Ventures Dialogue

Just a few short hours after the last two American Presidents discussed Canada-US relations at a ground-breaking event at the Toronto Convention Centre, the Prime Minister of Great Britain, Robert Brown, appears in the Wall Street Journal with an opinion piece on reducing trade barriers.

Prime Minister Brown makes a irrefutable argument against protectionism.

At Friday’s event with US Presidents Bill Clinton and George Bush, there was very little discussion about the recent protectionist measures south of the Canada-US border.  Both Presidents commented on the special nature of the US-Canadian relationship, but the economy and current trade concerns were barely touched.  Read a National Post article on the event here.

One interesting development, with today as the day when all people entering the US by land or sea will require a passport, enhanced driver’s license or a NEXUS card, neither former President appeared to know of the new security requirement! 

Photo courtesy:  National Post

My first full day in Hong Kong has been a busy one.  Shuttled from one interview to the next, I’ve had the fortune of meeting many nice people, all of whom wish to see a greater number of Canadian businesses active here in Hong Kong.  Over the next few days I’ll share some of their insights.

But first, I’ve just come from the Hong Kong Young Fashion Designers’ Contest 2009 and what a show it was!  New and innovative designs presented by young local talents to a symphony of lights and music – it was an amazing show.  19 finalists were selected from nearly 200 entries to showcase their collections in front of a star studded group of judges from the industry and the media.  There was much awe among fashion officionados that organizer, the Hong Kong Trade Development Council (HKTDC), was able to entice Ennio Capasa, a well known Italian fashion designer, and Japanese fashion designer Keita Maryama, to join the panel.

The show was divided into three categories:  Casual & Jeans-Wear Group, Contemporary Day-Wear Group and Party & Evening-Wear Group.  In addition, a special presentation was made by ex-winners and finalists of the Hong Kong Young Fashion Designer’s Contests from previous years.

It was a lavish display of texture, colour and sensuality and unlike anything I’ve seen before.  It had every element of a professional runway show that you might find in any of the fashion capitals of the world. It’s hard to believe that most of the designers are students just at the beginning of their careers.  If the excitement on the faces of tonight’s winners is any indication, these talented young designers hope the ranks of past winners who have created their own labels or become leading designers in the local fashion and garment industries.

Today has been a day of many firsts for me. 

• First time travelling to Asia
• First time flying business class
• First time watching the documentary March of the Penguins (on the plane)
• First time being met at an airport by someone with my name on a sign (I’ve always wanted to experience that)
• First time to lay eyes on Hong Kong 
• First time staying where when they turn down your bed they lay a kerchief on the floor and slippers at the ready

 With jetlag tugging at my eyelids, here is a smattering of first impressions.

1. It’s okay to wear your Lululemon yoga pants in Business Class! I agonized over this, wondering if I was going to look like a layabout among the many suited business people sharing the roomy front section of the Boeing 777 with me. But I need not have worried. People were wearing jeans, yoga pants, sweatshirts, ballcaps – all kinds of casual clothes. Whew! Am I glad I decided to opt for comfort!

2. Business class is definitely worth the money. All 5′2 of me could stretch out flat in my little reclining bed and the food and refreshments were quite satisfying. The toiletry bag was full of nifty things including some energizing foot spray which put a little sprite in my step after the mind numbing journey. Earlier in the flight in a clumsy effort to unfold the little eye mask a little energizing spray landed in my eye. This is not recommended.

3. Fifteen and a half hours is a long time in the air. It’s been quite a few years since I took such a long flight and I’d forgotten how slowly time creeps along. Almost as long as the journey must seem for the Emperor Penguins as they shuffle their way from the sea’s edge to their breeding grounds.

4. The March of the Penguins is a fabulous documentary by National Geographic. I laughed. I cried. I marvelled at their sacrifice for their offspring, their navigational prowess, and their innate sense of timing. Humans could learn much from their huddling behaviour on cold windswept terrain.  

5. Okay, so I didn’t find Mr. Hui, the driver picking me up, standing with my name in bold letters on a black and white sign. Mr. Hui was however, very informative on the half hour drive into the city from the airport, pointing out new residential areas, government subsidized apartment buildings, the bridge to Mainland China and the shipping harbour that we heard about from Carla Kearns in her series. Perhaps I was overrating the sign experience anyway.

