Rep shares business lessons from China

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By Mick Mulvaney

In September, I was one of three state legislators fortunate enough to travel to Dalian, China, as part of a S.C. Department of Commerce trade mission to the World Economic Forum. While the four-day trip yielded a variety of insights and experiences, a couple are of particular relevance for Lancaster County and South Carolina.

The governor gets it

Say what you will about Gov. Mark Sanford, but I have no doubt that he has a thorough grasp of globalization and international trade, and of the risks and opportunities they present for South Carolina. The simple fact that South Carolina attended the World Economic Forum speaks volumes about how seriously the governor takes things. Houston, Texas, was the only other U.S. presence. By contrast, there were formal delegations from several European and Asian countries and cities.

The sooner we all realize that the future of South Carolina’s economic well-being depends as much on things such as trade with China as it does the subprime mortgage market, the sooner we can prepare ourselves to take advantage of the opportunities available to us.

Education is one key

China (and India) produced more engineers than the United States last year. That, taken by itself, should be worrisome. But by digging a little deeper, one will find that, throughout Asia, there is an apparent shortage of skilled labor. My experience bore that out: Several business leaders commented that one of the biggest challenges of operating in China is that they had little or no confidence in the accounting system there. Manual labor, then, is everywhere; professional skills are in short supply.

That shortage of skilled labor offers South Carolina an opportunity. Jobs will be plentiful for us and our children, but only if we are trained in marketable skills. High-school dropouts and English majors who can”t write a memo have a bleak future, indeed.

Private industry is another key

Our team of legislators and Commerce Department employees was rounded out by an impressive group of South Carolina business leaders. And I came away from the conference confident that our private sector is more than ready to compete in the international arena.

Here's an example: One of the South Carolina business owners noted that his company was in the process of moving operations from China to South America, as it had become more economical to operate there. So here was an S.C. company that had moved operations from the USA to China to South America in a few short years, all in an attempt to increase productivity and profitability.

That showed me that South Carolina business has made the commitment to compete in the world economy. It also reaffirmed for me that business and industry will find us, if we can simply make South Carolina more attractive. And while we can’t compete on things such as hourly wages, we can compete and excel in areas such as productivity, regulatory climate and access to markets.

Energy may dictate new economy

In talking with some oil producers from Texas, I was stunned to learn that they had been unable to permit any new “clean” coal-fired power plants in their state, which is famous for its commitment to energy. I compare that to China, which this year alone will open one new “dirty” coal-fired plant every week.

While we are seeing a resurgence in nuclear power, and growing interest in (and economic viability of) alternative and green power sources, we may still face power shortages between now and the time those clean sources are readily available. How we handle that interim will impact whether we continue to grow and thrive.

As one conference commentator noted, “the world is flat..except when it comes to energy.” Those who figure out how to make energy production a competitive advantage – and not an Achilles’ heel – will move to the head of the pack.

Rules do not equal protectionism

I am a staunch supporter of free trade. However, I just as firmly believe that requiring food imports to be safe to eat and toys free of lead paint is not protectionism. Neither are environmental standards.

Dalian was reputed to be one of the cleanest large cities in China. At the same time, it was not possible to see from one end of the runway at the airport to the other because of the pollution.

How South Carolina businesses and industry are supposed to compete with Chinese businesses that are free to pollute concerns me immensely. Lax environmental rules are a form of government subsidy – subsidies that unfairly tip the playing field against American businesses.

I was pleased to have the opportunity to attend the forum, and to see first-hand that South Carolina truly does have a place at the table when it comes to the global economy.

While changing the fundamental nature of our state’s economy from domestic (mostly textile) manufacturing to globalized trade is a long and bumpy road, it seems to me that we are doing a lot of the right things to move us in the right direction.

Mick Mulvaney, who represents Lancaster, Van Wyck, Indian Land and Fort Mill in the S.C. House of Representatives, attended the World Economic Forum at his own cost, not at taxpayer expense. He can be reached at mulvaneym@scstatehouse.org, via his Web site, www.mickmulvaney.com or (803) 246-1001.