurricane Katrina.

The visit was considered a coup for the entire Northwest. But Portland business leaders profess envy as Oregon falls further behind Washington in the increasingly high-stakes China game.

Washington state companies have grown indispensable to China as it churns out America's consumer goods, piles up a huge trade surplus and finances a growing share of the U.S. budget deficit. China spends almost four times as much on Washington state products as on Oregon goods.

Twenty-two China-bound container ships call on Washington ports each week compared with one at the Port of Portland.

Annual sales to China by just one Washington company, Boeing, was almost double Oregon's $790 million in exports last year.

Seattle-based Microsoft's annual revenue in China exceed $200 million, according to Washington state trade experts. Seattle's Starbucks has 195 outlets in China, which is expected to become the coffee giant's second-biggest market outside the United States.

Washington's ties with China date to the 1860s, when Chinese workers helped build railroads and waterways. The first Chinese freighter to call on the United States after the two nations normalized diplomatic relations went to Seattle in 1979. Former Chinese leaders Deng Xiaoping and Jiang Zemin also visited Seattle.

But business leaders credit Locke, elected in 1996 as the nation's first Chinese American governor, with cementing recent relations with China.

Ragen, the Oregon Trade Commission chairman, notes the contrast between Locke and U.S. Rep. David Wu, D-Ore., a staunch defender of Taiwan. Wu, also Chinese American, has criticized mainland China's human-rights record, alienating some business constituents.

"David has chosen to do nothing but blast the Chinese, and Gary has chosen to work with them," Ragen said. "David has been totally ineffective. Our Chinese connection is working against China, and their Chinese connection is working pro China."

Yet Oregon is making progress. The state is about to become a national center for Chinese-language study after Portland Public Schools and the University of Oregon won a $700,000-a-year Defense Department grant that will immerse students from kindergarten through college in Mandarin Chinese.

University of Oregon officials plan to treat the language students "like football players," providing free tuition, books and tutors, says Carl Falsgraf, director of the Center for Applied Second Language Studies. Oregon manufacturing companies are cutting deals that go far beyond outsourcing, boosting jobs in the state.

Oregon Steel Mills Inc. is having the machinery for a new pipe mill made in China and shipped to Portland. The $35 million mill will employ as many as 300 workers. Longtime China players such as Cascade Corp., which makes lift-truck attachments in its two Chinese plants, are considering expansions and acquisitions. Service companies are getting into the act.

Zimmer Gunsul Frasca, a Portland architectural firm, is designing a 950,000-square-foot cardiovascular institute with 700 beds and 16 operating rooms in Beijing. ZGF is also planning a minicity in the capital that includes residential towers, schools, clinics, shops, restaurants and parks. The firm has completed a schematic design for a mixed-use development with 450 houses and a hotel.

Oregon Gov. Ted Kulongoski led a trade delegation to China in 2003, but more trade trips would help, said Greg Kulander, China business development director for Vesta Corp., a Portland-based company that specializes in billing for prepaid services such as gift or phone cards.

Kulander, who spent almost a decade in China, says Oregon should promote itself harder as the Chinese begin investing in U.S. real estate and opening U.S. sales and distribution centers. "There are thousands and thousands of companies that are just itching to get out of China," Kulander said, "and they don't know how to do it."