6. I was quite surprised by the mountains surrounding Hong Kong, even though I’d seen so much of them in photos and research for the trip. The amount of green space still caught me off guard. One of the other first impressions, this one not a surprise, was the fact that in Hong Kong they build ‘up’. As compared to the way we’ve built ‘out’ in Canada. Towering apartment buildings or condos, of all shapes and even colours (like purple and green) greet you in clusters wherever the topography allows it. The traffic on the highways was extremely light, confirmed by my driver as a result of the fact that most people in Hong Kong don’t own cars. Public transit is excellent, made easier than in Canada due to the small footprint left by this city of about 7 million people.

One of the towering buildings in the downtown is my hotel, Island Shrangri-La where the service is out-of-this world, I have a real doorbell on my room (we don’t even have a doorbell on our house at home) and the staff think 15 above zero is cold! 

Sleep is calling me now at 8:40 p.m. Hong Kong time, and 7:45 a.m. Ontario time.  Until tomorrow.

HKTDC World SME Expo and Inno Design Tech Expo (IDT Expo), two international shows organized by the Hong Kong Trade Development Council (HKTDC) and designed to provide insight and information for small and medium-sized enterprises, were held successfully at the Hong Kong Convention and Exhibition Centre (HKCEC) last week.

The two expos attracted some 600 exhibitors worldwide, including the Chinese mainland.

Under the theme of “Supporting SMEs, Creating New Opportunities,” SME Expo featured a wide range of practical services at its Solutions Hall. Prominent business leaders and academics were invited to speak at a series of SME forums on topical issues related to the current economic crisis. One of these experts was from Canada — Susan Sheehan, vice president of client business and sustainability for motum b2b.

Chinese Mainland and Hong Kong entrepreneurs must strive to lead in sustainable development and corporate social responsibility if they want to develop global brands, said this Canadian brand development specialist.

“It is not about talk. It is about actions and the time to get serious is now,” Susan Sheehan told an audience of 200 international businessmen at World SME Expo 2008 here Friday. “Brands that align with sustainable development have to build or rebuild the way they do business from the ground up, not simply plant trees. That is the basis of building a genuinely great brand.”

“Asian leaders view brand building as strategically critical to moving up the global value chain and increasing either revenues of profitability,” she said. “They are right but future brand building will not be business as usual. The party is over. Focus on substance: develop brands based on customer needs and tastes, and ensure the goods and services are safe, durable and reliable. Lead by associating yourself only with things that harm neither people nor the natural environment at home or abroad.”

“New public policy approaches are emerging in the United States, Europe and possibly globally to advance sustainability in new ways.”

To request a copy of her speaking notes and accompanying PowerPoint^TM presentation, please email.

About motum^® b2b

motum b2b is a strategic and tactical business-to-business and sustainability marketing firm, acting as a gateway between North American and Asian markets. Based in Toronto, Ontario, Canada, the company has a proven track record working with global brands such as BASF, Toyota Industrial Equipment, Fluke Electronics, Tembec, Canadian Standards Association and BPA Worldwide, as well as helping smaller brands to establish themselves in new markets where they thrive.

Photo – Susan Sheehan, Vice president, Client Business and Sustainability, motum b2b presenting her insights at the World SME Expo 2008 in Hong Kong

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There’s a great story in the Financial Post today about Avalon Ventures Ltd., a Toronto-based junior mineral exploration business listed on the TSX Venture Exchange. Read the rest here:

China’s almost complete dominance of the rare-earths and metals industry does not deter Don Babur, chief executive of a Canadian company that is trying to crack the market for producing the raw materials used in everything from iPods to hybrid cars.

The fact China supplies more than 90% of the global demand is a huge opportunity — buyers want more supply-side diversity, says the soft-spoken geologist who heads Avalon Ventures Ltd., a Toronto-based junior mineral exploration business listed on the TSX Venture Exchange.

Over 120 delegates from 61 Canadian life science companies arrived in Hong Kong yesterday to take part in the 4th annual Canadian Life Sciences Mission to Hong Kong. This year’s mission organizers included the Canadian Consulate General in Hong Kong, the Hong Kong Trade Development Council.

The five top reasons life science companies had for joining this year’s mission were:

1. To learn more about the opportunities in the Greater China marketplace for Canadian life science companies’ products and services. China is one of the top 5 pharmaceutical markets in the world. The current annual per capita consumption of western drugs is $14 versus $52-65 in most developed countries and $587 in Canada. This rapidly changing market for medical products is growing exponentially especially in key areas such as seniors because China’s population is aging faster than any other country in the world.  Healthcare and medical treatment is also relatively expensive, so high quality western products are highly valued as a preventative treatment strategy. Dietary supplements or “natural health products” as they are called in Canada are the fastest growing segment in OTC products in China, with the market expected to reach $18 billion by 2010.
    
