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US state law presents opportunity for Southeast Asian exporters

AvantiKumar | Aug. 18, 2011
Southeast Asian exporters into Washington State may benefit against China: Asia Policy Partners

Mike Mudd, Senior Partner of Asia policy Partners, LLC

PHOTO - Mike Mudd, senior partner of Asia Policy Partners.

A new bill passed by US Washington State on 4 April 2011 makes it a violation for any business to sell products in the state while using 'stolen or misappropriated IT' in its business operations.

"When regulations have been called 'The Unfair Competition Act', (UCA) most exporters from Asia are 'uncomfortable,'" said Asia-based technology consultancy Asia Policy Partners' senior partner, Michael Mudd.

"Although this is not a US Federal law, it does matter for Asia, simply because of the fact that Seattle is a major port of entry in Washington State for goods from Asia," said Mudd. "Seattle ranks as the seventh largest US port by trade volume, it ranks second for goods imported from Asia (behind Long Beach) and therefore this law will apply to many imports from Southeast Asia. Even if the goods are imported into the US via another state other than Washington, they may still find their way into Washington State and thus be subject to the law."

"In addition, other states may be considering similar laws and this may portend a global trend for greater influence by other major importing countries or regions, such as the EU [European Union]," he said. "As it stands, Louisiana has already passed a similar law."

"Four of the top 10 trading partners of the US are in Asia; all four are from North Asia," said Mudd. "Of these, China has grown over the last 30 years to be the largest by far; and ASEAN is the US's fourth largest trading partner in aggregate with more than US$150 billion in two-way trade, in ASEAN's favour. But this pales to the US$456 billon in two-way trade with China, vastly in favour of China by some US$365 billion."


Review of China as 'factory of the world'

"Washington State is often referred to as the most trade dependent of all the US States; this is why the UCA matters," said Mudd. "So is this law really negative for the region? Perhaps not, a better way to look at it is to look at what the law is intended to achieve and then examine any competitive opportunities, especially in relation to that giant in the north, China."

"Right now, inflation is skyrocketing in China; this is causing companies, such as the US-based luxury brand Coach, to reassess its manufacturing operations in China," he said. "They are actively looking at Vietnam, The Philippines, Indonesia and Thailand according to a Financial Times report in early May. Labour unrest and 20 percent+ salary increases are becoming more common in China. Foxconn, the contract manufacturer for Apple's popular iPhone and iPad, among others, has seen its wage bill double in 2010 alone. Another Pearl River Delta factory that exports 90 percent of its output to the US has seen its wage bill increase twice in 2010 by 25 percent each time."


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