Exporting $8.4M from a Foreign Trade Zone
Making it Easier for China Consumers to Buy U.S. Dietary Supplements
Jiangxi Province Foreign Affairs Official inspects U.S. products at the Nanchang Free Trade Zone (FTZ). The United Natural Products Alliance (UNPA) is using the FTZ to make it easier for U.S. makers of dietary supplements to sell to customers in China. UNPA’s efforts have helped U.S. firms generate $8.4 million of sales in China over two years.
Beating Trade Barriers: From Blue Hat to Distributed Ledger
The FTZ strategy is just the beginning. Barriers to China’s $23 billion natural health products market remain like the “blue hat” quality seal from the State Administration for Market Regulation. It resembles a blue hat, hence the nickname. The seal signifies that products meet high quality and safety standards. Firms with blue hat registration certify, among other things, the origin of all product inputs. But the registration process disproportionately favors Chinese manufacturers, with over 99% of approvals being awarded domestically.
The next phase of UNPA’s strategy is to create an alternative to blue hat by integrating distributed ledger technology within FTZ environments. This new quality and regulatory assurance process will allow U.S. firms in FTZs to meet or exceed the blue hat requirements without going through the discriminatory process.
ITA Support
The support of the International Trade Administration (ITA) goes beyond the $300,000 financial award ITA made to UNPA to undertake a five-year project. ITA’s Commercial Service China staff, including Ming Yang, Xiaowan Yan, and Yaoyi Wang, has helped UNPA coordinate and mount two major events in China. From Washington D.C., Leah Markowitz in ITA’s Industry & Analysis unit coordinates overall support by the 10-member ITA project team from Washington, D.C. From ITA’s Commercial Service field office in Salt Lake City, where UNPA is headquartered, Daniel Bruner provide stateside support.
UNP Strategy: Create U.S. Jobs at New FTZ
UNPA members’ leveraging of FTZs to boost exports is not confined to China. Inspired by the China FTZ model, UNPA and World Trade Center Utah have established an FTZ in Salt Lake City. Other U.S.-based FTZs may follow. U.S. FTZs help U.S. firms leverage duty-free imports of inputs, transform them into higher-value-added products, and re-export them, thus increasing margins and creating U.S. jobs.
China remains a huge market, but with the FTZ strategy many new markets are becoming profitable for U.S. firms. UNPA predicts $30 million in additional export sales annually for the industry with the new FTZ strategy.