November 14, 2005
Learning Chinese | The Maine International Trade Center's Stephen Franck on the organization's new China Desk
By Sean Donahue
Stephen Franck developed his connections to Asia more by accident than by design. Following his college graduation in the late 80s, the Auburn native began backpacking around the world, working for a time in Europe before traveling through Asia. By the time he landed in Taiwan, he says he had become fascinated by the region, and spent the next six years teaching English, learning Chinese and helping friends with an import/export business. "It was like opening up whole new world," Franck says.
Now, as head of the new China Desk at the Maine International Trade Center's Lewiston-Auburn office, Franck hopes to help open that world to Maine companies. Modeled after MITC's Canada Desk in Bangor, the China Desk provides a central source of information and assistance to Maine companies interested in exporting to, importing from or setting up offices in China, Taiwan and Hong Kong. Last year, Maine companies exported $112 million worth of goods and services to China, and Franck's goal is to help increase that flow.
Although the region's huge economy offers plenty of opportunities to do that, says Franck, it also can be a challenging and expensive place to do business. Earlier this year, MITC had to cancel a planned trade mission to China due to a lack of participants, which officials said at the time had more to do with cost and confusion over the marketplace than a lack of interest. So when MITC hired Franck earlier this year as director of its Lewiston-Auburn office, it decided to use his expertise in the region to also create the China Desk, which opened in September. (Besides his first stint in Taiwan, Franck, a Maine Law graduate, spent two years working as a lawyer in Taipei on foreign investment deals and other trade issues.)
Mainebiz recently spoke to Franck about his new position, and the opportunities and challenges that face Maine companies looking to do business in China.
Mainebiz: For the last few years it seems like China has been largely perceived as a threat to the Maine economy, a place that's taking manufacturing jobs away. Is that perception softening a bit, to the point that Maine companies now recognize China as an opportunity, or is that your job at the China Desk ˆ to help companies see opportunities there?
Franck: I haven't really been back in Maine long enough to know about the idea that China is a big threat for Maine businesses. Most of the people I've talked to since I've been at this job have been excited about getting their products into China. I know that people across the country have talked about the loss of manufacturing jobs, but the Maine International Trade Center doesn't get into policy issues. My role is to try to help Maine businesses export to China.
So from that standpoint, I look at China and I try to talk to people about China as an opportunity. I'm not trying to take away from people's concerns, I just don't see that it's my role to talk about that. My job is really to say, "How can I help Maine businesses get into China?"
Rather than just focusing on lost manufacturing jobs, do you think companies should take a step back and try to find what opportunities this global market shift presents to them?
I think that's the way to look at it. Most people would agree that it's probably impossible to compete with China in terms of labor costs. We can perhaps compete with them on technology and brainpower and things like that, so if Maine companies are developing a high-tech product, an interesting product or a new product, those may have some value in China.
Companies must be finding those openings, because I read recently that China is the fastest growing export market for Maine companies ˆ up 300% between 1998 and 2003.
That's true in terms of a steady climb. Last year Brazil had huge growth [as an export market], but it was because there was an oil rig that was sold, so it was kind of a one-year anomaly. But in terms of steady growth, China is definitely the market because it's not reflected in any one, big purchase. It's just that there are a lot of Maine businesses that are able to access the China market now.
Did that growth inspire the idea for a China Desk?
I think so. The trade center has a Canada Desk up in Bangor that is staffed by Wade Merritt, and he's developed a significant level of expertise in getting products into Canada. With China being the fastest growing trading partner ˆ and I think that will continue to grow ˆ I think it makes sense to duplicate that model, because China is on the other side of the planet, and there are cultural and legal issues that make it more complex. I think it's important for the trade center to have a sort of point person who can coordinate all the services that we can provide, but also that are available from other organizations like the U.S. Department of Commerce or the [USDA] Foreign Agricultural Service or the Eastern Trade Council, who we work with. In fact, we just had a Maine company that went over to visit the Canton Fair, which is a big textile fair, and they met with a couple of guys from the Eastern Trade Council that are based in China.
So the idea is that a small-business person can make one call and have you help them track down all this expertise, rather than doing all the research on their own.
Right, and that's why I think the trade center is so important. Maine is primarily made up of small businesses, and they may not have a staff person to deal with these types of issues.
They can take advantage of us and we can be sort of an extension of them, at least in terms of international trade and in trying to find the answers that they need. And maybe we can't find all the answers ourselves, but we can help them find a person who can get the answer for them.
We recently had a client call up because they wanted to set up a branch in China. It's not something I can do for them ˆ they're going to need a Chinese lawyer for that. The documents need to be prepared in Chinese and filed with the applicable regulatory agencies in China. But I was able to guide them through their options and then ask questions about the plan. "Are you sure a branch office in China is what you need? Can you do what you want to do by finding a distributor or a sales rep, because setting up a legal entity in China costs money, and it's not something that can be done overnight." That's the kind of analysis I go through.
