Governor McDonnell Announces Wine Export Agreement between Chateau Morrisette and China’s Tianjin Commodity Exchange

~Five-Year Deal Results From Governor’s Focus on Growing Agricultural Exports, New International Marketing Investments~

SHANGHAI, CHINA – Governor Bob McDonnell announced as part of his trade and marketing mission to Asia that Chateau Morrisette and the Tianjin Commodity Exchange Company Limited (TJComex) have reached a five-year agreement to export Chateau Morrisette wines to China.  The inaugural sale of more than 1,150 cases of wine from Chateau Morrisette was scheduled to arrive in Tianjin, China’s fourth largest city, during the Governor’s mission to Asia.

Commenting on this new export business, Governor McDonnell said, “This sale is another positive result of the ongoing focus we’ve placed on increasing recognition of Virginia’s outstanding agricultural products and growing exports of those products to key markets, like China, around the world.  These exports ultimately provide new opportunities, and new jobs, for our agribusinesses and citizens.  It’s also a good example of how Virginia now has the ability to bring together foreign companies with Virginia businesses to find new export sale opportunities.  I congratulate Chateau Morrisette and TJComex on reaching this accord and hope that this is the beginning of a long-term, prosperous relationship.”

In Beijing, Virginia Secretary of Agriculture and Forestry Todd Haymore met with leadership of the commodity exchange to recognize formally the sale of Chateau Morrisette wines after meetings in Virginia late last year and to discuss future wine purchases.  Haymore and TJComex leadership also agreed to explore potential export opportunities of other agricultural products.

“Today’s announcement marks another positive step in the Governor’s initiative to help the Virginia wine industry grow its presence in the global marketplace,” said Haymore.  “In fact, the Governor’s strategic focus on growing agricultural exports in general continues to yield new opportunities for our producers.  I appreciate the Governor and General Assembly providing the resources needed to help facilitate business discussions in the global marketplace between companies like Chateau Morrisette and TJComex.”

Chateau Morrisette is located in Floyd County and is regarded as one of the oldest and largest production wineries in Virginia.  The winery produces more than 60,000 cases of wine per year from its scenic location on the Blue Ridge Parkway.

“The Tianjin partnership is an integral step toward implementing our long-range strategy of increasing distribution both domestically and internationally,” says Chateau Morrisette General Manager George Weldon.  “A five-year contract firmly positions Chateau Morrisette on the global stage as Virginia’s premier winery and it serves as a testament to the quality wines produced by our winery.”

TJComex was founded as China’s fourth commodities exchange and the first in the country to be funded privately.  The company provides a trading platform for a wide range of materials and commodity products, ranging from wood products to iron ore, and now high-value agribusiness products such as wine.  The exchange began operations in December 2009 and is developing its portfolio of commodities along with opportunities generated by consumer demand in China.

Dr. Chuanliu Ni, President and Chief Executive Officer of TJComex said, “We are very pleased to have found wine of such superb quality in Virginia.  The Chinese market for wine is growing rapidly and we hope that by beginning a long-term relationship with Chateau Morrisette, we will expand wine culture in Tianjin and open our city and country to future purchases of Virginia wines.  We also would like to thank Governor McDonnell, Secretary Haymore, and Virginia’s agribusiness development team for their help in introducing Virginia wine to consumers and investors in China.”

Leading up to this sale, Virginia Department of Agriculture and Consumer Services (VDACS) international marketing staff partnered with the Advocom Group to introduce TJComex members to various Virginia wineries.  Advocom and VDACS staff worked together to coordinate a trade visit by TJComex members to Virginia, during which members of the exchange met with Virginia companies producing wine, wood products, and other agribusiness commodities.  Founded by Virginia residents Lane Bailey and A.J. Donelson, the Advocom Group is a global consulting firm with offices in Washington, DC and Beijing.

“We were pleased with this initial purchase and we look forward to helping TJComex with future purchases and investments in Virginia wines and other products,” said Donelson.

