California Mines for Golden Opportunities With Trade Strategy

To many observers, governor-led trade missions are merely taxpayer-financed foreign holidays. Far from improving a state’s economy, detractors say, they are simply a way for self-serving governors to advance their political careers and reward campaign contributors.

California Gov. Gray Davis caught more than a little of that flak in October, when he led a delegation that included some of his biggest campaign donors on a two-week trade trip to Europe and the Middle East. It didn’t help when at one point during the trip his hosts said he was on his way to becoming president.

But the junket alarm bells quieted last week when Davis announced that the trip led a Swiss firm to decide to locate a maintenance facility in Palmdale, a move that will create 6,000 high-paying jobs in the next few years.

In an interview with The Times hours before the announcement, Lon Hatamiya, the state’s trade and commerce secretary, said the governor is thinking globally for 2000.

For starters, the administration will increase its foreign trade offices from nine to 15, the secretary said, opening two in South America and four in Asia. The new offices--in Buenos Aires; Sao Paulo, Brazil; Shanghai; Singapore; Manila; and an undetermined site in India--will join existing offices in Mexico City; London; Hong Kong; Frankfurt, Germany; Tokyo; Taipei, Taiwan; Seoul; Johannesburg, South Africa; and Jerusalem.

“We think those are emerging markets; they are already very important markets to California,” Hatamiya said. “But . . . the rebound of those economies in those six areas bodes well for California.”

These overseas trade offices are designed to help California companies conduct business in foreign markets, including developing trade leads, organizing trade events, arranging introductions and advising about financing.

Funding for the new offices is already appropriated in the state’s budget, which means the administration must have the offices staffed before the end of the fiscal year in June. The state’s overseas trade office budget is $6.3 million for fiscal 2000.

Hatamiya said the state will be contracting with people in the new countries to operate the offices and represent California.

“It’s important to have people who speak the language, who understand the business culture, who have a network of people they can work with quickly,” he said.

Five of the existing trade offices have been without permanent directors since at least last April, when Davis abruptly sacked the heads of three of the offices. Two others had previously resigned. Davis has come under repeated attacks for not naming replacements.

Hatamiya stressed that all of the offices have acting directors. “The governor is continuing to review qualified applicants for those positions, and hopefully he’ll be making those decisions as time goes on. I don’t have a time frame on that.”

In June, the governor announced that he was planning two overseas trips a year to encourage trade, which already generates nearly 25% of the California economy. When asked where the governor will be traveling in 2000, Hatamiya replied:

“We’re looking at a couple of places that are, obviously, major markets for us. I’m going to leave that up to the governor, and you can probably make some presumptions, but obviously Asia is important and Latin America is important and Mexico is of continuing importance.”

(A spokeswoman at the governor’s office would not directly confirm the secretary’s implication of upcoming trade missions to Asia and Latin America.)

Mexico is poised to become California’s leading export market for the first time, having passed Japan into the top spot through the first nine months of this year.

Meanwhile, the state’s exports to seven of the 10 key Asian markets (the 10 being Japan, South Korea, China, Taiwan, Hong Kong, Singapore, Thailand, Indonesia, Malaysia and the Philippines) have grown in the first three quarters of 1999. The “Asian 10” account for 41% of California exports. Shipments to South America represent 2% of California exports, but Hatamiya says South America offers a tremendous growth opportunity for California firms.

“Two major focuses for California’s presence overseas are: one, to increase our export opportunities . . . and two . . . we should also be looking at foreign investment opportunities,” the secretary said.

The Swiss aircraft maintenance company is a case in point. In late October, while the Davis delegation was in Israel, the governor sent Hatamiya to Zurich, Switzerland, to negotiate with SR Technics, which had been looking to locate its North American headquarters in Texas or Arizona. While Hatamiya was there, the governor also placed calls to the chief executive of SR Technics, Hans Ulrich Beyeler. A deal was reached within weeks.

“This is the kind of thing that you can only generate with face-to-face opportunities, and there’s no better advocate for the state than the governor himself,” Hatamiya said. “Business trips are so important--for people to know the governor, to know business leaders from California, so they feel more comfortable doing business in the future.”

In addition to increased representation in Latin America and Asia and probable governor-led trade missions to both regions, the head of the Trade and Commerce Agency is already touting a 40-minute IMAX film titled “Wild California” that will be shown in theaters worldwide beginning this spring.

Besides highlighting the state’s scenery, Hatamiya said, the film will spotlight California’s innovative entrepreneurship, cutting-edge technology, entertainment industry, diverse population and range of opportunities.

Hatamiya estimates that in the first five years of the film’s release, more than 13 million people will see it. Created by the same people behind “Everest,” “Wild California” is scheduled to premiere at the California Science Center in Los Angeles in May.

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