It sounds like a consultative process ˆ you're not just a switchboard giving out information on who to contact.
Exactly. I think that comes from my legal background, because working as a lawyer in Asia I used to get a lot of questions from clients and sometimes I'd say, "Well, I'm not exactly sure that's what you need. You may want to think about this." If I think that there's a better way for [a client] to do something I'll try to do that. So I'm definitely not just a switchboard.
How else did your legal experience prepare you for this job? Are there certain trade regulations or laws in China that are particularly tricky for most U.S. businesses to deal with?
I spend a lot of time trying to educate companies about intellectual property issues and enforcement in China, and ways they need to protect themselves. As I said earlier, we can compete with China in terms of brainpower and technology, but if you have a new technology you want to bring into China you don't want it to get stolen ˆ you don't want it to get copied. So there's a risk there, and I always make sure that I've talked to companies about intellectual property rights issues in China.
You've also said that establishing relationships is especially important when doing business in Asia. Why is that?
Here's a good example, and this is a true story. We had a company that my law firm was representing ˆ a venture capitalist-type company ˆ that came to Taiwan because they were thinking of buying a Taiwanese company. So we had a meeting between the CEO and some of the officers for the Taiwanese company and the American guys that were thinking of buying the company. And the American side wanted to get down to the numbers right away, while the Taiwanese guys just wanted to chat. The lead American guy was a fast-talking New Yorker ˆ a good guy, a bright guy, but you could tell he was losing his patience. He was just getting frustrated because the Taiwanese side kept deflecting the questions, and they wanted to have some tea and chat.
That paints a really good picture of how business is done differently there. The Taiwanese wanted to get to know the Americans better, not necessarily start hounding about numbers right from the get-go. Sometimes doing business there can take a couple of days. You might have to spend the whole day with someone and have dinner with them and drinks afterwards ˆ a lot of that type of stuff.
Relationships matter because I think the Chinese culture is based on a lot of relationships. If someone in Chinese culture considers you a friend, a confidante, then it's a very tight bond. That's the kind of thing you really want to develop because then you can have more success in doing business there than if you're simply an outsider.
How important is your ability to speak Mandarin in forming those relationships, and do you expect to use the language in your work at the China Desk?
I've used it on a couple of occasions already. When we had the China Desk event we had some people from Taiwan there, and I went to dinner with them and we talked back and forth in Mandarin and English. It made them comfortable that I was able to speak some Chinese with them. We also had a member send me an e-mail that came to them that had an attachment in Chinese, and I was able to read it and give them an explanation of what the attachment was. Not that my reading of Chinese is great, but it was good enough to figure out what this document was.
English is the international business language, though. All my e-mail to China is all in English. Even when I was working as a lawyer in Taipei I never tried to promote myself as being able to translate in business meetings. That's a skill that is beyond my capacity and I don't want to be responsible for trying to exactly translate something.
Looking ahead, do you see certain types of Maine companies that have a good chance of finding a market in China?
Getting back to the technology part, I'd say anybody that is developing some type of new technology may have potential in a market like China. Perhaps some seafood industry companies, too, and maybe some high-end consumer goods. The textile company that I referred to earlier that went to China produced a high-end good, an expensive product, so the idea is to try to sell it to the growing upper class in China.
Some of the wood products companies may find opportunities because there is a big attraction to U.S. hardwood for the interiors of apartments. The Chinese tend to live in big apartment complexes that are concrete block-type buildings, and inside they'll put a lot of nice wood interiors and wood flooring and cabinets to take away the concreteness of it all. So I think there's potential there, because from what I've learned the Chinese see North American wood as a higher grade and higher quality.
How much activity and interest have you seen so far from Maine companies?
There have been a lot of exporting questions and helping companies sort through some of those issues ˆ giving advice on payment mechanisms or letters of credit, that kind of thing. I've also had a lot of people call me up who just want to tell me what they're doing in China, which is good because then if another Maine business has a question about a similar issue there might be some sort of synergy there. Maybe I can put them in touch with each other and they can trade stories and experiences.
Earlier this year, MITC had to cancel a planned trade mission to China. Is a trade mission something you're hoping to pull together as head of the China Desk?
It's always something we think about. If there's a need, a desire and something that's going on in China, then it would make sense. I think the idea for China is to have an industry specific-type mission as opposed to a broad mission, because the country is very large. We've had some discussions internally about what sectors to focus on.
How would you feel about getting back to Asia? Are you looking forward to helping make connections between Maine businesses and Chinese companies?