Domestic and international promotion of the Virginia wine industry is one of Governor McDonnell’s top economic development and jobs creation initiatives.  Since 2010, the McDonnell administration worked with the General Assembly to establish a reimbursable tax credit program for the establishment or expansion of vineyards and wineries and to almost triple the amount of funds placed in the Virginia Wine Promotion Fund for research, education, and marketing programs. Governor McDonnell also promotes the sale of Virginia wines in Virginia, around the country, and during foreign trade and marketing missions.

Virginia currently ranks fifth in the number of wineries in the nation with more than 230.  Virginia is also the nation’s fifth largest wine grape producer.  According to a 2012 economic impact study, the Virginia wine industry employs more than 4,700 individuals and contributes almost $750 million to the Virginia economy on an annual basis. In addition, more than 1.6 million tourists visited Virginia wineries in 2011.

In 2010, Governor McDonnell implemented a strategic plan to grow the state’s agricultural and forest product exports.  Working in close partnership with Virginia’s producers, agribusinesses, and exporters, Secretary Haymore and Virginia Department of Agriculture and Consumer Services’ (VDACS) Marketing and Development staff focus on retaining strong market presence in mature and established markets like Canada, China, and Japan, pursuing new opportunities in emerging markets such as India and Mexico, and developing business in unconventional markets, such as Cuba and Venezuela.  This team also works with state government partners, including the Secretariat of Commerce and Trade, the Virginia Port Authority, and the Virginia Economic Development Partnership, to find more export opportunities.

To supplement the strategic effort, the Governor secured new international marketing funds from the General Assembly over the last three years for VDACS to open agricultural trade offices in India, China, Latin America, and the European Union, all regions that contain some of the world’s largest and fastest growing economies.  Later this year, Virginia will open an agricultural trade office in Canada. VDACS has had a trade office in Hong Kong for more than 20 years.

Since taking office in 2010, Governor McDonnell has led overseas trade missions to Canada, Great Britain, Ireland, Switzerland, the Netherlands, Sweden, Germany, Japan, China, South Korea, Israel, and India.  These missions and the work of VDACS’ new international marketing staff with Virginia’s private sector exporters have resulted in more than $500 million in new agricultural exports from Virginia so far.

Agriculture and forestry are Virginia’s largest industries, with a combined economic impact of $79 billion annually: $55 billion from agriculture and $24 billion from forestry.  The industries also provide approximately 500,000 jobs in the Commonwealth.

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Washingtonpost.com:  “Lobbying down, but advocacy up” - T.W. Farnam

Is the lobbying business shrinking or just changing? It’s hard to say.

2012 was, by any historical measure, a tumultuous year in politics and public policy.  As the presidential and congressional campaigns evolved, clearly defined differences between parties and ideologies were front and center.  The American people voted, and along with a decisive victory by President Obama, we gave tepid support to continued divided government. What can we learn from the election and the past year in politics and public policy?  What does this mean for the public affairs business?  Here’s a look ahead.

• Look for the Republican Party’s continued decline in the polls and for their tenuous hold on the House majority to further weaken throughout 2013.  The Republican brand is in decline.  The party is seen as out of touch with independents and middle class voters, speaking to an increasingly narrow constituency.  Party leaders argue that their 2012 failures were more the result of political miscalculations than policy failures.  Yet, it is policy positions around the budget, taxes, abortion, guns, immigration, women’s issues, gay rights and others that slowly eroded the brand and the candidates who embraced it.  The most recent NBC/WSJ poll showed that the Republican Party is now viewed negatively by 65% of voters; with words like “bad”, “weak”, “lost”, and “wilderness” most often used to describe the party.  There’s no evidence as we end 2012 that Republicans have learned any policy or political lessons from the elections.
• The Tea Party’s 15 minutes of fame is in its last minutes.  The 2012 election also provided some evidence that the Tea Party is being roundly rejected.  The most compelling evidence comes from the losses suffered by Tea Party candidates in the US Senate races.
• President Obama will continue to enjoy broad public support, but difficulty on nearly every front with Congress, as he navigates the nation through a continued and more robust recovery.
• In 2013, dealing with the deficit will continue to dominate the business of Congress.  That’s good news for public affairs and lobby shops, of course, as tax reform, budget cuts and entitlement programs all require an unprecedented amount of lobbying and public affairs support.
• Immigration Reform will pass Congress by a wide margin and be signed into law by the President – Why?  See #1 above.
• Guns and Violence will be on the agenda, and there will be progress, but the NRA’s influence and rural state culture will prevent ‘meaningful’ solutions to the violence in Newtown. 
• Social media will continue to empower millions of individuals to be ‘iAdvocates’.  Every citizen already has the power to organize and create social media communities to push for policy outcomes on the Hill and in agencies.  Increasingly, citizens are finding new ways to increase their voices and breakthrough the Washington policy clutter, to be heard.
• The center of gravity for public affairs will continue to shift to States, as public policy debates and political activity continue to migrate there.  Implementation of the Affordable Care Act, especially Health Exchanges, and Medicaid funding shortfalls, will continue to make health care ground zero in public policy and politics.  Public affairs shops with state policy and advocacy capabilities are already reporting growth in new and organic business.
• Micro targeting will come of age in DC.  Fully integrated lobbying campaigns will increasingly use micro targeting and large campaign databases to create sophisticated models that assign activist scores to every American on top public policy issues. In this new micro targeted world, lobbying efforts will be supercharged by these constituent advocates, recruited from specific zip codes and linked to issues.

