Governor C.L. “Butch” Otter and Idaho commerce and business officials are preparing for their week-long trip to China. The trade mission takes off this Saturday.
This year’s trip to China comes two years after Gov. Otter lead a similar mission there, with the aim of creating direct investment opportunities for wealthy Chinese in Idaho. The 2010 trip ended up being steeped in controversy after right-wing bloggers asserted these direct investments threatened Idaho’s sovereignty.
The governor rejected such claims. But this trip, the message has changed. Gov. Otter is going to China to sell Idaho goods and services, not solicit direct investments.
Idaho Statesman reporter Rocky Barker attended the 2010 trade mission and has written extensively about the trip and Idaho-China relations over the last couple of years. Barker isn’t going along this time, but says regardless of political rancor, the trip is a worthy mission for Idaho’s economy.
A: Governor Otter, all of our governors have done these trade missions for years. They’re traditionally missions to sell Idaho goods. So, we’ve been going to China for quite a while. Selling particularly agricultural goods, it’s been a big market for us. And of course Micron has a big factory, a big presence over there. What was different two years ago though, we were in the depths of the recession, the Legislature hadn’t given Idaho, or the governor any money to promote Idaho. Banks weren’t giving money to Idaho companies. So, as a part then, of Project 60, the governor was trying to get foreign investment in a variety of different ways.
So the mission in 2010, at least part of it was designed to attract Chinese investment. This time around, he’s just simply “selling groceries”, as he says. That just means they’re going to have 16 companies, those companies basically on a trade mission, the way Gov. Otter does it. He goes to the companies and says, ‘what is it you need’? And he basically meets their needs, that’s his goal. There might be some goals around the side, but he’s primarily there for the people who go on the mission.
Q: How does having an elected official, a governor, on the trip help Idaho companies?
A: Particularly in Asia, remember this is a country whose government actually owns many of the businesses, so a person in government is very important. Frankly, if you have a governor with you, you open doors. The last meeting we went on, we had several wonderful state dinners with important people like the governor of Guangdong Province, his foreign minister, the head of the top minister of the commerce ministry in Beijing. We wouldn’t have had those meetings without the governor along. Now, for at least one of the businesses that was on the trip, that was very important. Melaleuca, who is also on the trip this year, they have a business that depends on direct sales. The government in China looks very carefully on direct sales. Having Butch along helps them get into areas that they likely wouldn’t have gotten into without him.
Q: How can you quantify if a trip was successful? You reported the trip will cost the state of Idaho, taxpayers, between $18,000 and $19,000 this year.
A: They have a stock line. ‘It’s really hard to tell, you can’t really tell from the sales that come directly on a mission’. And I think that’s probably true. But I do think you do lay groundwork on what companies should be able to say ‘hey I’m making more money because I went on this mission and I had the governor along and therefore we had more exports.’ Actually since 2010, China exports have gone down– like 10 percent – it was pretty significant at a time when all the rest of our exports were going up.
I didn’t have the money this year to go, so I didn’t really push it. But I don’t think they really wanted me to go again, in part because of the backlash. I wrote a lot of stuff in 2010, and I think Idahoans saw more about this process than they ever had before. I don’t think that’s bad, except for people who are skeptical of government doing anything. If $18,000 or $19,000 is all they paid, and I’m not sure that includes agriculture, even if it’s double that, it’s still a bargain for the state to have its presence known across China.
Last trip, one thing I’ll remember their newspaper had a full page of stories about Idaho that day. There had been a bunch of Chinese journalists here before the trip. There were two or three other governors in town, and here’s Idaho getting this big feature. You can’t beat that. Let’s face it, we’re trying to sell.
Q: Were you surprised at any of the businesses going on this year’s trade mission?
A: No, they’re traditional companies. What there weren’t as many of this time were food companies. Part of the reason, from what the agriculture department told me, is that the timing of the mission was off. They wanted to get the mission done before China goes on vacation in May. They wanted to get this done in April, which isn’t necessarily a good time for ag businesses.
Q: Idaho’s top export to China is tech goods, things like memory chips, how does that affect the way ag producers sell their products?
A: It’s interesting to see how you do business in China. You don’t just go over there and sell stuff. You have to go over there with a long term plan. For instance, the last mission Idaho Timber Corporation was there. They had no agenda. They were checking things out, trying to figure out how they fit in. they did some business in China, but they weren’t there trying to sell. This time, they’ve got two other companies, you’re pretty much trying to get yourself in the door and lay the groundwork for a long term effort. Simplot for instance, I wrote about this two years ago, Simplot went to China and actually set up an entire potato industry in China. They had to start it from the ground up; growing potatoes, the French fries plant. This was first to serve McDonald’s in China, but it also laid the groundwork to sell fresh potatoes. They had to do all of that, or they wouldn’t have been able to sell fresh potatoes. They were able to convince Chinese companies that they were the people you wanted to do business with. They’ve beat out French companies because they took the long haul.
Q: Will any companies come home with contracts signed, deals made?
A: That’s not usually the process. I think the last time around, Melaleuca in particular made some deals about places they could go to, that they weren’t able to go before. I spoke with a couple of companies from north Idaho who actually got some contracts the last time around. But then the wheat commission was there on a much longer term effort. They don’t buy a lot of wheat from Idaho, not as much as we’d like them to buy. The wheat commission and Butch were trying to convince them, ‘if you bought wheat and store it in Idaho you don’t have to grow wheat in China. You can grow other things, you don’t have to worry about starvation. We’re here for you. You can depend on us.’ For potatoes, one of the things they were doing is going into big stores like Wal-Mart and trying to convince people that frozen potatoes are good for you. Because they have smaller refrigerators, they were trying to help people how to store things over a longer period of time.
Where those folks say, ‘is this the proper role of government?’, well, when you’re a company, sure you can go do it all yourself, but it is in the interest of the state to help companies, particularly on those kind of things, of trying to set up a system for companies to be able to do commerce. Making sure people can get loans, making sure that when people come to Idaho that they’re going to be able to work through the system, and the same growing the other direction to China. When you have a governor along, in particular, he gets you through the door, in places that you wouldn’t be able to get before.
This interview has been edited and shortened.