Ventures Dialogue

Hong Kong-based global consumer goods exporter Li & Fung Limited  and the Hudson’s Bay Trading Company  announced a global sourcing strategic partnership for Hudson’s Bay Trading Company’s four main retail banners, the Bay, Zellers, Home Outfitters and Lord & Taylor.

According to Jeff Sherman, Chief Executive Officer, Hudson’s Bay Trading Company, the consolidation of the company’s global sourcing requirements and activities into one North American shared services group with a best-in-class partner will accelerate the company’s overall business strategy to integrate and improve operating effectiveness of each of the retail brand merchandising entities.

“The signing of buying agency agreement with Li & Fung complements our shared services strategy to consolidate and align global sourcing needs into one group for all of our banners. By partnering with the world’s leading consumer goods sourcing company, we will be able to leverage Li & Fung’s scale and expertise,” said Mr. Sherman.

Mr. Bruce Rockowitz, President of Li & Fung (Trading) Company, said, “We are delighted to see the execution of this outsourcing deal with one of the oldest companies and one of the leading retail groups in North America. We are very excited about this strategic relationship as the four main retail banners are well-established and we see great potential in them. With our strong network of offices in over 40 economies, we are confident that we will be able to contribute to the long term success of Hudson’s Bay Trading Company in North America.”

The new buying agency arrangement with Li & Fung will go into effect in 2010.

Federal Finance Minister Jim Flaherty is on a high level mission to China with some of Canada’s heaviest finiancial hitters.  Not only have some of the key players in Canada’s banking industry joined him on the trade mission, but the head of the Bank of Canada, Mark Carney, is also on board.

For a country where the state plays a large role in business, this kind of high level mission is very important.  Canadian businesses have made successful inroads in China and have a very significant presence in Hong Kong, due in large part to a long and prosperous history between the two nations.  However, diplomatic efforts are necessary as well if we are to grow Canada-China trade.

This fact was made loud and clear by Dr. William Yip, a Hong Kong businessman with whom I met while in Hong Kong in January.  Dr. Yip chronicled a number of Canadian companies who have successfully leveraged connections to party officials into business success.  He explained that party opinions are very important.  What they think and what they know about your project carries a lot of weight.  Hence his statement that,

 ”in Western culture, all roads can lead to the room.  In China, there are lots of dead end roads – they tell you all roads lead to the room.”

Liberal International Trade Critic, Scott Brison, argues in today’s National Post that not enough has been done to strengthen diplomatic relations with China. 

Regardless of your thoughts on the past three years, a visit planned by Prime Minister Harper to China in November will be welcomed by the Canadian business community as a step in the right direction.

Currently, if you wanted to get from Hong Kong to Shanghai or Beijing by train, it will take about 20 and 24 hours, respectively.  In about seven years, however, travel time will be cut down to eight and 10 hours, a definite improvement.

Scheduled for completion in 2014-2015, Hong Kong SAR’s Executive Council has given the go ahead for a HK$39.5 billion ($5.2 billion CAD), 26 km underground high-speed railway link.  It will fully connect with mainland China’s rail network.   Travel between Hong Kong and Guangzhou, on the mainland, will be halved to just under 50 minutes.  In essence, Guangzhou will become a regional railway hub, linking the express rail network, and billed as a gateway into mainland China.

The Hong Kong government will pay for the initial construction cost, but the Mass Transit Railway Corporation Limited (MTRCL) will operate the line for 50 years with annual concession fees under a build-operate-transfer arrangement.  A similar arrangement was reached for the Shatin to Central link (SCL).  Guangzhou already boasts the terminus at Shibi, one of the four biggest passenger transport centers in China.

Along with the new link and transportation hub in West Kowloon, Eva Cheng Yu-wah, Secretary for Transport and Housing said the area would also be built into a commercial center.  Expecting to facilitate 10 trains in both directions, Cheng expects that 37 percent of travelers would be new transit passengers and the other 63 percent would be from commuters who already using either the train, cross-boundary coaches or other means of transport.  Although funding approval from the Legislative Council is still required before any work can begin, the project is expected to break ground next year.  A total of 15,000 jobs, which includes 5,000 construction jobs are expected to be created.  It is estimated that the project will boast around 100,000 passengers a day in 2020 and 120,000 in 2030.  In the next 50 years, this is expected to bring a $83 billion ($10 billion CAD) economic benefit in terms of travel time saved.

The Executive Council approved planning for the previously mentioned SCL and the Kwun Tong Line Extension, also by MTRCL in March of this year.  The former will have nine stations linking existing railway lines, and thereby creating east-west and north-south train corridors.  It is expected to facilitate one million passengers a day by 2021 and produce $4 billion ($500 million CAD) in time saving economic benefit.  Construction costs for SCL is HK$37.4 billion ($4.9 billion CAD)

Ever had a craving for Fotiaoqiang (Buddha jumps over a wall), oolong tea from WuYi Mountain, lychees, or Longans?  If so, Fujian province should come to mind. 

