Md. firms cope as SARS fears grow

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Maryland companies doing business in China are expressing concern about the SARS epidemic and how it will affect international commerce.

Corporations from around the state sold $138 million in products and services to China last year, according to the Maryland Department of Business and Economic Development, and indications -- pre-SARS -- were optimistic.

Since China joined the World Trade Organization in 2001, the nation has experienced outstanding economic growth, and it is seen as a fertile market for American companies.

"Of all our activities worldwide, China is the place that is really booming," said Harold Adams, chairman of RTKL Associates Inc., a Baltimore-based architecture and engineering firm. It has offices in seven U.S. cities, as well as in London, Madrid, Tokyo and Shanghai. "So it's very distressing, what's going on with SARS. We, like a lot of other companies, are feeling it."

In recent weeks, concerns about severe acute respiratory syndrome have led Baltimore Aircoil Co. in Jessup, a division of Chicago-based Amsted Industries Inc., to shut down its six-member sales office in Beijing.

Aircoil, which designs cooling and thermal storage systems, has about 3,000 employees worldwide and has annual sales of $200 million to $300 million.

"Our customers have pretty much gone indoors and hid," said Frank Bowman, Aircoil's vice president of marketing and support operations international. "Our salespeople are not traveling because city-to-city travel has been nonexistent.

"It hasn't shut down our business, but it sure has put a crimp in it," Bowman said.

Baltimore Aircoil has a venture with a Chinese refrigeration company, the Dalian Bingshan Group, which controls 50 percent of the nation's industrial refrigeration market. A trip to Dalian was planned in late March to celebrate the venture's fifth anniversary, but Bowman said that was canceled.

"The longer this goes on, the more concerned we become," said Peter O'Neill, director of DBED's Office of International Business. "It's going to become an issue here if this becomes extended and people don't get on planes."

The Office of International Business postponed Asia Trade Week, scheduled for last week, because of SARS. The event sought to bring to Maryland trade representatives from China, Japan, Taiwan and Singapore to meet with business leaders.

The conference will be rescheduled later this fall, DBED officials said.

With virtually all American companies imposing a moratorium on travel to China and Hong Kong earlier this month, many business transactions are being conducted electronically, through videoconferencing or via e-mail, fax or telephone.

This is particularly challenging in a nation whose culture so highly prizes the face-to-face relationship known as quanxi, said Dave DeChant, professor at the University of Baltimore's Merrick School of Business and director of its China Executive MBA Program.

"In China, it's 100 percent -- or 110 percent -- about relationship-building," DeChant said.

The Chinese prefer to do business with individuals they know and trust, he said, and Chinese executives view the relationship as between two individuals, rather than two companies.

RTKL Associates has several large construction projects under way in China, including the $40.2 million Chinese Museum of Film in Beijing, scheduled to be completed in 2005, and several major developments along the riverfront in Shanghai, including the $200 million Shanghai Science Musuem, which opened in October 2001.

The firm has conducted business in China for a decade, said chairman Harold Adams. RTKL's Shanghai office has half a dozen employees. They recently received approval from the Chinese government to significantly increase the staff's size, but it likely will be some time before that happens, Adams said.

RTKL imposed a travel freeze after eight employees returned from China in March. A return trip, planned for April, was canceled. But against company officials' advice, one RTKL vice president, a Chinese-American, insisted on making the trip earlier this month to check on several projects.

"His wife made him get an extra life insurance policy before he left, and she insisted he stay in a hotel for 10 days after returning before he could come home to her and their children," Adams said. "And he did those things."

On Monday, the World Health Organization said that the worst of the SARS outbreak appears to be over in Singapore, Hong Kong and Canada, while Vietnam has become the first country to contain the highly infectious respiratory disease.

Eight new fatalities were reported Monday in China and five in Hong Kong, raising the worldwide death toll for severe acute respiratory syndrome to at least 332, mostly in China and Hong Kong. It has sickened about 5,000 people.

While no cases in Maryland are classified as probable, state health officials said Friday they have investigated 22 people for possible SARS symptoms since the outbreak began.

Two suspected cases are in isolation at home and are expected to be released from quarantine by the end of this week, state health officials said.

Sam Wong, vice president in charge of trade and business development for the American Products Exhibition and Exchange Center in Baltimore, said his trade organization began restricting travel to and from China in late February.

While they frequently had brought Chinese business people to Baltimore, that practice has stopped, he said.

Wong said he and others who are monitoring the SARS situation closely would like to see the Chinese government get the epidemic under control within a month -- two at the latest. "We want to see the number of cases decreasing," he said.

The full economic impact of SARS has not yet been felt, Wong said, but the financial results from the next fiscal quarter will be telling. Factories still are busy completing orders from last year, he said, but if new orders can't be placed this spring -- or if new plans for products cannot be conveyed to manufacturers -- production will slow dramatically by summer.

Anthony Goh, founder of the Maryland-China Business Council and president of U.S. Pacific Rim International, a Baltimore consultancy, said a "wait-and-see" stance prevailed at a meeting last week of Maryland business people and the Chinese Ambassador Yang Jiechi in Annapolis.

"The ability, the efficiency of how China's government can handle this issue" will affect not only trade with Chinese businesses, Goh said, but global investment in the government itself.

"I think China is making a great effort," said Goh, who said he talks daily by telephone with friends in China. "The government is determined to bring this disease under control."

At least one Maryland business stands to benefit from SARS. GenVec Inc., a Gaithersburg-based biotechnology company, has received a $420,000 contract from the National Institutes of Health in Bethesda to work toward developing a vaccine for the disease.

Copyright © 2014, Los Angeles Times
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