F JENNINGS CONSULTING

I recently attended a joint China/U.S. working group session focused on identifying impediments to U.S. technology companies expanding their markets to China.  There was a common theme that our export policies are outdated and need significant overhaul.   Many U.S. companies cannot compete with companies from other countries because of the U.S. restrictions on exports to China.  This not only impacts their direct revenue opportunities from the still growing Chinese market but it also impacts their overall position in the international market place.

Yes there are valid national interest reasons for restricting the exportation defense related technology but there needs to be a better process for conducting an ongoing review of these policies to make sure they are current with the times.  A technology that was unique to the U.S. defense industry ten years ago is most likely common place in much of the international market today.  While there are processes in place to obtain authorizations they are very cumbersome and can create a substantial cost burden on a small company. 

However, the Department of Commerce is not ignoring this impact on U.S. companies.  Secretary Locke has made a review of export controls a priority for his staff.  The big question is will the bureaucrats who fear China allow for any substantial progress.  The 20^th session of the Joint Commission on Commerce and Trade (JCCT) with China has just been scheduled for 28 and 29 October in Hangzhou.  Previously the JCCT agendas have addressed many hurdles for improving trade.  The last session had RFID regulations and standardization in China as a priority issue and much has been accomplished in the past two years.  We will need to watch to see what comes out of this month’s meetings.

I recently heard what I feel was an excellent visual description of the current market condition – a bathtub.  We all know that the sharp economic decline in the past 18 months will not have a sharp recovery.  All indications are that we will be faced with an extended ride at the bottom before there is a gradual rise.  If you can picture this, the visual should be a traditional bathtub.

 My concern is that many executives will find themselves being comfortable in the bathtub.  It can be very soothing to stay in that bathtub and not venture out into the cold market to risk having to make more cutbacks.  The real leaders in the next market surge are going to be those who find a prudent approach to leading their company out of the bathtub.  This will obviously involve some risk taking but market leaders are not adverse to risk.   The key is that those who decide to get out of the bathtub first will most likely be way ahead of their competition in the market.