The Small Biz Gateway to China

Finally, corporations in China are great avenues of revenue for American small businesses ... through the brokering of goods and services, or through direct sales. For example, Linktone (LTON Quote), a company formed by two ex-Goldman Sachs bankers, grew from $500,000 in 1999 to the present market cap of $109 million. The company provides consumer wireless solutions, products and services to people in China.

What types of companies do you think would benefit the most there?

Manufacturing, especially for electronics-related products. Small businesses really have a huge advantage given the scalability of manufacturing runs.

One of my good friends in Colorado, Tim DePumpo, owns a small private electronics manufacturing business with annual sales of just under $1 million. He's been contract manufacturing in China for nearly five years, but also still manufactures products in the U.S. as well.

He recently told me the quality and ease of communication is truly there in China. He mentioned there's virtually no downside in contracting in China. ... the only exception being the volume required for China-based companies to consider even doing the run. He asserts that even the smallest businesses can benefit, if the dollar/volume is there.

He said a few years ago, things were risky, and if you were doing business with a company sight-unseen, there was plenty to be worried about. But now the communication, infrastructure and trust are there, so American small-business entrepreneurs can do business without ever stepping foot in the country.

Are there any public companies whose example a small business would be able to follow?

Sure, take a look at Watts Water Technologies (WTS Quote). The company manufactures water valves and flow-control products and is the single largest supplier of home-plumbing equipment to Home Depot (HD Quote). Chances are, if you've made a weekend trip to Home Depot to buy something for your leaky faucet, Watts had it made in China.