Right Back at You
By Ian Mount

(FORTUNE Small Business) – China trade isn't all bleak for small American manufacturers; more and more are exporting finished goods to China. Between 1999 and 2003 (the latest data available), the value of goods shipped to China by American small and midsized businesses jumped 281%, to $9.3 billion. Overall, 49% of American companies exporting to China have fewer than 20 employees. Computer and electronic products are leading the way, as Chinese companies import components they can't yet produce locally and Chinese branch offices of American companies call on familiar U.S. suppliers. CLINIQA, a Fallbrook, Calif., manufacturer of substances used to check the accuracy of medical testing equipment, began exporting to China three years ago, and today about 2% of its $10 million in annual sales hail from that country. "You have to look for things that the Chinese can't do themselves," says CEO Granger Haugh, who expects to open an office in China in the next five years. "The issue for successful U.S. companies is really being on the ground and having your guanxi--your personal connections--in China," says Adam Segal, a senior fellow in China studies at the Council on Foreign Relations. "It's very hard to sell into the market from a distance."