– Lane Bailey, CEO

China’s leadership transition

It’s just been announced that the Chinese Party Congress will meet on 8 November to announce China’s new leadership team. The change of leadership in China will take place just a few days after the American electorate determines who’ll be the next President of the United States. This is a remarkable concordance in the birth of new stars in the political universe; a qixi or tanabata in the political heavens (wrong day I know) that will hopefully see the relationship between China and America re-consummated, with the blessing of the magpies who build the bridges or deny them between hopeful partners, as in the myth.

At the moment, the probability is that President Obama will continue as US President. The alternative candidate, Mitt Romney, is also well known. The outcome of the process that almost certainly will project Xi Jinping to the Party Chairmanship and Presidency of China and Li Keqiang to the Chinese Premiership is well known, although there is less certainty about the composition of the leadership team in the Politburo, and the Bo affair meant that there may be some unexpected bumps along the way to declaring the ballot. The process by which this outcome was determined, of course, is less clear, but perhaps less so than some would have us believe.

There’s an instinct in the western press and commentators to underline the opacity of Chinese governance around this transit in the political heavens. The contrast is certainly stark. With China now an active issue in the American electoral contest, that contrast has assumed new importance: not only in how governments might conduct their affairs with China, but also in how ordinary people that elect governments in representative political systems are led to think about how they should conduct affairs with China. The current slanging match between President Obama and Mr Romney over who’s tougher on China and who’s less compromised by being a Chinese comprador is unlikely to affect the way in which either conducts affairs with China should he win office, one hopes, but there is a deep worry that if this kind of thing continues unchecked it will corrode the psychology of the relationship and develop into a uncontrollable pathology that may lurk barely suppressed under the surface.

The Chinese political system is typically described as authoritarian. This is a description that resonates with the events in Tiananmen Square in June 1989. And it resonates too with the many thousands of protests against unjust treatment and the violations of human rights that occur in China every year. There are many dimensions of China’s system of government that are unmistakeably authoritarian. To intelligent and critical Chinese the description also has a strong ring of truth. Yet it is a description that doesn’t quite capture the system of government under which they live today and of which they have expectations for the future.

Susan Shirk has famously described the Chinese system as being run by a ‘selectorate’ — responsive to public interests and the popular will in a way that denies the authoritarian label — a description that captures its nature better than most.

Meanwhile, as Ryan Manuel argues in our lead essay this week, ‘(t)he recent hubbub over [Chinese heir apparent] Xi’s disappearance says as much about our analysis of China as it does about the Chinese regime’. While Xi’s two-week absence from public appearances led to a flurry of articles about how opaque China’s government is and how little we know about the future leadership, the idea that it threatened the legitimacy of the Chinese regime, as some suggested, was far-fetched. As Manuel points out, Xi’s absence was his third fortnight-long disappearance from the public eye this year. And although they were happy to guess at what ailed him, few Chinese commentators seem concerned by Xi’s illness, whatever it may have been.

