San Diego’s Pacific Rim Hopes Keyed to China : The Wheels of Deals Grind Slowly but, Business Executives Hope, Surely

The delegation from the North China Institute of Computing Technology waited patiently while Ken Liebler poured beer from 32-ounce bottles of Miller High Life.

The group of Chinese engineers and educators then sipped their beer while a Los Angeles businessman who represented China made a sales pitch:

China’s national planners were readying the country’s seventh 5-year plan and the country was interested in entering the recording head industry. Was Liebler’s company interested in a joint venture? If so, what would the venture cost?

The deal outlined during the August, 1985, meeting at Ken Liebler’s Old Town office never materialized. In fact, the only business generated by the meeting was an order from the University of Shanghai for a single piece of test equipment.

“The wheels evidently grind as slowly in their government as in ours,” quipped Liebler, president of Magnebit, a San Diego-based company that manufactures recording heads.

Despite the delays and pitfalls, the market potential of China and other Pacific Rim countries is attracting attention from a growing number of San Diego County companies.

Asian countries accounted for $84 million of the $291 million in goods exported by San Diego County businesses during the first quarter of 1986, according to results of a pilot study by the San Diego Chamber of Commerce.

Not surprisingly, the biggest slice of San Diego’s export pie--$94 million--went across the border to Mexico. An additional $76 million in goods were exported to European countries, and $22 million in exports were shipped to Canada.

Based on that preliminary data, the chamber has estimated that San Diego companies shipped $1.34 billion--and quite possibly as much as $1.5 billion--in exports during 1986.

The chamber anticipates that San Diego’s Pacific Rim exports will continue to grow.

But cultivating those trade relationships can take time, according to Monitor technologies Vice President Francis Harding, who has traveled to China to promote his company’s export business.

Harding, who returned from his most recent China trip in November, said senior managers “visit with their counterparts in China at least two times a year” in order to maintain contact.

During his trip last November, Harding attacked the thorny problem of how to stimulate demand for Monitor’s environmental products “when you’re operating in a planned economy. . . . You have to remember that there’s no such thing as a salesman in China, so there’s no one out there stimulating product demand through sales and marketing.”

Harding also has learned that “because of logistics, it takes four times longer to do business than it would in the Western world.”

During a previous trip, Harding traveled through China on a train powered by a “steam engine that was so old that it was coal-fired and hand-stoked.” He also waited in a freezing train station with “. . . all my clothes on, I mean, everything. My sweaters, a ski parka and a London Fog and moon boots. When it’s getting close to minus 30, you’re cold.

“You learn that you just don’t go to the airport and say ‘I want to go to (Beijing),’ like you expect to do at home,” said Harding, who “once sat in Beijing for three extra days because I simply couldn’t get a seat (on a plane) out.”

Harding and Monitor manufacturing Vice President Allan L. Budd have traveled to China several times to set up and maintain a manufacturing and marketing agreement with the Chinese National Technical Import Corp. in Beijing.

Monitor’s window of opportunity may be closing in China, however, because orders for foreign products have been slipping as the country’s supply of foreign currency dwindles. Consequently, Monitor’s third-year contract with China “will be for just one-third to one-half of what we received in the (1986),” Harding said.

Although Harding predicted that Monitor’s downturn in China will be balanced by new sales drummed up during recent trips to Korea, Taiwan and other Pacific Rim countries, he described China as “a unique new business environment that isn’t going to come along that often.”

Manufacturers aren’t the only companies expressing interest in the Pacific Rim.

San Diego Gas & Electric, for example, views the Pacific Rim as a capital source as well as a market for its newer, non-regulated subsidiaries.

San Diego Gas & Electric Chairman Tom Page first ventured to Japan in search of investment capital in 1985. That trip, which included a presentation to the Japanese Institutional Investors Conference, has yet to generate a solid return.

However, one of Japan’s four major investment houses “is contemplating the start of a utility (investment) fund, and it appears that we’re being considered as one of the stocks for that portfolio,” according to an SDG&E; spokeswoman.

In addition, Integrated Information Systems, a non-regulated business housed in SDG&E;’s Pacific Diversified subsidiary, recently pitched its computerized mapping product to utilities, government agencies and developers in Malaysia, Japan and Korea.