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By Spencer Sutherland
It’s a good time for business in Utah. The population is growing. Employment is on the rise. Consumer confidence is high. Across multiple studies, Utah consistently ranks as home to one of the strongest economies in the country.
But no state is an island. As economists and business leaders try to predict what to expect for Utah in 2016, they’re looking beyond the borders of the Beehive State. Not only are they keeping a close eye on the national economy, but they’re also looking globally for the greatest opportunities and risks.
Consumerism in China
It’s impossible to talk about the world economy without starting with China. With more than 1.3 billion people living in the country, China’s population is roughly the size of North America, South America, Australia, New Zealand and all of Western Europe combined. That means big opportunities for U.S. companies—and Utah is looking to be at the forefront.
A trade mission led by World Trade Center Utah, the Governor’s Office of Economic Development, and Zions Bank recently returned from China. The delegation included nearly 60 participants representing 30 different Utah organizations, including private business, nonprofits and universities.
Derek Miller, president and CEO of World Trade Center Utah, was part of that trade mission. He says China’s size and rapid growth—averaging six to seven percent annually— are not the only reason why Utah companies are looking to make inroads into China.
“China is transitioning from a stimulus-based economy—meaning the government was pumping money into economic development, primarily in real estate and construction—into a consumer-based economy,” Miller says. “That is very good news for Utah because now you’re transitioning those 1.3 billion people into 1.3 billion consumers. That will bode well for our exports.”
Utah companies are already taking advantage of the new consumer-based economy. For example, Salt Lake City-based PMI Foods is exporting meat and seafood to China. Another Utah company, Cicero Group, is exporting services, helping Chinese companies with data analytics and strategic consulting. The Cicero Group recently opened an office in Beijing as well.
“Over the next year, I think we will see increased opportunities for exports to China,” Miller says. “In the ‘90s, when Chinese markets were just opening up, the joke was if you could just sell one toothbrush to each of the 1.3 billion Chinese, what a great market that would be. We have some great Utah companies that are already doing that.”
Turning Chinese Yuan into American Dollars
Utah’s business leaders are not only focused on helping Utah companies send products and services to China, they are also working to bring more Chinese investment dollars into the state. Those investments come in different forms, whether it’s through real estate, capital investment or the purchase of facilities like the Miller Motorsports Park in Tooele.
Utah’s tourism industry is another benefactor of Chinese spending. The state’s “Mighty Five” campaign has been paying major dividends by drawing visitors to the five national parks located within Utah’s borders. “Tourism is an often overlooked service export,” Miller says, “but anyone who has been to our state capitol or one of our national parks recently has seen a lot of Chinese visiting our state and spending money.”
Though it has taken a lot of work for the state to coordinate relationship-building efforts and marketing campaigns, Miller says it hasn’t been a hard sale. “Luckily for us, we just tell them the truth. Utah is the fastest-growing economy in the United States. We have the second-lowest unemployment rate. We’re home to businesses from 29 different countries and we’ve got a very stable business environment with low taxes and reasonable regulations. We’re also a very friendly place for international business because we speak many different languages.”
That doesn’t mean that relationship with China doesn’t come with challenges. The Chinese government recently devalued its currency by 2 percent, sending shockwaves throughout global markets. Though the devaluation was purposeful, the market reacted by dropping currency values even further.