Yeah, I think that would be good, because I could certainly be there and work with [Maine companies] and deal with some of the logistical issues of just getting around in China. I could help them in some of the basic introductions, but once they start talking business it's really up to the Maine company and their Chinese counterpart.
Now, as head of the new China Desk at the Maine International Trade Center's Lewiston-Auburn office, Franck hopes to help open that world to Maine companies. Modeled after MITC's Canada Desk in Bangor, the China Desk provides a central source of information and assistance to Maine companies interested in exporting to, importing from or setting up offices in China, Taiwan and Hong Kong. Last year, Maine companies exported $112 million worth of goods and services to China, and Franck's goal is to help increase that flow.
Although the region's huge economy offers plenty of opportunities to do that, says Franck, it also can be a challenging and expensive place to do business. Earlier this year, MITC had to cancel a planned trade mission to China due to a lack of participants, which officials said at the time had more to do with cost and confusion over the marketplace than a lack of interest. So when MITC hired Franck earlier this year as director of its Lewiston-Auburn office, it decided to use his expertise in the region to also create the China Desk, which opened in September. (Besides his first stint in Taiwan, Franck, a Maine Law graduate, spent two years working as a lawyer in Taipei on foreign investment deals and other trade issues.)
Mainebiz recently spoke to Franck about his new position, and the opportunities and challenges that face Maine companies looking to do business in China.
Mainebiz: For the last few years it seems like China has been largely perceived as a threat to the Maine economy, a place that's taking manufacturing jobs away. Is that perception softening a bit, to the point that Maine companies now recognize China as an opportunity, or is that your job at the China Desk ˆ to help companies see opportunities there?
Franck: I haven't really been back in Maine long enough to know about the idea that China is a big threat for Maine businesses. Most of the people I've talked to since I've been at this job have been excited about getting their products into China. I know that people across the country have talked about the loss of manufacturing jobs, but the Maine International Trade Center doesn't get into policy issues. My role is to try to help Maine businesses export to China.
So from that standpoint, I look at China and I try to talk to people about China as an opportunity. I'm not trying to take away from people's concerns, I just don't see that it's my role to talk about that. My job is really to say, "How can I help Maine businesses get into China?"
Rather than just focusing on lost manufacturing jobs, do you think companies should take a step back and try to find what opportunities this global market shift presents to them?
I think that's the way to look at it. Most people would agree that it's probably impossible to compete with China in terms of labor costs. We can perhaps compete with them on technology and brainpower and things like that, so if Maine companies are developing a high-tech product, an interesting product or a new product, those may have some value in China.
Companies must be finding those openings, because I read recently that China is the fastest growing export market for Maine companies ˆ up 300% between 1998 and 2003.
That's true in terms of a steady climb. Last year Brazil had huge growth [as an export market], but it was because there was an oil rig that was sold, so it was kind of a one-year anomaly. But in terms of steady growth, China is definitely the market because it's not reflected in any one, big purchase. It's just that there are a lot of Maine businesses that are able to access the China market now.
Did that growth inspire the idea for a China Desk?
I think so. The trade center has a Canada Desk up in Bangor that is staffed by Wade Merritt, and he's developed a significant level of expertise in getting products into Canada. With China being the fastest growing trading partner ˆ and I think that will continue to grow ˆ I think it makes sense to duplicate that model, because China is on the other side of the planet, and there are cultural and legal issues that make it more complex. I think it's important for the trade center to have a sort of point person who can coordinate all the services that we can provide, but also that are available from other organizations like the U.S. Department of Commerce or the [USDA] Foreign Agricultural Service or the Eastern Trade Council, who we work with. In fact, we just had a Maine company that went over to visit the Canton Fair, which is a big textile fair, and they met with a couple of guys from the Eastern Trade Council that are based in China.
So the idea is that a small-business person can make one call and have you help them track down all this expertise, rather than doing all the research on their own.
Right, and that's why I think the trade center is so important. Maine is primarily made up of small businesses, and they may not have a staff person to deal with these types of issues.
They can take advantage of us and we can be sort of an extension of them, at least in terms of international trade and in trying to find the answers that they need. And maybe we can't find all the answers ourselves, but we can help them find a person who can get the answer for them.
We recently had a client call up because they wanted to set up a branch in China. It's not something I can do for them ˆ they're going to need a Chinese lawyer for that. The documents need to be prepared in Chinese and filed with the applicable regulatory agencies in China. But I was able to guide them through their options and then ask questions about the plan. "Are you sure a branch office in China is what you need? Can you do what you want to do by finding a distributor or a sales rep, because setting up a legal entity in China costs money, and it's not something that can be done overnight." That's the kind of analysis I go through.
