O.C. businesses hope Bush's three-nation tour will lead to trade breakthroughs.

February 15, 2002

By JOHN GITTELSOHN
The Orange County Register

	PATRICK MULCAHY, left, and his partner May Hsu of TeamChina USA in Tustin are interested in working with Hong Kong-based liason Dominic Yin, right, on water-treatment plants in China. Source: H. Lorren Au Jr. / The Register

Irvine-based exporter Mark Matsumoto has spent 10 frustrating years trying to sell American garbage disposals to Japan, battling trade officials in Tokyo, distributors in Osaka and code enforcers in rural prefectures.

He hopes President George W. Bush will help his cause during a two-day visit to Japan that begins Sunday.

"He's got to support deregulation," said Matsumoto, 36, head of the Southern California District Export Council, an organization of small- and medium-size business exporters. "Disposers are a minor issue, but the same thing is happening everywhere. Japan is moving at a snail's pace."

In the aftermath of Sept. 11, the spotlight during Bush's six-day trip to Japan, South Korea and China will shine on anti-terrorism and military security issues. But, for many in Orange County, the focus should be on business and <147,1,0>trade.

How will the president spur Japan to liberalize and revitalize its economy? Will Bush do anything to stop what many consider Korea's unfair treatment of U.S. auto and steel products? Can Bush get guarantees from China that its markets will open to U.S. companies?

Trade is vital to Orange County, where exports account for about 12 percent of the economy, according to a California State University, Fullerton, study.

After Canada and Mexico, Japan is Orange County's third-largest export market, but sales have faltered during a decade-long slump that shows no signs of lifting. Orange County's tourism industry also suffered with the absence of Japanese visitors.

Bush is expected to lobby Prime Minister Junichiro Koizumi to reform Japan's banking system with the goal of ending the cronyism and bureaucracy that hobble the economy and keep out products like Matsumoto's disposals.

"The real issue is that the local officials are awaiting guidance from above and are unwilling or afraid to do anything," Matsumoto said.

One of the biggest trade issues with Korea affects Hyundai and Kia, Korean automakers with U.S. head quarters in Fountain Valley and Irvine. They could suffer if Washington invokes trade sanctions in response to complaints that Korean trade barriers are hurting sales of American cars. South Korea argues that its markets are open but consumers shun American cars because they are gas guzzlers.

Trade disputes are a sign of normalization in U.S.-China relations compared with last year, when Washington called China a strategic rival.

Bush arrives on the heels of China's admission to the World Trade Organization. Vincent Dropsy, associate professor of international economics at CSUF, estimated China's membership would help Orange County double its exports to China in five years. Service firms such as engineering, financial, management and environmental consultants are expected to see business grow.

"You don't have to be a Motorola with 20 lawyers to do business there," said Patrick Mulcahy, president of TeamChina USA, a Tustin consulting company that has worked in China since 1984. "This is a time for small and medium businesses."

Mulcahy met Thursday with partner May Hsu and Dominic Yin, a visitor from Hong Kong, to discuss contracts for waste-water treatment plants in China's Shandong province. The plants are the first of hundreds proposed under China's new water-quality laws, a potential windfall for companies that have the expertise to design and operate the plants.

"Orange County is very good at what the Chinese want," said Hsu, a Hong Kong native who has lived in California since 1960. "President Bush going to China is very encouraging for us."

Local aerospace, telecommunications, software and chip-making companies also could benefit. The number of cell phones in China is expected to grow 20 percent to 40 percent a year.

Dick Dadamo, a board member of Anaheim-based M-flex, which has made circuit boards for cell phones in China since 1993, is traveling to China with an electronics trade delegation that hopes to capitalize on Bush's visit. Dadamo is pleased that U.S.- China relations are shifting from political confrontation.

"We are a trade group, not a political organization," he said.

But when an American president goes to Asia, the politics is often about trade.