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Miami-China Annual Report: No. 7 trade partner pushing for the top spot

July 27th, 2006

A flood of Chinese imports could recalibrate the lineup of Miami’s top trade partners.

Imports from China are outpacing those of Miami’s top trade partners, promising a rejiggering of the trade roster perhaps as early as this year.

China ended 2005 holding onto its position as South Florida’s seventh most important trade partner, with $3.4 billion in bilateral trade. But that was a whopping 34 percent jump from the year before in a lopsided exchange that saw Miami import more than $3.1 billion in Chinese goods.

The fast growth put China close on the heels of Honduras and Costa Rica, which are Miami’s sixth and fifth trade partners, respectively.

And it wasn’t just China’s strong performance in 2005. In the first quarter of 2006, China’s overall trade with South Florida was up 15 percent.

Already in 2005, China was closing in on South Florida’s top overall trade partner, Brazil, when it came to imports. The Miami Customs District imported $3.4 billion in goods from Brazil and $3.1 billion from China last year. In 2004, Miami imports from China totaled $2.4 billion.

As evidence that the rapid-fire growth continues, results for the first quarter 2006 showed South Florida importing more than $779 million worth of Chinese products compared with $492 million from Brazil. During the same three months, South Florida exported less than $71 million in goods to China.

Chinese electronics led the import list, although the figures are somewhat misleading since a large portion of the electronic products does not remain in Florida. In the case of those products, the Miami Customs District as a transshipment point for Central America and the Caribbean.

Computers were the single most valuable import, totaling $461 million a gain of 71 percent when compared with 2004 figures. Imports of cell phone transmission devices rose even more, climbing 83.5 percent to end the year at $211 million. Shipments of computer parts, however, were down nearly 7 percent to $177 million.

Furniture was the fourth most important item on the import roster. In 2005, South Florida imported more than $154 million-worth of sofas, beds, tables, desks and other furniture. That compared to less than $120 million in 2004. Imports of chairs and seats reached nearly $54 million, up 31 percent.

The Miami Customs District also imported $101 million-worth of Chinese-made shoes. That was a sizeable gain from the $80 million imported in 2004.

One of the fastest-growing import commodities was rubber tires. South Florida brought in more than $37 million-worth of Chinese tires, a jump of 164 percent from the previous year.

On the export side, scrap metals dominated. South Florida more than doubled its aluminum waste exports to $38 million at the same time it send nearly $31 million in scrap iron and steel to China a colossal 239 percent jump. Exports of copper waste climbed 27 percent to surpass $27 million.

South Florida also shipped $3.6 million in aircraft parts, down 7.8 percent from 2004.

At Enterprise Florida, Manny Mencia said there are several reasons why there is a huge trade imbalance between Florida and China. He said they run the range from the devalued Chinese currency, the yuan, to the Asian country’s complex business environment.

“It is a very difficult challenge for small and medium U.S. companies to compete,” said Mencia. “Rules are not always clear cut. There are also trademark infringements and intellectual property issues.”

Jerry Haar, a professor of management and international business at Florida International University, said there is another reason for the lopsided relationship: West Coast ports still dominate traffic with China. And he noted that South Florida is more likely to be an exporter of services than goods to Asia since the Miami area does not have a heavy industrial base.

“China needs commodities and Florida only has oranges and sugar. China needs heavy equipment but companies such as Caterpillar already have offices in Beijing,” Haar said. “For Miami is much easier to ship products to Latin American countries. They are our natural markets.”

Nevertheless, Mencia predicted that as China begins to become more involved in World Trade Organization affairs and bilateral negotiations, it will become easier for U.S. companies to develop export opportunities. China joined the World Trade Organization in 2001.

For the near future, Mencia said, Florida will continue to be an important exporter of aircraft components, technology goods and life science related products bound for China.