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China Trade Desk Program


									                                    Lodi District Chamber of Commerce
                                   China Trade Desk Program
                                    An Innovative Program of Collaboration,
                                          Partnership & Shared Vision


In October of 2007 The Lodi District Chamber of Commerce took its first Tour & Trade Mission to see
China, the awakening economic giant that is and will continue to reshape commerce the world over.
Eighty business people made this excursion, one of them made a contact which led the Lodi District
Chamber to open new worlds of opportunity for members by establishing their own trade desk in
Shanghai China.

The Lodi District Chamber of Commerce is located in the middle of the great central valley of California.
Over 350 varieties of food grow in fertile sandy loam, under consistently warm sun and cool nights, in
short perfect growing conditions. This Mediterranean climate is ideal for world class wines as Robert
Mondavi knew over 50 years ago.

Since 1923 The Lodi District Chamber has helped the surrounding agricultural businesses get their crop
to market. In those days it involved getting roads and railroads to distribute food throughout the state
and eventually all over the United States.

Today the Lodi District Chamber has opened up a political and logistical pipeline for exporting locally
grown and manufactured products to the largest emerging consumer market on the planet. As the Lodi
District is the largest producer in the United States of many agricultural food products and other non-
food items it only makes sense to do business with what will soon be the largest consumer group in the
world, the rising middle class of China.

A first generation Chinese entrepreneur came to the USA for an education and look for a way to
accomplish his dream of bringing his two countries and cultures together in commerce. Unknown to
him just 30 miles to the south the Lodi District Chamber CEO and the son of a farmer with a passion to
sell Lodi wine all over the world both had the same vision. They found one another in the spring of 2008
from a contact made in Shanghai! But before the year had passed exploratory trips to China were taken,
education for Lodi wine industry leaders began and the pace toward exporting to China quickened.

In January 2010 the Lodi District Chamber of Commerce opened its Lodi Chamber China Trade Desk in
Shanghai, the only U.S. Chamber to have such and office. Before long Chinese buyers were coming to
Lodi. As time went by more local wine industry leaders were seeing and believing possibilities. In
September of 2010 the Lodi Chamber China Trade Desk facilitated 6 Lodi Wineries to be the exclusive
United States wine industry representatives at the only “International Wine Show” during the 2010
World Expo in Shanghai. This is a study of people partnering around a shared vision, collaborating
through the on-going efforts of the Lodi District Chamber of Commerce.
                                    Lodi District Chamber of Commerce

                                  China Trade Desk Program
                                      A Program of Collaboration,
                                      Partnership & Shared Vision

In October of 2007 The Lodi District Chamber of Commerce, a Chamber of 800 businesses located in the
agriculturally rich San Joaquin Valley of California, took a “Tour and Trade” mission to China. Eighty
Chamber members and several members of the Lodi community went to see first-hand the awakening
of this economic giant of opportunity. Chamber leaders went with a simple question in their mind;
“How can we, the largest producers of many products do business with the largest consumers?”

Background & History
In 2007 the Lodi District Chamber celebrated its 88th year representing businesses within the city and
also the vast and varied agricultural industry surrounding the community 63,000 citizens. In 1923 our
Chamber was established to help the new town of Lodi and the agricultural farms encircling it prosper.
Lodi was known as the “Watermelon Capitol” in the early 1900’s, soon it was also well known the
climate was perfect for growing grapes. The Chamber worked to get infrastructure of roads and rail
transportation in Lodi to get produce from farm to market whether it be in the state or across the