Nestled between China’s most economically developed areas with the Yangtze River Delta to the north and the Pearl River Delta to the south, is Fujian province.  Fujian has an area of 121,400 square kilometers (46,355 square miles) and a population of more than 35 million people.  It is situated in southeast China, opposite Taiwan across the 180 kilomete-wide Taiwan Strait.  Zhejiang province lies to the North, Jiangxi to the west and Guangdong lies to the south (see map).  The capital city is Fuzhou, as well as its largest city.

Fujian is governed by both China (People’s Republic of China) and Taiwan (Republic of China).  China administers all but the archipelagos of Kinmen and Matsu, which are under Taiwan’s domain. 

Most of the province is mountainous with the Wuyi Mountains creating the border with Jiangxi province.  Huanggang Peak is the highest point in this mountain range with an altitude of 2157 meters (7077 feet).  It has a subtropical climate, with January averaging seven to 10 degrees Celsius.  Summers have high temperatures and typhoons are common, usually occurring from July to September.  Sitting on several small fault lines, Fujian is also prone to minor earthquakes. Annual precipitation ranges from 1.4 to 1.2 meters (3.94 to 4.59 feet), on average. Continue reading ‘Fujian Province – Optional Trip at 9th Hong Kong Forum’

Nowadays when we look at China, we see a fast growing economy and market.

However, the numerous Provinces, Autonomous Regions, Municipalities and Special Administration Regions in China, with different market characteristics, represent often very different markets within the same country with different languages, cultures, business practices, and rules and regulations. This could present a challenge to prospective companies especially those which have no China trade experience.

Canadian companies, with limited resources, have to be rigorously strategic when devising their China business plans – not spreading their resources too thinly or wasting them. For starters, it may make sense for them to identify the best possible entry point into this huge and diverse market.

This best possible entry point “in China” should be able to provide the Canadian company with the right business partners, international legal system such as Common Law, and Intellectual Property (IP) security. It should also enable the Canadian company to make money and get paid.

This best possible entry point in China for Canadian companies is Hong Kong.

Hong Kong is THE international city in China. Hong Kong offers Canadian companies many advantages including freedom of movement of people, goods, capital and information. Hong Kong understands the West and the East, and many Hong Kong companies have extensive China trade experience and connections to share with potential Canadian partners and associates.

If a Canadian company chooses Hong Kong as its bridgehead for the Mainland China market or regional target markets, it will probably need to:

1. Obtain market intelligence
2. Find a business partner
3. Go to the market

To proceed, the Canadian company can leverage on the services and initiatives provided by the Hong Kong Trade Development Council (HKTDC), Hong Kong’s statutory trade promotion agency. For more information, interested parties can contact Constance Leung, Business Development Officer, HKTDC Toronto Office, Tel: (416) 366-3594, email: constance.h.leung@tdc.org.hk or visit the portal site of HKTDC:http://www.tdctrade.com/

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

China promises "a shopping spree of historic proportions," Janet De Silva

China’s growing middle class is expected to transform the global consumer marketplace as we know it, according to the CEO of a Hong Kong based company called retailChina.

Speaking to The Hong Kong Canada Business Association, Janet De Silva, explained that by 2009, the number of middle-income consumer class households in China is expected to triple to 105 million and to reach 520 million by 2025.

In China, these households are much more youthful than other developed countries. According to De Silva, many of China’s emerging middle class consumers are young professionals between the ages of 25 and 40, with significant, discretionary spending power. More importantly to Canadians, they’re first generation consumers with no brand loyalty, and they value goods produced outside of China.

De Silva, a Canadian who was previously the Chairman and CEO of Sun Life Financial (Hong Kong) Limited, says China is unlike any other market. In order to successfully sell to China, companies must understand the geographic diversity and differences in consumer tastes and attitudes.

De Silva describes dramatic differences between consumer preferences in China’s largest four or Tier 1 cities, and the 11 cities labeled as Tier 2. In Beijing, Shanghai, Guangzhou and Shenzhen, consumers are looking for items that demonstrate their rising status; whereas in tier 2 cities like Nanjing and Xi’an, consumers focus more so on safety and hygiene. Successful companies adapt their marketing strategies accordingly.

Of course price point is vital. Retailers must be able to drive down costs in order to succeed in the market. And for retailers, the biggest barrier, according to De Silva is getting experienced people and keeping them.

Working directly with the property developers of international malls in China (200 new malls in the next 3-5 years), retailChina is looking to acquire international brands to market to this burgeoning middle class. Already the company is marketing Fruits & Passion in 12 stores in China and plans to grow that network to 80 stores by 2010.

China promises “a shopping spree of historic proportions,” says De Silva, with all international brands equal in the eyes of the Chinese consumers. While “Made in Canada” has no particular brand, Canadian retailers have an equally tremendous opportunity to sell to what will someday be, the world’s largest middle class consumer market.