Rather than fret overly about what is a commonplace event in the comings-and-goings of the Chinese leadership, Manuel suggests, the character of Chinese government and the deep substructure of its operation and interests are what will matter to the conduct of affairs with China over the coming years, paradoxically reflecting what analysts also might say about dealings with the United States. All the important issues have to be dealt with ‘at the appropriate lower level (duikou guanli)’. That’s a matter of getting to know ‘the appropriate level’ and what the ‘appropriate level’ is thinking and doing. And as with what’s going on in the Chinese economy, there is much that is known about that if the effort is put into analysing it and relating to it.

What we do know is that, from the top (including Wen Jiabao) to the appropriate level, many thoughtful people are thinking hard about the economic and political challenges that China faces in the years immediately ahead — in particular about the nexus between continuing economic success and political reform. Political system reform, it is increasingly understood, is deeply connected to getting China’s big economic problems sorted out. A more representative political system is likely to make that easier, and is essential to dealing with systemic corruption — an inevitable outcome of the interaction between a one-party state and getting things done in the market. The question of political reform in this system is proximately focused on making the system of governance in the Communist Party (80 million strong as it is, of course), rather than in the country, more representative. Effecting political change will not be easy and hopefully China will have the international space and the understanding at home at all levels that allows it to make further progress on political reform under its new leadership.

Other recent articles in which you may be interested from the East Asia Forum are listed below. You can click the title of each one or visit www.eastasiaforum.org for daily content.

Peter Drysdale
Editor
1st October

Bradley adds to the Advocom Group’s global capability and footprint in Asia, joining John Russell and Robert Magyar, both of the North Head Group, in Beijing.

Sonia Bradley

“Sonia’s expertise on some of the world’s most pressing issues including food safety, the international regulatory environment and the global economy will be invaluable to our clients,” said Lane Bailey, co-founder of Advocom Group. “Add that to her strong relationships with key players in those spaces and Sonia knows how to help our clients stay relevant inside governments.”

“Her big picture thinking aligns well with the Advocom Group philosophy,” AJ Donelson, Advocom Group co-founder, added. “We are excited to work with her in developing and implementing powerful advocacy and communication strategies that resonate and have a meaningful impact in global markets.”

Bradley, an Australian, has worked with the World Bank in establishing the Global Food Safety Multi-Donor Trust Fund (MDTF), has served as a manager for Food Standards Australia New Zealand (FSANZ) and currently works on food safety market development with the Waters Corporation (NYSE:WAT). Her work has opened many doors and earned her respect in Asia, United States and across the globe.  She recently launched Collaborate Consulting in Australia to expand her reach.

“I’m delighted to join the Advocom Group global network and to apply my experience and expertise to the many other clients in Australia and beyond,” Bradley said. “My focus will continue to be helping clients navigate and develop advocacy strategies around the topics I’m most passionate about: public health and food safety and regulation.”

Although this verdict is only the third largest patent verdict in history, behind Centocor Ortho v. Abbott in 2009 ($1.8 billion) and Lucent v. Microsoft in 2007 ($1.5 billion), the direct global impact of this patent fight has yet to play out and could reach an unprecedented level. Apple has filed similar cases against Samsung in at least eight other countries, including Germany, Japan, Italy and France. Add to that the fact that the Apple patent assault against Samsung was really only a proxy fight, with the real target of the Apple legal strategy being Google’s Android software, which is used by Samsung and most other mobile device manufacturers. This is a war and a single victory at the beginning of it.  So, this verdict is relative pocket change when compared to what is likely to come – and come fast.