With the advent of refrigerated rail cars the Lodi Tokay Table Grapes were a favorite from coast to coast.
Tens of thousands of acres were planted, harvested and shipped to new type food stores called
Supermarkets. In the 1960’s a Lodi native son by the name of Robert Mondavi returned from Europe
and brought with him a vision for California grown wine-grapes and quality wine. He grew up with the
knowledge of Lodi’s fertile soil, warm days and cooling ocean breezes every night, in other words the
ideal growing conditions for world class wines. Beginning in the 1970’s the Tokay table grapevines were
replaced with wine-grapes bringing a greater price per ton and a growing demand.
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Today the Lodi Appellation, a designated American Wine-grape Growing Region, is the largest in the
United States, growing more than Napa & Sonoma Valleys combined. Lodi boasts over 100,000 acres of
various types of wine-grapes, the largest production in the USA of these varietals; Cabernet Sauvignon,
Chardonnay, Sauvignon Blanc, Zinfandel, Merlot, Sarah, to name a few. For years Lodi grapes and bulk
wine was purchased by Napa wineries for mixing into their world famous brands. Beginning in the late
1980’s Lodi began to market bottled wine itself, led by Robert Mondavi’s “Woodbridge Wine Collection”
made in the Lodi Chamber’s district. Today, over 80 bonded wineries are winning wine competitions
nationally and internationally competing on par with wines much higher in price. Lodi wines are known
for their fruit forward robust deep flavor, rare high quality at an affordable price point.

Also the Lodi Chamber district is home to some of the largest growing regions in the United States for
cherries, almonds, walnuts, asparagus, olives and olive oil production. One of our Walnut and Almond
growers ships containers of nut products all over the world. Several large Lodi food processing
companies make a range of products including; canned fruits, vegetables, tomato paste and sauces,
peppers, juice concentrates and also cake mixes and breakfast cereals.

Beyond agricultural based products Lodi has a diversified manufacturing base including; various plastic
thermo-forming product companies, modular building pioneers, PVC pipe manufacturing, vulcanized
rubber producers, iron foundries and metal fabricators. In short little livable, loveable, Lodi… has a lot to
offer the world!

The Beginning, One of Persistence and Fate
The Lodi Chamber’s first trip to China was in October of 2007. Our tour facilitator Mr. Leo Liu and his
company Citslinc offered “Face-to-Face” business meetings for Lodi business people to meet with
Chinese business people of similar interest. Well over a dozen such meetings occurred at a hotel in
Beijing. Lodi Chamber member, Mr. Frank Gayaldo met a gentleman who listened intently but
confessed his interest was little but gave him the name of someone he thought might be interested in
Lodi wines.

Mr. Gayaldo was a relatively new wine broker with a passion to spread Lodi wines internationally. The
lead he was given turned out to be monumental as it eventually led Mr. Gayaldo to Mr. Tie Zhang. Mr.
Zhang, an entrepreneurial gentleman had offices in Shanghai China and also in Sacramento California,
just 30 miles north of Lodi!
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Mr. Gayaldo had made contact with The Counsel General of The Peoples Republic, Mr. Gao Zhansheng
of China and invited him to come to Lodi for some wine-tasting and a luncheon in his honor. Frank and
Executive Director of the Lodi Winegrape Commission, Mr. Mark Chandler, Robert Patrick, the Lodi
Chamber CEO and the Conference & Visitors President Nancy Beckman together made the Counsel
General feel welcome and he reciprocated by promising to personally drink and promote Lodi wine. Our
new friend Mr. Tie Zhang was also a guest at this first ever meeting.

Encouraged by the luncheon for the Counsel General, Mr. Gayaldo under the banner of the Lodi District
Chamber of Commerce, took several wine vintners, and wine from 10 Lodi wineries to a large Wine-Expo
in Hong Kong in 2008. Hong Kong had just reduced import tariffs on imported wine 100% to zero. The
Chamber thought it might be good to put a “toe in the water” to gain knowledge of the Chinese and
Hong Kong markets looking for Chinese interest in our wine. Shortly after the Hong Kong show, which
had good success for one winery eventfully shipping several containers to China, Mr. Tie Zhang
approached the Chamber with a partnership idea.

Innovation Through Important Relationships
Mr. Tie Zhang is owner and President of U.S. - China Business and Cultural Association, again with offices
in California and Shanghai. Mr. Zhang proposed a partnership to locate a Lodi Chamber Trade Desk in
Shanghai. Mr. Zhang had visited the U.S. Department of Commerce in Shanghai on several occasions
and developed a good relationship with the Agricultural Trade Officer (ATO) Mr. Wayne Batwin. Mr.
Batwin, a U.S. government employee was the top executive in southern China, there to aid the
importation of American agricultural products into China. Through this relationship with Mr. Batwin, an
office arrangement was reached inside the U.S. Department of Commerce office building. This was quite
an achievement for Mr. Zhang and the Chamber. In January of 2010 the Lodi Chamber China Trade Desk
opened for business. Three employees of the Trade Desk began looking for buyers of Lodi District

