Two years in, I am pleased to say that we are making good progress. New figures from the Minnesota Trade Office show Minnesota exports of agricultural, mining and manufactured products reached a record $5.1 billion in the third quarter of 2012. State exports for the third quarter increased by 1 percent compared with the same period from 2011. This marks the eighth straight quarter of record exports in Minnesota. 

MDA’s own economic studies show Minnesota’s agricultural exports hit a record $6.8 billion last year. This is up 13 percent or about $750 million over the previous year. Agriculture is well-established as Minnesota’s second-largest exporting sector, with major markets in China, Mexico, Japan, and Canada. Minnesota now ranks sixth among all states in agricultural exports.

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Minnesota’s relationship with China dates back to the 1870s, when the first Chinese immigrants traveled to the state. Over the decades, the bond between China and Minnesota has grown significantly and today Minnesota enjoys many sister-province and sister-city relationships, academic partnerships, business relationships, and cultural and humanitarian ties. On Friday, Governor Dayton’s delegation will travel to our sister state, the Province of Shaanxi, home of the famous terra cotta warriors, to meet with Governor Zhao and other Shaanxi Province officials and participate in a banquet for the delegation and celebrate the bond that has grown between our states.

So, how did this great sister relationship begin?  Between 1979 and 1981, a dedicated group of US China Peoples Friendship Association Minnesota (USCPFA-MN) volunteers, spent countless hours to make this dream a reality.  Volunteers initially proposed the idea for a sister relationship to USCPFA-MN Chapter President, Fred Ptashne, who enthusiastically approved the idea. This was followed by an official trip to Shaanxi by a Minnesota delegation to meet with Vice Governor, LI Lian Bi to discuss details about creating the sister relationship. Minnesota Governor AlQuie and Shaanxi Governor Yu Mingtao formally signed the sister-province agreement at a ceremony in St. Paul, Minnesota. October 19, 2012, will officially mark the 30th Anniversary of our Sister-province relationship.

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Having established themselves as a household name for many middle class Americans, Best Buy is now expanding its market in China, particularly through its subsidiary company Five Star.

Best Buy believes that Five Star can make China its largest overseas market, rivaling even their U.S. operations. FiveStar currently consists of roughly 200 stores, but plans to add 50 new stores this year and up to 500 more stores by 2016, to market to the growing Chinese middle class. Best Buy is hoping to prosper from this growth, and participating in the Governor’s Trade Mission will be key to their success. On the trip, Governor Dayton has had the opportunity to meet Nicholas Wang, Five Star’s Chief Executive, whose rolein the relationship between China and Best Buy will be expanding in the years to come as Best Buy begins to focus their Chinese efforts exclusively on building the Five Star brand.

Read more about Best Buy here: http://www.bestbuy.com/ and more about Five Star here: http://bit.ly/MnncOe

This new market investment has been a trial and error process for Best Buy. In 2001, only 3% of the Chinese population fit the middle class definition, whereas, in 2012, 18.2% are now considered middle class, with this expansion expected to continue. Additionally, Best Buy has faced challenges in determining Chinese priorities and realizing the differences that exist between American and Chinese consumer goods.

Read more about the Governor's trade mission here: http://mn.gov/governor/blog/the-office-of-the-governor-blog-entry-detail.jsp?id=102-42432

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On his current trade mission to China, Governor Dayton is pleased to have two of Minnesota’s finest biomedical companies, 3M and Medtronic, joining him in as members of the delegation. In addition to fostering Minnesota’s trade relationship with China, this trip is a confirmation of Minnesota’s commitment to the exchange of both ideas and information as China and the United States move forward through the 21st century. There is perhaps no better symbol of that commitment than the biomedical field, a field which has unmatched potential to improve the lives of humans all across the earth.

In addition to embodying Minnesota’s spirit of shared progress, both 3M and Medtronic foster strong relationships with China. 3M has had a rubber and adhesives branch in China since 1984—3M China Ltd.—which has its headquarters located in Shanghai. 3M also has eight manufacturing sites and 26 business locations throughout China, and the company has invested over $750 million into the nation as of 2010. You can learn more about 3M’s work in China here.

Since over 60% of all management personnel in 3M are local, the Chinese branches employ primarily Chinese workers. And 3M’s relationship with China is mutually beneficial: according to 3M, the company’s presence in China has been crucial to the company’s overall profits.

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Atmosphere Recovery Inc.

Ronald Rich isn’t exactly a novice when it comes to traveling in China.

The president and founder of Eden Prairie-based Atmosphere Recovery Inc. has been to the country four times – taking his most recent trip in March – and is already successfully selling some of his company’s products there.

