KENTUCKY GOVERNOR BRIMMING WITH IDEAS FOR TRADE
Matt Bevin confident that tensions can be ironed out
Matt Bevin, governor of the US state of Kentucky, who has just returned from his administration’s first economic development and trade mission to China, is still excited by the journey.
“It was an excellent visit. I was very impressed by all of it. It was incredible,” the Republican said at his office in Frankfort, the state capital.
Bevin was pleasantly surprised to learn that Kentucky has such a good name in China “because of Kentucky Fried Chicken”. “So many people know the name, and they have a good connection to the name. It reminds them of something that makes them smile. It has consistency, it has quality,” he said.
“And so we need to do a good job in Kentucky of leveraging that — not just Kentucky chicken but Kentucky goods and services,” said Bevin, who is eager to show China that his state’s economy is also playing a prominent role in nonagricultural areas, particularly auto manufacturing and medical facilities.
During the weeklong trip, Bevin attended the China International Import Expo in Shanghai with Kentucky Cabinet for Economic Development Executive Officer Vivek Sarin and Erran Persley, the cabinet’s executive director for international affairs and business development.
Last year, Kentucky’s exports to China hit record levels, with more than $2.8 billion in products and services shipped.
According to the governor’s website, Kentucky exported about $1.5 billion in goods and services to China in the first eight months of this year, making the country the state’s sixth-largest export destination by dollar value.
However, last year, Kentucky imported more than $8.09 billion in goods and services from China, creating a $5.28 billion trade deficit.
According to the website, Chinese-owned companies are “substantial employers” in Kentucky. Eight Chineseowned ones operate facilities in the state, employing about 8,700 people.
They include some of Kentucky’s most recognizable employers, such as GE Appliances (owned by Haier Group), which employs more than 6,000 people in Louisville, and Lexmark (owned by Apex Technology, which is headquartered in Lexington, and has about 1,600 employees.
In August, Chinese-owned paper products manufacturer Global Win Wickliffe said it planned to reopen the former Verso Corp paper mill in Ballard County with a $150 million investment, which is expected to create 500 fulltime jobs.
Bevin and his group visited five of the eight companies on their trip to China. The tour took in Beijing, Chongqing, and Qingdao in Shandong province, with the aim of strengthening relationships with Chinese companies that are operating in Kentucky as well as developing new business and government connections to fuel growth.
Good conversation
Bevin met with people from various industries, including automobiles, pharmaceuticals, healthcare and agriculture, and held extensive talks.
Gesturing with his thumb and forefinger, he said, “I have a stack of business cards this thick of people who are interested in further conversations.
“There are so many potential ways in which capital can be invested (in Kentucky),” he added. “And it’s exciting, because my economic development team is following up and working closely with every one of them.”
The trip to China followed a visit to Kentucky in August by Cui Tiankai, China’s ambassador to the United States, who met with Bevin and various government and business leaders in Frankfort.
Bevin said: “It’s a good conversation. It needs to happen here at the sub-national level and at the local level. We need to have company-to-company, province-to-state, person-toperson dialogue, and this is my commitment. This is why I went to China.
“I want to get to know through sister states and sister cities the opportunity for that sub-national level of dialogue,” he said. “This is how long-term partnerships are built, this is how strong relationships are built, and this is how good business is done.”
Referring to the trade tensions between the two countries, Bevin said he was “positive things will be sorted out”.
“America and China are the two largest economies in the world. Our two countries comprise 40 percent of global GDP. We must work it out. If we don’t work it out, it’s bad for America. If we don’t, it’s bad for China. If we do, it’s good for both of us,” he said.
Bevin added that he was “confident that we can open markets in both directions, so that Chinese goods can come into America, and American goods can come into China”.
“The people of America want to buy from China; the people of China want to buy from America. Let’s make this possible, and good things will happen.”
At the two-day G20 summit in Buenos Aires, the Argentine capital, which starts on Nov 30, President Xi Jinping and his US counterpart Donald Trump are expected to discuss trade frictions on the sidelines of the meeting.
Bevin said he “truly believes that our presidents and their negotiators will work this out”.
“In the meantime though, I am continuing to work at that sub-national level. I’m not waiting for them. I know they will catch up ... We’re out there having these conversations,” he said.
Kentucky, a powerful force in the US auto industry, is home to 513 auto-related facilities that employ more than 100,000 workers. Major automakers have been building vehicles in the state for generations, and it ranks fourth nationally for the number of automobiles and trucks assembled and it is the No 1 producer of light vehicles per capita.