It’s pretty easy to understand who some of the losers will be in this war: Samsung, HSC, LG, Motorola/Google (at least over the short term), consumers who are price conscience, etc., but it may be more interesting to look at the eight big winners in this particular verdict:

1. Apple – Gaining a billion dollar verdict is only the beginning of the ‘spoils’ of this early victory. The company’s market cap rose to $633 billion on the Monday after the verdict, cementing its hold as the world’s most valuable company. In addition, the verdict – and the chilling effect it will have on the competitive landscape – will likely allow for medium-term growth in the current 19 percent of Apple’s global market share. Finally, on the eve of Apple’s introduction of the next generation iPhone, and the widely expected new “iTV/ Apple TV” platform, Apple finds itself without a peer as it, once again, creates entirely new categories of design, technology and content.
2. The Lawyers – Morrison and Foerster, LLP and Wilmer, Cutler, Pickering, Hale and Dorr, LLP were the lead firms for Apple in the case and if Apple is the world’s most valuable company, these guys have just become among the most valuable (and billable) lawyers. Estimated legal fees in the case could top $500 million and Morrison and Foerster reportedly billed a ‘median rate’ of $582 per hour, under an Apple discount.  And, their work has just begun, as the U.S. case is appealed and the global cases get litigated.
3. Patent Attorneys and International Patent Law Schools – Like Rodney Dangerfield, patent attorneys ‘get no respect’. Long the backwaters of the legal profession, they spend entire careers buried in detail and minutia. As of Friday, the profession is the new global legal battleground for every company and every government. If you have a son or daughter considering becoming a lawyer, international patent law is an obvious choice and so are its top schools – University of California, Berkeley, Stanford (of course!) and George Washington University.
4. American Innovation – There will be plenty of people who argue that the verdict will harm American innovation and limit intellectual property because it will ultimately limit the number of players. The fact is that IP is the last and most important and valuable ‘export’ we have. The more our IP is replicated, the lesser its value. The more we protect IP, the greater the incentive to ‘dream it in America’. No single company demonstrates that more than Apple does, and while all of the parts of the iPhone are made in China, the IP lives inside an American company, protected by U.S. patent law.
5. American Design – Clearly, a large part of Apple’s success has been in the design of its products, which the company also sought to protect under patent law seeing design as just as important as the hardware and software the products contain – it was, after all, Steve Jobs’ particular obsession. The case and the verdict establish new ground in how design features can be protected and are an intrinsic value.
6. Prospects for Patent Reform – For those on the losing side of Apple v. Samsung, the good news is that this victory is very likely to be a catalyst for a new look at U.S. intellectual property and patent law public policy, long in need of updating and reform. We can expect – and should encourage – Congress and the Administration to think about the implications of the verdict and the verdicts to come. There are probably too many patent applications filed in the United States, many are frivolous, and our intellectual property framework hasn’t kept up to date with the technology, global trade, and design advances. Patent reform would continue to encourage innovation and help update the ‘rules of the road’ so that lawsuits such as Apple v. Samsung aren’t needed.
7. Microsoft and Nokia – Potential big winners in the case are also the two important Apple competitors, Microsoft and Nokia. With Microsoft set to launch the Surface tablet with revamped Windows software, the software giant is set to enter the mobile space. And, Windows 8 may prove to be a serious rival to Apple’s iOS; there’s no question that some in the industry were already considering Windows as an alternative to Android. And, Nokia, which has been fighting tough competition from iPhone and Android-based smartphones, could see its fortunes turn around. It has a new smartphone line based on Microsoft’s Windows phone operating system. Nokia may gain an edge over Samsung as original equipment manufacturers and consumers weigh their options.
8. Steve Jobs (posthumously) –The shadow of Jobs hangs over this entire case and the battles to come. His maniacal protection of Apple IP and his understanding of the value of design, brand and technology make him unique in the history of patents. This paternal guarding of Apple’s IP shows every sign of continuing as the world’s most valuable company becomes even more valuable. Indeed, the world has been once again turned upside down by Steve Jobs.

Lane Bailey is Co-Founder and CEO of Advocom Group. Renowned for his ability to ‘connect the dots’ and leverage governments on behalf of businesses and organizations around the world, Lane has also provided communications support on a number of high profile trade cases involving the United States and China. A former Chief of Staff to U.S. Senator Jay Rockefeller (D-WV), Lane also chairs the Board of Directors for the Blanchette Rockefeller Neurosciences Institute (BRNI) in Morgantown, West Virginia, which conducts research on diagnostics and treatments for Alzheimer’s Disease and deals regularly with dozens of intellectual property and patent issues.