State by State: China and Wisconsin Trade

Wisconsin, one of the leading dairy producers in the U.S., produces about a quarter of America’s cheese. The agriculture industry forms a significant portion of Wisconsin’s economy. The state ranks first nationally in the production of corn, cranberries, ginseng and snap beans for processing; second in terms of milk production and butter production. The Wisconsin economy grew at a moderate pace in 2013, reaching US$282 billion. Other major industries include manufacturing, energy, power and control, bioscience, food and beverage and water technology.

Trade and Exports with China

China is the third-largest export market of Wisconsin – in 2014, Wisconsin exports to China totaled US$1.6 billion. China ranked third for agricultural exports from Wisconsin in 2014, following Canada and Mexico. Total agricultural exports to China last year were valued at US$278 million, about a fifth of the total commodity exports to the country and about 8 percent of total Wisconsin agricultural exports worldwide. Other major exports to China include civilian aircraft, engine and parts, tractors, parts and accessories of motor vehicles. 

State-Province Relationships

In April this year, a delegation of more than 30 agriculture professionals from Wisconsin made a trade mission to China’s Heilongjiang province, along the Russian border in northeastern China. The province has had a sister-state relationship with Wisconsin since 1982. Heilongjiang is China’s largest grain producer and is interested in importing dairy products, live animals and other agricultural products from Wisconsin. The trade mission was expected to promote Wisconsin dairy products and boost Wisconsin’s exports to China. 

RELATED: Investing in China’s Growing Health Foods Market

Investment Opportunities

Food and Beverage Industry

Chinese consumers are in favor of imported food: foreign food imports to China have annually increased 15 percent in recent years, and the amount of food imports has more than quadrupled in the last ten years. By 2018, China is expected to become the top importer of foreign food products, with the total value of food imports set to reach RMB 480 billion (US$77 billion). Edible vegetable oils, cereal and milk products account for roughly half of all food imports. Massive domestic food safety concerns have led to huge investment opportunities for foreign investors in food business in China. In addition, based on the newly released food safety law, food companies are now required to establish a food safety self-examination system. This new requirement has created opportunities for investors that have expertise in food safety science. 

Energy/Water Technology

To tackle its severe air pollution problem, China encourages foreign investment into its energy control sector, with tax breaks and financial support provided for eligible R&D centers conducting research on renewable energy development. Foreign investors are also encouraged to engage in the construction and operation of hydropower stations, new energy power stations and water supply plants. 

As a global center for energy, power and control technology development, Wisconsin is home to world-class academic institutions and companies committed to addressing the world’s energy challenges. 

Tax Treaty – US Trade with China    

The United States has signed a Double Tax Treaty with China. This can reduce tax burdens under certain circumstances in both trade and any China legal establishment. Please seek professional advice for specific China investment requirements. Treaty details can be found here. 

Further Support from Dezan Shira & Associates

Dezan Shira & Associates can service Wisconsin-based companies that are looking to further develop their operation in China. The firm can help companies establish a direct office in the country and can guide them through the affiliated tax, legal and HR issues that come with doing so. To arrange a free consultation, please contact our U.S. office at usa@dezshira.com.

China Retail Industry Report 2014
In this special edition of China Briefing, we provide an overview of the retail industry in China and the procedures for setting up a retail shop, focusing specifically on brick-and-mortar physical retail stores. Further, we have invited our partner Direct HR to offer some insights on the talent landscape in the retail industry, as well as tips for recruiting retail personnel in China.

Using China’s Free Trade & Double Tax Agreements
In this issue of China Briefing, we examine the role of Free Trade Agreements and the various regional blocs that China is either a member of or considering becoming so, as well as how these can be of significance to your China business. We also examine the role of Double Tax Treaties, provide a list of active agreements, and explain how to obtain the tax minimization benefits on offer.

Adapting Your China WFOE to Service China’s Consumers
In this issue of China Briefing Magazine, we look at the challenges posed to manufacturers amidst China’s rising labor costs and stricter environmental regulations. Manufacturing WFOEs in China should adapt by expanding their business scope to include distribution and determine suitable supply chain solutions. In this regard, we will take a look at the opportunities in China’s domestic consumer market and forecast the sectors that are set to boom in the coming years.

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