The purpose of the office would be to facilitate the export of Lodi products to China. The Shanghai staff
would have access to importation reports and data bases to locate buyers and importers in all the
product categories in which Lodi competes. The Trade Desk also allows for meetings with clients and
receptions for business activities in the offices. One of the Lodi wineries held a wine-tasting at the office
site for potential buyers. The Chamber felt this was a prestigious address in which to do business. To
have offices in the United States Department of Commerce Commercial office building sent a strong
message to the Chinese that Lodi is not to be taken lightly but viewed as
                                                                                                Page 4

a serious marketing entity making a strategic approach to the Chinese market. This “everyday” presence
is a consistency not previously seen from the United States.

According to the U.S. Department of Commerce the Lodi Chamber of Commerce is the only U.S.
Chamber to have an office in Shanghai. The accomplishment is unique, but simple to duplicate as a
business model, for large or small Chambers.

Back in California, the Lodi Chamber had several meetings with Gao Zhansheng, the Chinese Counsel
General and staff. Mr. Gayaldo was invited to be the Counsel General’s guest at Chinese New Year
celebration, Mr. Gayaldo reciprocated having the Counsel General and staff to his home for a Bar-B-Que
in his vineyard. At one gathering the Counsel General referred to Mr. Tie Zhang as “The Golden Bridge”
to China for Lodi’s export effort. At a Lodi event Mr. Tian Deyou Deputy Counsel General addressed
more than 400 wine-grape growers at their annual meeting. This part of the narrative is offered to
demonstrate the depth of relationship of our efforts on both sides of the Pacific. In China, our partner
Mr. Zhang has secured a profitable relationship with the U.S. Department of Commerce ATO. And in
Lodi, Mr. Gayaldo develops a comfortable friendship with one of the highest ranking officials China has
in the United States.

These relationships prove to be valuable on various levels: First in the business of international trade
there are those who do not deal honestly. With the help of the ATO in Shanghai and our link to China’s
Counsel General’s office and staff we have “built into” our model a level of security for prospective
buyers, this is a valuable safety element.

By example, if there is ever a question at the Chinese port of entry, customs or inquiry by a Chinese
importer, our relationship with the Counsel General here becomes invaluable. The Lodi Chamber often
respects and honors these two important relationships, upon which we rely. Everyone we do business
with on either the Chinese side or U.S. side knows and sees first-hand our integrity and our
governmental partners and the effectiveness of our relationships. This goes a long way to bring some
trust and comfort in first-time international transactions.

The Pace for Export Begins to Quicken
Mr. Gayaldo and Mr. Patrick of the Chamber and Mr. Chandler from the wine industry made a trip in
2008 to Shanghai participating in a Consumer and Trade Wine Show. Some new relationships were
made with large distributors in China. A large distributor made a commitment to come to Lodi.
                                                                                            Page 5

Thus the first “In-Bound” mission was planned, into Lodi that is. The Chinese party came to Lodi in the
early spring of 2009, on that trip new friends were made and relationships begun with letters of intent
signed with several wineries. This in-bound mission was so successful several wineries went to China the
next month, returning to the same show Patrick, Gayaldo and Chandler were at just the preceding year.

Perhaps one of the proudest moments for Mr. Zhang and the Chamber Trade Desk Program was when
Mr. Zhang arranged for Lodi to be the only United States wine-region to take part in an exclusive wine
show inside the World Expo in September of 2010. The special wine pavilion featured only one wine-
region from each of the 15 major wine producing countries in the world. The Lodi contingent was made-
up of 6 Lodi wineries representing the United States. Each of these wineries now had access to quality
buyers and distributors servicing the growing market of Chinese wine-drinkers at the exclusive World

On the U.S. side of the China Desk “pipeline” California media recognized the efforts of the Lodi
Chamber. Stories have been written about how the effort is designed to increase exports in the near-
term, ease inventory and firm domestic pricing in the mid-term and increase local jobs in the long-term.
All of these market advantages are or will be the fruits of labor produced by the Lodi Chamber’s China
Trade Desk. The media spotlight on the Chamber has pointed out that this is a unique effort and a
visionary Chamber.

