Canadian exports to the middle kingdom stand at roughly one third of Australia’s. In terms of trade, China may be to Australia what the US is to Canada, but the Port of Vancouver is virtually the same distance to China’s eastern coastline as Australia is.
Meanwhile, on this side of the Pacific, what can Canadian exporters, so heavily reliant on the US market, reasonably expect from their US partners as they struggle to emerge from the current US economic downturn?
Significant trade opportunities definitely exist for Canadians exporters who are willing to diversify beyond their comfort zone – the US. Look beyond the perceived barriers and falsehoods, and strive for the great export opportunities presented by China.
Some experts believe that tripling or even quadrupling Canadian exports to China in the next 5 to 10 years is realistic. To their credit our Australian friends have fully understood and capitalized on this opportunity.
Post-bubble growth means less US imports
The US recession has taken its toll; millions of Americans have lost their jobs, and many more face the prospect of unemployment. The US consumer, that great and seemingly insatiable importer of goods and ultimate driver of global growth, is now more concerned about paying down debt and saving for retirement. The days of massive and perennial US current account deficits, funded by foreigners (mainly China) keen to invest in US treasuries is gradually coming to an end.Â And as the US dollar devalues, imports to the US are getting more expensive and American exports are becoming more competitive. Â It is therefore entirely consistent for President Obama to propose a post-bubble growth model that places emphasis on US exports and manufacturing: “If Germany, a wealthy, highly unionized industrial nation, can generate 40 percent of its economy as export-based, then it seems to me that there is something we’re missing that they are doing right, and we have got to figure that out,” Obama opined recently. What is slowly emerging from the ravages of the recent economic recession is a world where the US is no longer able or willing to be the global import â€œpitâ€ that has sustained the previous trading model, so beneficial to China and many other countries, including Canada.
What to do about it
The implications to the overall global economy are too numerous to list in this article, but they affect all exporting companies and therefore individual Canadian exporters must carefully consider the following points as they position themselves for the future.
Diversify: With the US market becoming relatively more challenging, diversification becomes an essential aspect of any export marketing plan. This is particularly critical for businesses currently relying solely on the US market.
Focus on Growth: Where there is growth there is opportunity and the massive real and potential growth of China cannot be overestimated or ignoredâ€¦in an increasingly competitive environment there are no real alternatives to the scope and depth of the China market.
Competitive Advantages: Canada’s unique advantages are many; relative proximity to China; our many cultural and social links to China; access to the US, and our ability to produce the type of consumer goods and industrial materials that China needs to achieve its planned growth.
Knowledge: To achieve these objectives businesses must first be made aware of and then be able to leverage the available resources and capabilities that are available to them to crack open the China puzzle.
Common misperceptions about China
Most are aware of the opportunities in China and the need to explore them, but detractors remain aplenty. Aside from the obvious challenges of language and culture, the issue of trust is front and centre when discussing risks to doing business in China with Canadians. The fear of â€œcopy-catsâ€ deters them from moving forward. There is no question that the risk exists, as it does in many markets, but it is not as widespread as you would think, and there are many ways to overcome it.
Get involved: Great business relationships and experiences in China flow from a genuine commitment to build real lasting friendships. Friendships will lead to partnerships and a commitment to protect one another in the market. Choose your partners wisely enlist the help of professionals.
Stay involved: By stipulating in your distributorship agreement the right to independently audit your partner’s operation in China, you can keep track of and stay involved in the venture.
Obtain a patent: Adherence to trademarks and patents in China is improving, and seeking legal support on the ground in China will allow you to effectively monitor the situation.
Consider a licensing arrangement: With China’s growing appetite for innovative products and technology, selling the rights to your technology or brands and negotiating royalties is an attractive proposition for many companies. It is a great way to get around barriers including high shipping and product certification costs as well as import duties and taxes.
A call to action
Canadian businesses realize that investing in the development of new markets is critical to the future success of their organization.
As demand for Canadian products and services becomes more challenging in the US, we cannot ignore the many emerging opportunities for exports.
Taking the time to learn about these opportunities and preparing your business for such an enterprise is a wise investment in time, personal and financial resources.
2010 is just around the corner. If China does not hold a significant place in your business strategy, 2010 is the time to change your strategy.
Through our branch network in China as well as our contacts in the Chinese government and private sector, and our unique experience of the Asian market, the Canada Export Centre is uniquely positioned to help you achieve your objectives in the China market.