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

A key part of Governor Dayton’s trade mission to China is convincing Chinese companies that Minnesota companies – and Minnesotans – are worth investing in.

Foreign Direct Investment (FDI) is the direct investment into production in a country by a company located in another country, and Minnesota has been a beneficiary of FDI from China. When Chinese companies invest in Minnesota companies, it allows those companies to expand and increase their production – this creates more jobs for Minnesotans, and provides a benefit for Chinese companies when companies they have invested in do well and provide extra profit. Chinese FDI in Minnesota has risen from $151 million in 2008 to $390 million in 2011.

Graphic: Chinese FDI in Minnesota by year:

One recent example of FDI, and how it benefits Minnesota, comes from Duluth last year. Since 2011, the China Aviation Industry General Aircraft Company (CAIGA) has invested nearly $100 million into the Duluth-based company Cirrus Aircraft. As a result, Cirrus has been able to expedite its aircraft development programs and accelerate the company’s global expansion, helping make the Cirrus brand more successful and prominent in the marketplace. CAIGA’s investment also allowed Cirrus to develop a new aircraft, the Vision SF-50, a project that will create hundreds of jobs in Minnesota.

Three major Minnesota universities are currently participating in Governor Dayton’s Trade Mission to China. The University of Minnesota, St. Cloud State University, and Metropolitan State University have each seen substantial growth in their relationships with Chinese universities, students, and faculty in recent years, and the current trade mission offers all three an occasion to strengthen current ties to China, and to also create new partnerships. Below is a brief overview of each university’s connections to China, as well as their objectives for the current trade mission.

University of Minnesota

The first Chinese students attended the University of Minnesota in 1914. Today, of the 4,500 international students, faculty, and staff at the University, over 1,400 are visiting Chinese scholars and students, the largest Chinese population of any campus in North America. In 2004, President Robert Bruininks led an official University of Minnesota delegation to China to facilitate educational exchange and promote cultural understanding. By 2009, the University of Minnesota launched its first official office abroad in Beijing, which provides support for students, faculty, and staff traveling to China on official University business. The University’s rapport with China has consistently progressed in recent years, leading to a growing Chinese presence on campus, which the current delegation will continue to encourage.

St. Cloud State University

Saint Cloud State University (SCSU) has developed deep international relationships and agreements over many years of interaction. St. Cloud State University has active relationships with more than 25 overseas universities and institutions through their Center for International Studies, including eight Chinese universities. The partnerships include student and faculty exchanges and participation of Chinese students and faculty in a summer training institute on the SCSU campus.

The partnership with Shanghai University of Engineering Science has taken individual importance during this trade mission. St. Cloud State University President Earl Potter, a veteran of four governor’s trade missions, anticipates meeting with the new president of SUES, Xiaodong Ding, during the trade mission. In addition, both SUES President Xiaodong Ding and the institution’s previous president, Dr. Wang Hong, now governor of the industrial/port district in Shanghai, have both been invited to attend a reception with Governor Dayton.

Today, Governor Dayton will lead a delegation on a ten-day trade mission to China, traveling to Beijing, Shanghai and Xian (the capital of Shaanxi Province) for market and industry briefings, business match-making events, networking events and meetings with key U.S. and Chinese government officials. The 50-member group of business, industry, education and government leaders will attend market and industry briefings, networking events, and meetings with key U.S. and Chinese officials.

The delegation will also host multiple receptions for top Chinese government officials and business executives to showcase Minnesota companies and export industries, as well as promote the state as an ideal destination for direct investment by China. Minnesota has had an official relationship with China since signing the sister-state agreement with Shaanxi Province in 1982.

As the trip unfolds, the Governor’s office will be covering the delegation in a special blog series that explores how trade missions foster new relationships via commerce, agriculture, trade, and the environment. You can get daily updates on the delegation by signing up for our e-mail list, checking back on the blog, or following Governor Dayton on Twitter and Facebook. We will showcase highlights of the delegation, highlight our sister-province relationship, and post photos of the Governor’s meetings across the state. We hope that you will travel along with us as the Minnesota delegation embarks on its trade mission across China.