The governor, who met with auto industry representatives in China, said: “I told them there are no Chinese automobile plants in the United States. I want the first one to be in Kentucky. And I will do everything that I can to make it possible for the first one to be here.
“Whether it’s a joint venture or even a direct investment, I think the possibility is incredible,” he added. “This is a big marketplace; if you can sell cars in the United States of America, you can sell cars anywhere in the world.”
The pharmaceutical sector is another area in which Kentucky has shown its strength.
“Healthcare ... long-term care is something that we have great knowledge about,” Bevin said.
In the report of the 19th National Congress of the Communist Party of China, released in October last year, Xi stated the government will “actively respond to the aging of the population; build a policy system and social environment for caring and respecting the elderly; promote the integration of medical resources and resources for supporting the elderly; and accelerate the development of that industry”.
Bevin said, “I want to create a dialogue between Kentucky and China on long-term care, because there’s an aging population in China, and President Xi has said directly ‘I want all of our provinces, I want our cities, and I want our companies to focus on investing on how we are going to resolve this.’
“We want to be part of that solution,” the governor said.
Kentucky is home to about 600 dairy farms, with some 56,000 milk cows. The state produces about 454 million kilograms of milk a year, according to the Kentucky Dairy Development Council.
Bevin said the state abounds in dairy products, which are needed in China, and he believes this is another sector for investment and cooperation.
“There is a need for dairy products in China. (However) there’s not a lot of land for dairy cows in China. So the ability to have raw milk produced there is small, but protein powders and powdered milk are verymuch needed, and there’s not enough of it to meet demand in China,” he said.
“In Kentucky, we have dairy farmers who are trying to find a market for their milk, because Americans have more milk than we need.”
‘Trust our milk’
Bevin said he wants a Chinese dairy company to come to Kentucky to set up a production facility.
“We will make it possible for them to find the right location close to our dairy farmers. We will help them make the arrangements to buy the milk; they can turn it into powder here in Kentucky, they can put it on a ship here ... on one of our rivers and take it all the way to China,” he said.
“China trusted Kentucky for our chicken. And for many years we have delivered a quality, consistent, good experience with our chicken. Now, I am asking Chinese consumers to trust us with milk. You trusted our chicken, now trust our milk products,” he said.
Kentucky, known as the Bluegrass State, also is a big producer of beef and a major exporter of soybeans.
“We have high-quality food products in Kentucky, and again, the Chinese people know us, they know the quality of our food, but we can extend that. I want to bring other brands, the qualities of our dairy products and soybeans and other things that people need as well.
“And bourbon of course,” Bevin added.
Kentucky, the birthplace of bourbon whiskey, produces 95 percent of the global supply. According to the Kentucky Distillers Association, bourbon is an $8.5 billion industry in the state, providing 17,500 jobs with an annual payroll of $800 million.
“Bourbon is becoming more and more popular outside of the US and Canada. It’s becoming huge in Asia. … So we would welcome opportunities to speak with folks about that also,” the governor said.
Meanwhile, cooperation between China and Kentucky in the equine industry is increasing.
Raising horses in Kentucky is a major part of the state’s agribusiness, including sectors involved in breeding and rearing, racing, buying and selling, and tourism.
“Kentucky has the best racehorses in the world . ... They win more races around the world than (horses from) anywhere else,” he said.
According to a study by the University of Kentucky, the equine industry contributed $3 billion to the state economy in 2012 and generated 40,665 jobs.
At a dinner at US Ambassador to China Terry Branstad’s residence, Bevin also met with a representative of the thoroughbred horse industry in China. They talked and agreed to have further conversations.
“We would like her and other representatives to visit, and we will show them the horse industry in Kentucky.
“I would like to have a stronger relationship. I think this is going to be concentrated more in Hainan province. I believe a lot of the horse industry is in that province. So we will be working on that possibility as well,” he said.
Kentucky is home to arguably the world’s best-known horse race, the Kentucky Derby, which is run at Churchill Downs in Louisville, and is one of three races that comprise the Triple Crown, the other two being the Preakness Stakes and the Belmont Stakes.
“The China Horse Club owned 25 percent of Justify, which won the (2018) Triple Crown. That’s incredible. So there’s going to be a lot of opportunity between China and Kentucky on horses,” Bevin said.
He quoted a Chinese proverb: “The longest journey begins with a single step.”
“It’s very true. It’s the same for these types of relationships — economic development relationships. This is a long journey, and we are taking one step at a time to a wonderful destination together,” he said.
The people of America want to buy from China; the people of China want to buy from America. Let’s make this possible, and good things will happen.”
Matt Bevin,
Kentucky governor