Visions of a Billion Sales Dance in Their Heads : Trade: Foreign products are doing well in China. Business people are looking forward to more.

Talk of selling to China and that magic number soon comes up: 1 billion.

Just imagine one sale for every man, woman and child in China, goes the foreign business person’s perennial refrain.

J. Michael Jardine of the Walt Disney Co. (Hong Kong) says it has already been done. Disney’s Donald Bubble Gum, made under license in China by a U.S.-Chinese joint venture, sold more than a billion pieces last year, he said.

“I would hazard a guess that they are the first foreign-brand product to sell a billion of anything in China,” Jardine said.

True, we’re talking about 1 1/4-inch pieces of bubble gum priced at less than a penny apiece.

But the achievement dramatizes how far foreign products have come in China since the 1980s, when soft drinks and cigarettes were virtually the only foreign-brand items in shops outside a few major cities.

Prospects of reaching at least the 300 million urban residents among China’s 1.2 billion people are better than ever.

That explains why U.S. business people are nervously awaiting President Clinton’s scheduled announcement in June on whether he’ll renew China’s low-tariff trade status of “most favored nation” for another year. He has threatened to cancel it if China fails to improve its human rights record.

Cancellation would close many business opportunities to Americans, although U.S. companies that already manufacture in China hope to be somewhat insulated from any tariff war.

Foreign investment in China totaled $25.7 billion last year and could top that this year. Much of the investment is directed at making consumer goods for sale inside China.

Imports are also climbing, but high tariffs keep imported consumer items beyond the reach of most Chinese--except when the goods are smuggled in, another growth area.

It is now possible for a Chinese man or woman who has never gone abroad to start the day by shampooing with Head and Shoulders; dress in an Anne Klein or Ermenegildo Zegna suit; bicycle to work on a Schwinn 12-speed; sip instant Maxwell House coffee while working at a Compaq computer; lunch at Pizza Hut; head for a health club and don Reebok exercise clothes; then go home to watch videos on a Toshiba television while snacking on M&Ms; or Planters Peanuts.

There are even foreign stores that sell exclusively or predominantly foreign-brand products. Japan’s Yaohan chain has a department store in Beijing, and Seibu opened one last year in Shenzhen, adjoining Hong Kong.

“Chinese sports shoes don’t look well, but the main thing is quality,” said Han, a young man in jeans and T-shirt who was buying Nike sports shoes at the Beijing Yaohan. The price was $60, more than most Chinese earn in a month, but Han said, “I can wear these shoes three, four years.”

Disney has licensed more than 60 children’s boutiques in stores around China, with clothing and toys featuring “Mouse Mi”--Mickey Mouse--and “Old Duck Tang”--Donald Duck.

“It will become the most important Asian market to us within 10 years,” Jardine predicted.

The factors behind the foreign invasion are many. Western and Japanese companies facing sluggish economies at home are pushing harder at new markets and are applying lessons learned about China from less successful efforts in the 1980s.

China has also let down some barriers to foreign companies and products. Foreigners used to be barred from retailing; now, joint-venture stores are allowed in some cities.

Turning Chinese renminbi into hard currency used to be impossible; now it’s merely difficult.

Limits on advertising have been relaxed, allowing foreign companies to build name recognition. Jardine said the Donald bubble gum manufacturer plastered ads on Shanghai buses, which would not have been allowed in the 1980s.

Local authorities, competing to attract foreign capital, have become more flexible in interpreting regulations.

“Practice is moving ahead of regulation,” said Anne Stevenson-Yang, Beijing representative of the U.S.-China Business Council. “You can do a lot more in the way of promoting, distributing and servicing your product than you could a few years ago.”

Most important, three straight years of strong economic growth have given many city residents more disposable income.

If China gains entry this year to the General Agreement on Tariffs and Trade, the world trade body, more barriers to foreign products and services could fall.

“No, you’re definitely not looking at 1 billion” buyers, said Philip Shen, general manager of Kraft General Foods International’s joint venture in Canton, which makes Maxwell House coffee. He said coffee is too expensive for most Chinese. “But whatever figure you end up with from a base like that, it’s still going to be quite significant.”

There’s no significant competition from domestic coffee companies. Other products such as prepared baby foods, disposable razors and dandruff shampoos didn’t exist in China before foreign companies introduced them.

Chinese companies have been quick to imitate and challenge. Daniel Loeb, general manager of Nike International Ltd.’s China operation, said local makers of Nike look-alike sports shoes have the advantage of lower prices and fewer distribution hassles.

Foreign companies have to go through local distributors, and many stores have limits on how many foreign brands they can stock. They also often have to pay more than Chinese companies for electricity, staff wages and services. Bank credit is hard to get.

This is where veteran foreign businessmen interrupt with tales of how they overcame far worse problems in the 1980s. One likes to tell how he bought tons of frozen shrimp for export in order to get dollars to import equipment.

If there aren’t really 1 billion potential customers out there, is it worth it? “No question about it,” said Loeb. “You have to play the game.”