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A Buy American Strategy
for Those Chinese Imports

Our Buy American Mention of the Week!
by Roger Simmermaker
January 13, 2003

Wait a minute! Can "Buy American" and "Chinese Imports" be used in the same sentence or headline? The answer is "yes." Buying American is more than just about buying made in USA whenever possible. It's about supporting American companies who pay triple the amount of taxes to support our military and national defense, public hospitals, schools and libraries, as well as Social Security, Medicare and Medicaid than foreign companies. We all benefit when there's more money available for these necessities.

Having said that, let me re-state my position concerning U.S. trade policy with China. I oppose Most Favored Nation (MFN) Status for China. Such a policy gives preferential treatment to Chinese imports over domestically produced goods. Foreign workers don't pay taxes to America. Only American workers, and to a large extent, only American companies do. The U.S. Congress should never have voted to admit China into the World Trade Organization. China will always be protectionist and find a way despite WTO membership to remain protectionist. And why wouldn't they? No protectionist country that enjoys nearly unfettered access to the U.S. market would switch to free trade. What would there be to gain? China, much like their economic model Japan, will find ways to utilize non-tariff barriers to favor domestic production, thereby satisfying their WTO commitments.

But let's face it: Even "Buy American" conscious consumers are going to encounter the "Made in China" label quite often, so we need a clear strategy to deal with this reality. Many of the jobs that have gone to China and elsewhere may never return, and there are some areas where no American-made consumer goods are available. If you're in the market for a VCR, DVD Player, clock radio, or cordless phone, for example, you won't find any made in the USA.

When faced with only "Made in China" choices, it's better for America to buy an American-owned General Electric or Emerson clock radio than a Sony. Although we should shun American brands made in China for those made in non-communist countries like Taiwan, we need to support American companies whenever "Made in China" is the only option.

For American-owned Motorola, for example, China has become their most important market since China buys more cellular phones than any other country, including the United States. I know personally that Motorola does not use China strictly as an export platform since my Motorola phone was assembled in the USA with foreign and domestic components. In this case, it makes sense for American companies to invest in China to produce for the Chinese market. Profits reaped by Motorola will be repatriated to the United States and paid to American owners and investors, and the taxes on those profits will be paid to the U.S. Government. Has anyone noticed the U.S. Government is in debt? And the chances are good that if you contribute to a mutual fund or 401(k), your portfolio includes shares of Motorola stock, and probably a lot of other American companies.

It is also important to support American automobile companies like General Motors. There is likely no other company in the world that has paid more taxes to the U.S. Treasury and supported the livelihood of more American workers, retirees and their families than General Motors. GM invests heavily in China, and why not? None of their cars are being exported back to the U.S., and GM makes twice the profits on a car sold in China than those sold in the U.S., so who could blame them? Again, profits from American-owned General Motors will be sent to American owners and investors, of which you may unknowingly be one. You will pay taxes on those gains, as will GM, and there will be more money available through tax dollars for all the demands "We, the People" have put on our government.

These facts lead us to yet another sobering fact: The Chinese market cannot be ignored. As in any situation, Americans must make the best of what they have to deal with, and America must deal with China, one way or another.

American-owned Kodak is in a fierce battle with Fuji in the United States, has been all but shut out of Japan, but they control nearly two-thirds of the Chinese market. Yet 90% of the film Kodak sells to the American market is made in the USA, so they aren't using China for an export platform either. None of Kodak's cameras are made in the USA, but that holds true for all their foreign competitors, so let's not unfairly demonize Kodak. All profits made by Kodak, even those made in China, are repatriated to America.

In the second edition of How Americans Can Buy American: The Power of Consumer Patriotism, I suggest that we buy nothing from China where an alternative exists, and that remains my position. But the reality is that China can no longer be ignored, and buy American conscious consumers should buy an American company's brand made in China over a foreign company's brand made in China. Sometimes that will be the only choice consumers will have. So let's make the best of it. For American companies like General Motors, Motorola and Kodak, the stakes are high. All Americans will benefit if American companies succeed in China instead of their foreign competitors.


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