Canada's Pacific Gateway Strategy: Navigating the Silk Road
To boost Canada’s 2005 Pacific Gateway strategy, the Harper government recently pledged nearly $600 million to eliminate road, rail and border bottlenecks to navigating the silk road.
The CEO is feeling a little rattled. It’s his first business trip to Japan and he must impress potential customers, which means demonstrating some newly acquired cultural know-how. At first things go well. He bows in accordance with traditional etiquette and proffers his business card with both hands. But something is amiss; his efforts are continually met with polite laughter. He asks his local agent why he is inspiring amusement rather than respect. Inspecting his client’s business card, the agent replies, “I think it’s because, on the Japanese side, your name reads ‘old brush head.’”
Thankfully for this red-faced CEO, being lost in translation was only mildly embarrassing. But he was right to be concerned. Attention to detail is crucial in Asian countries, where doing business is often a formal, choreographed dance in which “yes” can mean “no” and saving face is everything. In this diverse regional market, one serious faux pas can mean the difference between deal or no deal.
It’s an etiquette minefield out there. Given Asia’s challenging geographic, linguistic, bureaucratic, legal and cultural landscape, it’s not surprising that some B.C. manufacturers and service firms have watched its economic surge from the sidelines, shrugged their shoulders and turned back to more familiar territory south of the border.
Things are starting to change. To boost Canada’s 2005 Pacific Gateway strategy, the Harper government recently pledged nearly $600 million to eliminate road, rail and border bottlenecks to Asia-Pacific trade. Among other projects, federally funded infrastructure improvements will include eliminating train crossings on the rail corridor to Deltaport, and constructing a new Pitt River Bridge and Mary Hill Interchange to replace a pair of swing bridges.
However, according to the Vancouver-based Asia Pacific Foundation, we still need to resolve a truckload of regulatory and policy issues regarding the flow of goods and people in and out of our region, and we must invest heavily in research and development and higher education if we seriously want to participate in the Asian boom.
Bureaucratic hurdles aside, we have started to play catch-up with competitors in Europe and Australia who have fallen over themselves to penetrate China and are now moving onto India and Southeast Asia. According to the Asia Pacific Foundation, China knocked Japan out of position in 2005 to become B.C.’s number-two trading partner: trade between the province and China reached $8.9 billion. In the past five years, the value of B.C.’s exports to China has almost doubled, and last year China ranked third as a destination for B.C. exports, behind the U.S. and Japan.
In addition, a recent Asia Pacific Foundation survey found that two-thirds of Canadian firms expect to increase their investment in Asia over the next 12 months, and 82 per cent expect to do so over the next decade. More than 35 per cent of this future investment is destined for China, which includes Hong Kong, and Taiwan.
Resistance, as the saying goes, is futile. If you’re a decent-sized firm with commodity products or high-quality consumer goods or services, you need an Asia Pacific strategy – not as a replacement for U.S. markets, but as another string to your bow.
So what does it take? In an effort to better understand these complex markets, BCBusiness spoke to some knowledgeable expats heading a diverse group of local companies firmly embedded in Asian hot spots: China, Japan, Korea and India. Their heritage and cultural ties give these trade experts a competitive advantage, and their advice to those of you thinking of climbing aboard the juggernaut is this: make your play now or risk losing out on the biggest money-making opportunity in recent years.
Passage to India
Sokhie Puar and Bijay Singh are among a growing number of Indian expats and second-generation entrepreneurs to cross what’s known as “the human bridge” linking B.C.’s Punjabi population with its Indian heritage. The goal: for business people to get in on the ground floor of their native country’s upcoming economic explosion.
“India is about 10 years behind China,” says Puar, president of SNJ Capital, a Vancouver- based consulting firm that provides financing and ongoing corporate services to Canadian start-up and second-stage manufacturing ventures. “In my view, it’s time to think outside the box and start laying the groundwork for future business connections. Frankly, it amazes me that more B.C. companies aren’t doing the same thing.”
Since 2001, Puar and project manager Singh have taken several trips a year to India and other Asian countries in search of lucrative joint-venture opportunities, primarily for one of their larger clients, Delta’s JER Envirotech. Backed by the National Research Council of Canada, JER’s technology combines wood fibre or agricultural waste material such as palm fibre with high-grade plastic, turning it into a light, environmentally friendly composite board that can be usedin a huge variety of applications, including house construction, table tops, flooring and car dashboards.
This green technology offers a new source of revenue for small farmers and may one day meet Asia’s desperate need for cheap, durable shelter. In the Philippines, Malaysia and, very shortly, India (where a joint venture plant is currently under construction in the northern state of Himachal Pradesh), the composite board will be made from polypropylene and rice husks. These husks are normally burned in the fields and generate plumes of toxic smoke over nearby villages. With talks underway in China and several other Asian countries, Puar says it’s just a matter of time before JER becomes a major global enterprise.
Like China, India badly needs new sources of energy; its economy is growing by eight per cent a year, swelling the ranks of the middle class. While power shortages are a problem in some areas of the country, Singh says their impact on industry is overblown: most companies have their own power plants on site or use back-up generators to maintain production.
Both Puar and Singh believe India still has a way to go when it comes to building the infrastructure needed to support its projected foreign trade and investment boom, but the basic foundations are in place. “Because of the British influence, English is the official business language, which means communication is not as difficult as in some other Asian countries,” Singh notes. Bargaining is normal in India and companies expect and value flexibility in negotiation.
“India also has strong accounting, legal and transportation systems and its cellular network is far superior to that of North America,” he says. “As you travel around you’ll see that every major corporation you can name already has a presence there. While you won’t see a Starbucks, across the country young people are flocking to a chain called Barista, which is India’s Starbucks clone.”
Save over 50% off the newsstand price with a subscription to BCBusiness Magazine