But China is a huge market, and he is hoping that participating in the Governor’s 2012 Mission to China will open even more doors, particularly with government officials and industry leaders specializing in the renewable energy sector.

“I might learn some things on this trip that I didn’t know before,” says Rich. “By traveling with the governor, I’m hoping that it will help us get some introductions to people.”

Atmosphere Recovery, which Rich launched in December 1994, makes advanced gas analyzers that enable companies to reduce their energy usage and production costs. The analyzers help to monitor the complex mixtures of gases involved in making products, particularly in the steel, oil and gas, pharmaceutical and petrochemical sectors.

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Minnesota’s Largest Market for Agricultural Products

China is the state’s top market for agricultural commodities and related food products. In 2010, China purchased $1.35 billion in Minnesota agricultural products, accounting for 27 percent of the state’s total agricultural exports, which include bulk and intermediate agricultural commodities as well as processed food.

China was the top buyer and the main market for Minnesota soybeans and related products.  Those exports to China were valued at $1.2 billion in 2010 and represented 58 percent of Minnesota’s total exports of soybeans and related products.

Between 2009 and 2010, Minnesota’s total agricultural exports rose 8.1 percent, while the state’s agricultural exports to China increased 49 percent. Over the past decade, Minnesota agricultural exports to China jumped 800 percent, with most growth driven by exports of bulk and intermediate agricultural commodities.

Minnesota exported about $5 billion in agricultural products in 2010 (fiscal year, latest available) and was the sixth-largest agricultural exporting state in the nation. Minnesota was also the third-largest state exporter of soybeans.

(Source: Minnesota Department of Agriculture)

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Jet Edge

David Anderson is confident his company has what it takes to cut it in China.

“If you have a good product and can sell it here, you can sell it anywhere,” says Anderson, the international sales manager for Jet Edge, a manufacturer of ultra-high waterjet and abrasivejet technology. “China is a huge market for our products.”

Jet Edge waterjets cut with a supersonic stream of water that is so powerful it can cut through materials in one pass without shredding or crushing them. Here’s how it works: water is pressurized up to 90,000 psi and forced through an orifice as small as .005 inches. Often an abrasive is added that can cut cleanly through virtually any material.

The company manufactures complete systems and related products for precision waterjet cutting, surface preparation and coatings removal.
The systems have a variety of uses. Materials commonly cut with waterjet include rubber, foam, plastics, composites, stone, tile, metals like hardened steel and titanium, food, paper and much more. The only materials that cannot be cut with waterjet are tempered glass, diamonds and certain ceramics.

Jet Edge waterjet systems are used around the world in a broad range of industries, from the world’s leading airlines to automotive, aerospace, and industrial manufacturers to machine and job shops.

Jet Edge has a Chinese partner and sales office and showroom in Shanghai. “It is crucial to have equipment there to show and demonstrate, to have a local presence,” says Anderson. “Customers need to hear it, see it, look at it.”

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Deep-fried and served on a stick or wok-fried and served with chopsticks, food is one of the strongest connections between Minnesota and China.

Food is not just something to eat. It’s a reflection of taste and culture and geography and more. Food says a lot about people. It’s why we find the food in other countries and regions so interesting.

So it makes sense that Governor Mark Dayton’s trade mission to China has a strong emphasis on agriculture and food. It makes dollars, too. A whole lot of them.

China is Minnesota’s top market for agricultural commodities and related food products, with purchases of $1.35 billion in 2010.

“That accounts for more than one-fourth of Minnesota’s agricultural exports,” says state Agriculture Commissioner Dave Frederickson, who is traveling with the delegation.

“In the past 10 years, our ag exports to China have jumped 800 percent, mostly driven by exports of bulk and intermediate commodities,” said Frederickson. “China’s the top buyer and the main market for Minnesota soybeans and a growing market for our pork.”

And it’s not just commodities. Sales of processed foods were $202 million. Push a cart through the aisles of a big supermarket in China and you’ll find more than a few iconic Minnesota food brands on the shelves.

Trumpeting the Bugles®

At one time or another, most Minnesota kids have eaten Bugles®, those crunchy, cone-shaped corn snacks made by General Mills that small children especially love to wear on their fingertips like a witch’s fingernails.

But unless you’ve been in China, you’ve never eaten “Seaweed” flavored Bugles®.  In the Chinese market, the snack is made with potatoes, corn or rice and comes in dozens of flavors. In fact, Bugles® has become the leading brand among non-potato chip snacks in Greater China.

Curious how they market Bugles® in China? Take a look at this commercial on YouTube:

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Understanding a Market

• Whether there’s enough demand for their product to justify entering the market
• Whether the product needs to be modified to satisfy government regulations or consumer expectations
• Who their prime competitors might be
• What are the prime challenges or barriers to market entry

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