2. To find business partners interested in licensing their technologies or distributing the Canadian companies’ products in Asia. What better place to find potential partners than by attending some of the world’s largest trade shows in Asia? The International Chinese Medicine Conference and Exhibition, the new Wine and Beverage Expo, the Hong Kong Food Expo and the Medical and Healthcare Fair will each attract thousands of exhibitors this week in Hong Kong. Many leading Canadian firms including Purity Life Health Products of Acton, Ontario are already enjoying excellent success in penetrating the Chinese and other Asian markets using the lessons learned and the connections made while participating in last year’s Canadian Life Sciences mission to Hong Kong.
    
3. To investigate international research opportunities, facilities and potential partners for future joint R&D projects. In April 2007, the Canadian and Chinese governments announced a new joint science and technology grant program. Several bilateral international meetings established priority research areas such as life sciences. Grants with specific criteria were opened to applications last September. Canada and China have each invested $350 million dollars into the program and the first $22 million in research grants, covering 9 projects, were announced in May. Complete details on this program are available atwww.istpcanada.ca.Canada’s new natural health product regulations combined with our reputation for excellent agricultural production methods and world-class research in the medical uses of herbs are making Canadian firms and institutions extremely attractive research partners and a key reason many leading life science groups are sponsors of this event.
    
4. To learn how to protect Canadian intellectual property by entering the Greater China market through Hong Kong. China’s research and development spending has grown at over 17% annually during the past 12 years. The Chinese biotech market, second only to the Americans’ in size, is also increasing 30% annually and is expected to reach $71 billion by 2010. It is one of six key industrial technologies targeted by the Chinese government to fuel growth in the Chinese economy. By the end of 2007 over 1160 R&D centers had also been established by multinational corporations in China. While China’s entry into the WTO and the enormous increase in R&D inside China has led to many positive changes in the Chinese government’s attitude towards protecting IP and encouraging innovation, Hong Kong continues to have distinct advantages for companies looking to mitigate risk. Its use of common law (similar to Canada) means that Hong Kong-based partner firms of Canadian companies have the right to have their court cases heard in Hong Kong and the decisions enforced inside mainland China. 
    
5. To locate low cost sources of low cost ingredients, semi- finished and finished goods that can be used to create new products for North America, new brands or specific products for Asia and licensed or co-branded products for both places. When China opened to international trade in the early 1980’s there were very few factories. Today many factories contain state of the art equipment, have world class GMP and QA certifications, and for the next few years, will also continue to have low cost labour costs. A series of new research studies identifying some of these opportunities have been posted at www.strategis.gc.ca/logistics.

If you are interested in attending next year’s Canadian Life Sciences trade mission, contact the Hong Kong Trade Development Council’s Office in Toronto or one of the other sponsoring organizations.

For many small to medium sized businesses in Ontario, the world outside of our provincial borders can be daunting and many feel their business is just too small to start thinking big. In truth, firms of all sizes can and do successfully export from Ontario. Figuring out how to start exporting to other markets is now a lot easier with the Ontario Chamber of Commerce’s new global expansion program Export Market Access. It’s a cost-sharing program that will guides your business across borders and assist in providing direct contacts with partners in other markets.

Here are the Top ten reasons to look into Export Market Access (exportaccess.ca):

1. Exporting firms typically have a better bottom-line than non-exporting firms.

2. You may qualify for a grant covering 50% of your costs to develop export sales.

3. Market expansion is listed by Ontario’s high performance firms as a key to success.

4. Competition for Ontario firms doesn’t come from down the road but across the sea.

5. The BRIC nations (Brazil, Russia, India and China) represent unprecedented opportunities for Ontario companies.

6. EMA can help you showcase your goods and services to international buyers.

7. EMA can help you participate in outgoing trade missions.

8. EMA can help you develop market research.

9. EMA can help reduce your risk on foreign bidding projects.

10. The online application process is simple and you’ll receive a response within 30 business days.

It was imperative in this era of globalisation for Hong Kong to reach out to other countries  to collaborate in education and in nurturing of talent, according to the Secretary for Education, Mr Michael Suen.