Behind the Scenes
What the media does not know is that the 1st year’s rent for the Trade Desk office in Shanghai was under
$5,000. Eighty-percent of this was paid for by a grant from Mr. Zhang’s company. The labor expense at
the Lodi Chamber Trade Desk is also paid for by Mr. Zhang. His costs are offset by support functions
such as travel arrangements and various product research projects which are paid for by American
companies and Chamber members wanting specific market survey information for their products.

The desk began formal operation in January of 2010 inside the U.S. Department of Commerce. Mr.
Zhang became a partner with the Lodi Chamber in working to first see, experience and learn about the
China opportunity. Before the Trade Desk opened 2-years of ground work was laid before members
really began entering the market.

From a financial point of view the cash outlay and exposure so far has been minimal for the Chamber.
The 2009 Chinese in-bound mission was financially supported by sponsorships from local Lodi
businesses. Job creation thus far has been in China with
                                                                                                Page 6

the 3 Chamber China Desk staff positions. The appendix will have a schedule for services provided by the
China Trade Desk.

Mr. Gayaldo has secured over 20 memberships himself from agriculturists, wineries, freight forwarders
and other businesses interested in doing business through the Chamber China Trade Desk. As the news
of the Trade Desk spreads we have new members from over 200 miles away in all types of business
categories. The Chamber has at its core the ability to bring people together; the Lodi Chamber China
Desk Program is made up with members, volunteers, partners and collaborators.

The Lodi Chamber China Desk will have greater impact in the future with the maturation of our efforts
offering more food and non-food products to the growing and affluent middle class in China. Certainly it
is growing in number and sophistication for upscale western goods, including food and drink; this will
bode well for Lodi into the future. As we file this report in the first few months of the Lodi China Trade
Desk’s second year of operation we continue to uncover opportunities we did not see one year ago. We
will continue to lay the infrastructure facilitating trade which includes holding various trainings and
seminars about shipping, letters of credit, financing tools and other elements involved in international
trade, even cultural nuances.

In Conclusion
Late in 2010 Mr. Tie Zhang organized a second in-bound trip to Lodi. This time it did not have buyers of
wine but 40 different high-level, successful Chinese business owners and CEOs of a variety of business
categories. Many were interested in purchasing residential real estate, some commercial development
investment, while others were interested in purchasing a vineyard or winery; others were looking for
suppliers of clothes, steel and landscaping supplies and also local tourism. We did not consider this
initially but no doubt we will see greater demand as China becomes more affluent, and travel becomes
less restrictive for the Chinese traveler. Plus depressed prices in the USA are an investment opportunity
for the Chinese.

Because we are a limited staff we made the decision to focus on wine as an export product line in the
first few years of the Chamber China Trade Desk. It was a smart, safe choice. It is our biggest and fastest
growing industry with worldwide demand. Plus, wine seems to be a prestige product and a great “door
opener.” Later we will bring other Lodi District products through the Chamber Trade Desk door into
China. We still continue to see this as a great service to our members and believe going forward the
Chamber China Trade Desk will become even more valuable to more
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members. The world is growing smaller and balance of trade is a key component to a harmonious global

We are proud to be an active, creative leader in what will one of the future’s most important
developments in commerce for our region in this new millennium. We will not waver from our
commitment and vision, we are…

                               The Lodi District Chamber Of Commerce

                                            and this is our

                   Lodi District Chamber China Trade Desk Program

THANK YOU to the World Chambers of Commerce for giving The Lodi Chamber this platform to tell
others in our industry about our China Trade Desk program, we hope in some way it inspires other
Chambers to create a better tomorrow via mutually beneficial commerce!

                                       Robert “Pat” Patrick
                                   President / CEO Lodi District
                                     Chamber of Commerce
                                Lodi District Chamber of Commerce

                              Lodi Chamber China Trade Desk


1 Chinese Media Story on Lodi Wines in China

2 Mr. Way Batwin Support Letter, former ATO in Shanghai

4 Letter from Counsel General Office, Peoples Republic of China

4 3 Photos… 1st Wine Show in China, World Expo, Lodi Wineries visit China Desk

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