It sounds like a consultative process ˆ you're not just a switchboard giving out information on who to contact.
Exactly. I think that comes from my legal background, because working as a lawyer in Asia I used to get a lot of questions from clients and sometimes I'd say, "Well, I'm not exactly sure that's what you need. You may want to think about this." If I think that there's a better way for [a client] to do something I'll try to do that. So I'm definitely not just a switchboard.
How else did your legal experience prepare you for this job? Are there certain trade regulations or laws in China that are particularly tricky for most U.S. businesses to deal with?
I spend a lot of time trying to educate companies about intellectual property issues and enforcement in China, and ways they need to protect themselves. As I said earlier, we can compete with China in terms of brainpower and technology, but if you have a new technology you want to bring into China you don't want it to get stolen ˆ you don't want it to get copied. So there's a risk there, and I always make sure that I've talked to companies about intellectual property rights issues in China.
You've also said that establishing relationships is especially important when doing business in Asia. Why is that?
Here's a good example, and this is a true story. We had a company that my law firm was representing ˆ a venture capitalist-type company ˆ that came to Taiwan because they were thinking of buying a Taiwanese company. So we had a meeting between the CEO and some of the officers for the Taiwanese company and the American guys that were thinking of buying the company. And the American side wanted to get down to the numbers right away, while the Taiwanese guys just wanted to chat. The lead American guy was a fast-talking New Yorker ˆ a good guy, a bright guy, but you could tell he was losing his patience. He was just getting frustrated because the Taiwanese side kept deflecting the questions, and they wanted to have some tea and chat.
That paints a really good picture of how business is done differently there. The Taiwanese wanted to get to know the Americans better, not necessarily start hounding about numbers right from the get-go. Sometimes doing business there can take a couple of days. You might have to spend the whole day with someone and have dinner with them and drinks afterwards ˆ a lot of that type of stuff.
Relationships matter because I think the Chinese culture is based on a lot of relationships. If someone in Chinese culture considers you a friend, a confidante, then it's a very tight bond. That's the kind of thing you really want to develop because then you can have more success in doing business there than if you're simply an outsider.
How important is your ability to speak Mandarin in forming those relationships, and do you expect to use the language in your work at the China Desk?
I've used it on a couple of occasions already. When we had the China Desk event we had some people from Taiwan there, and I went to dinner with them and we talked back and forth in Mandarin and English. It made them comfortable that I was able to speak some Chinese with them. We also had a member send me an e-mail that came to them that had an attachment in Chinese, and I was able to read it and give them an explanation of what the attachment was. Not that my reading of Chinese is great, but it was good enough to figure out what this document was.
English is the international business language, though. All my e-mail to China is all in English. Even when I was working as a lawyer in Taipei I never tried to promote myself as being able to translate in business meetings. That's a skill that is beyond my capacity and I don't want to be responsible for trying to exactly translate something.
Looking ahead, do you see certain types of Maine companies that have a good chance of finding a market in China?
Getting back to the technology part, I'd say anybody that is developing some type of new technology may have potential in a market like China. Perhaps some seafood industry companies, too, and maybe some high-end consumer goods. The textile company that I referred to earlier that went to China produced a high-end good, an expensive product, so the idea is to try to sell it to the growing upper class in China.
Some of the wood products companies may find opportunities because there is a big attraction to U.S. hardwood for the interiors of apartments. The Chinese tend to live in big apartment complexes that are concrete block-type buildings, and inside they'll put a lot of nice wood interiors and wood flooring and cabinets to take away the concreteness of it all. So I think there's potential there, because from what I've learned the Chinese see North American wood as a higher grade and higher quality.
How much activity and interest have you seen so far from Maine companies?
There have been a lot of exporting questions and helping companies sort through some of those issues ˆ giving advice on payment mechanisms or letters of credit, that kind of thing. I've also had a lot of people call me up who just want to tell me what they're doing in China, which is good because then if another Maine business has a question about a similar issue there might be some sort of synergy there. Maybe I can put them in touch with each other and they can trade stories and experiences.
Earlier this year, MITC had to cancel a planned trade mission to China. Is a trade mission something you're hoping to pull together as head of the China Desk?
It's always something we think about. If there's a need, a desire and something that's going on in China, then it would make sense. I think the idea for China is to have an industry specific-type mission as opposed to a broad mission, because the country is very large. We've had some discussions internally about what sectors to focus on.
How would you feel about getting back to Asia? Are you looking forward to helping make connections between Maine businesses and Chinese companies?
Yeah, I think that would be good, because I could certainly be there and work with [Maine companies] and deal with some of the logistical issues of just getting around in China. I could help them in some of the basic introductions, but once they start talking business it's really up to the Maine company and their Chinese counterpart.
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