Speaking earlier this month at a breakfast seminar, entitled “Nurturing Talent in a Globalised world – Hong Kong’s Game Plan and Opportunities for Canada”, jointly organised by the Asian Institute of the University of Toronto and the Hong Kong-Canada Business Association in Toronto, Mr Suen said Hong Kong and Canada already enjoy sound educational ties, but as an important international partner, Canada had a significant part to play and “we can do even better”. 

Hong Kong’s education institutions have student exchange arrangements with more than 30 of their counterparts in Canada. “Of the 2,900 incoming exchange students this academic year, 231 are from Canada, while 289 Hong Kong students went to Canada,” Mr Suen said, while calling for more exchanges.

He said an exciting area for international collaboration was research and development. “There are more than 200 research projects conducted between institutions in Canada and Hong Kong’s high education sector covering areas such as biological sciences, physical sciences, engineering, IT and computer science and technology.”

Education takes up the largest share of Hong Kong government’s spending. The Special Administrative Region has set aside in this year’s budget about $18 billion (CAD$2.3 billion) for a research endowment fund to support research and development activities at its tertiary institutions. “I believe this will open up new areas for co-operation in research between Hong Kong and Canada,” he said.

Mr Suen said Hong Kong was so reliant on strong education because “one of our biggest challenges will be coping with the combination of an ageing population and low birth rate, resulting in a shrinking workforce.” And, “in a small externally-oriented economy such as ours, it is the vitality, entrepreneurship and hard work of our people that keeps us competitive in an increasingly competitive word.”

He highlighted the Government’s various measures to help raise the quality of its human capital in a globalised world, and stressed that opportunities were opening up in Hong Kong for overseas students, including those from Canada.

“We are opening the door wider to overseas talent including students, business people, investors and those with special talents such as musicians, sports people and creative talent,” Mr Suen said.

The Secretary for Education cited programmes such as the “Quality Migrant Admission Scheme (QMAS)”, “Entry for Employment as Professionals Scheme”, “Admission Scheme for Mainland Talents and Professionals”, and “Capital Investment Entrant Scheme”, as well as the newly-introduced “Immigration Arrangements for Non-local Graduates” scheme, as examples.

The Vancouver-born former NHL (National Hockey League) star Barry Beck is one of the 500 people who have been admitted to Hong Kong under the QMAS since its launch in June, 2006.  Other high-profile names include world-renowned pianists Lang Lang and Li Yundi, and actress Zhang Ziyi.

The “Entry for Employment as Professional Scheme” has also brought in more than 210,000 high quality people from different fields over the past decade. And, under the “Capital Investment Entrant Scheme”, with a minimum investment of about CAD$830,000, overseas citizens can settle in Hong Kong.

The seminar was attended by about 80 representatives from the academic, education, business and political sectors in Toronto.

The China-Hong Kong Closer Economic Partnership Arrangement (CEPA) was first introduced in January 2004 to increase the level of economic trade and cooperation between Hong Kong Special Administrative Region (SAR) and the Chinese mainland. 

Essentially, CEPA is a free trade agreement (under World Trade Organization (WTO) rules) which allows easier access to China’s market for Hong Kong made products and Hong Kong based service companies.  CEPA is China’s first bilateral trade agreement.  

Since 2004, there have been four supplements, with the most recent implemented in January 2008 (CEPA V). 

CEPA covers three broad categories: 

1. Trade in Goods - All classified “Made in Hong Kong” goods that meet CEPA rules of origin (ROO) from approved local manufacturers are imported, tariff free, into mainland China.

There are 1,502 tariff codes outlining the ROO criteria for classification as a Hong Kong made product.  Foreign products must be substantially transformed to meet CEPA standards. The major criteria are:

• Value-Added Content- This applies to about 11% of the 1,502 tariff codes. This origin rule requires the total value of labour, product development, component parts and raw materials to more than or equal to 30% of the free-on-board value of the goods.
• Manufacturing or Processing Operations- This applies to about 72% of the 1,502 tariff codes. This origin rule requires the principal manufacturing or processing operations which confer the essential characteristics to the final product are carried out in Hong Kong.
• Change in Tariff Heading- This applies to about 11% of the 1,502 tariff codes. This origin rule requires the processing and manufacturing of non-originating materials to be carried out in Hong Kong and resulting in a product of a different four-digit tariff heading under the “Product Description and Harmonized System Codes.” manufacturing or processing operations, and change in tariff heading.

Each shipment of goods exported to mainland China must be have a Certificate of Hong Kong Origin- CEPA (CO(CEPA)). Applicants must comply with 11 criteria to be issued a CO(CEPA) by the Trade and Industry Department (TID) or one of the five Government Approved Certification Organizations:

• The Hong Kong General Chamber of Commerce
• Federation of Hong Kong Industries
• The Chinese Manufacturers’ Association of Hong Kong
• The Chinese General Chamber of Commerce
• The Indian Chamber of Commerce, Hong Kong

Before applying for CO(CEPA), the Hong Kong manufacturer must apply for a Factory Registration (FR) with the TID. A FR validates that its factory has the capabilities to produce the goods for export.

2. Trade in services - Hong Kong service suppliers are given preferential treatment in entering into mainland China in many service sectors. Professional bodies of Hong Kong and the regulatory authorities in China have also signed a number of agreements or arrangements on the mutual recognition of professional qualification.

There are 28 service sectors in which geographical, financial, and ownership restraints are either reduced or removed. Any company, foreign or domestic, can apply as a Hong Kong company and take advantage of CEPA, provided that it meets the following criteria:

• Incorporated in Hong Kong
• Has operated for three to five years (depending on the sector)
• Is liable to pay Hong Kong profits tax

[A company (domestic or foreign/ Hong Kong or foreign) must pay profits tax if it carries on a trade, profession or business in Hong Kong and has profits arising in or derived from Hong Kong.] 

• Employs 50% of its staff locally

3. Trade and investment facilitation - Both China and Hong Kong have agreed to enhance cooperation in eight core trade and investment areas: 

• Customs Clearance Facilitation
• Quarantine and Inspection of Commodities, Quality Assurance and Food Safety
• Cooperation of Small and Medium-Sized Enterprises
• Cooperation in Chinese Medicine and Medical Products
• Electronic Commerce
• Trade and Investment Promotion
• Transparency in Laws and Regulations
• Protection of Intellectual Property

For more information about CEPA:

Trade and Industry Department of Hong Kong (SAR) http://www.tid.gov.hk/english/cepa/index.html 

Hong Kong Economic & Trade Office http://www.hketo.ca/invest/cepa.html

With the launch of VENTURES, your Ontario Hong Kong China business dialogue, a collaborative initiative between the Ontario Chamber of Commerce (OCC) and China focused business associations in Ontario, has taken shape.

VENTURES is an online publication, designed to stimulate more business exchange between Ontario – Canada and Hong Kong – China, and comes as a result of the China Initiative, a partnership announced in November, 2006 by the OCC and the Hong Kong Economic & Trade Office (HKETO).  The China Initiative was borne from HKETO’s mandate to reach out to businesses in Ontario, and the OCC’s desire to help its members bridge the cultural and geographic gap to the Asia Pacific region. 中文版請按這裡

“The importance of the Chinese market to Canadian companies is often underestimated,” explains the Hong Kong Economic and Trade Office.

 ”With an average growth rate of 9.6% since the late 1970s, China presents unparalleled opportunities and challenges.  Ontario companies need a China strategyin order to tap inot this lucrative market, as well as to fend off increasingly fierce competition in a global market.  The Chinese market is not just for big corporations.  Canadian SMEs can always share the pie if they have the right tools.”

HKETO has been providing outreach to SME’s, largely in the GTA, to help them learn more about opportunities in China, and to demonstrate the advantages of using Hong Kong as their launching point into the Chinese market.

“The primary mission of HKCBA, very much a national Canadian business association, continues to be to encourage Canadian business – particularly the small and medium business enterprises – to be take the opportunity and initiative to expand their activities, now, and increasingly in future, in the rapidly growing China marketplace,” says Robert Brown, an HKCBA Founding Director.  “We assist by providing advice and examples as to how they may do this, in confidence and safety, by using Hong Kong as their business platform to other parts of China and South East Asia.  VENTURES is a practical extension of our ongoing activities.”

“I suppose you could say we’re the new kids on the block here,” says Len Crispino, President & CEO of the Ontario Chamber of Commerce.  ”But many of our members see the enormous potential offered by the robust economy in Hong Kong and China, only they don’t know where to start.  VENTURES will help us provide valuable insight and information, while also positioning Ontario as an ideal location for investors from China.”

As a platform for dialogue about Sino-Canadian business exchange, VENTURES is just the beginning of the conversation.  Over time this publication will become more interactive and provide an unparalleled platform for discussing and promoting two-way trade.   Future activities are also planned to build on the momentum created by this initiative.

Letter of Congratulations from Consul General of the People’s Republic of China in Toronto