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Podcast Transcript: Expert shares top reasons why Wuhan works

Canada has just doubled its commercial footprint in China.

The Canadian Trade Commissioner Service has opened six new offices in China. Starting now Canadian companies can benefit from expanded trade, investment and innovation partnerships with in market and local expertise.

The offices are staffed with business development experts with strong connections within each of the new cities, so Canadian companies might want to put their China strategy on the front burner if it isn’t already.

I’m Michael Mancini, Editor-in-Chief of CanadExport, the official e-magazine of the Canadian Trade Commissioner Service.

Today, Wuhan is in the spotlight. Known as the City on Rivers — the Yangtze and Hanshui — Wuhan is actually made up of three distinct towns.

It’s also an economic giant. Fortunately for Canadian firms, the Trade Commissioner Service now has a representative office there.

On the phone with me is Eric Pelletier, Trade Commissioner at the Canadian Consulate General in Shanghai.

Thanks for speaking with me today, Eric.

Eric Pelletier: Hi, Michael. Great to talk to you.

Michael Mancini: So Eric, what would you say are the top reasons Canadian companies should do business in Wuhan?

Eric Pelletier: Well, I’d say one of the first reason that I can think of is Wuhan’s location. Wuhan occupies a strategic position on the Yangtze River. As you may know, the Yangtze River is the longest river in China and one of the longest in the world so it’s an important river in terms of shipping and transportation.

Wuhan is also the largest city in central China. The central government in China is investing heavily in western cities such as Wuhan. So cities like Wuhan benefit a lot from that kind of investment. And Wuhan itself does represent a big market. The population is close to 10 million people. And in the province of Hubei there are close to 60 million people. So for the Canadian exporter, that in and of itself represents a large market.

Also, Wuhan can be seen as a bridge between east China and west China. Because of its strategic position you can reach Beijing, Guangzhou or Shanghai – all within 1,000 kilometres. Obviously those cities are very important markets. So Wuhan can actually be a very good base for a Canadian exporter or a Canadian company looking to establish a business in China.

A second reason is also linked to its geographic location. It’s the city’s transport infrastructure which is very well developed. You have a lot of highways. The Port of Wuhan is actually the largest inland port in China. The airport I think is the fourth-largest airport in China after Guangzhou, Beijing and Shanghai. And maybe even more importantly is the rail system. Wuhan is the junction for rail lines from Beijing in the north and Guangzhou in the south, and from the east to west - between Shanghai and Chongqing. They all cross in Wuhan. So Wuhan is a bit like Chicago. It’s really a transportation hub.

So because of its central position and its strong infrastructure, it’s to reach China’s most important markets from Wuhan. As I mentioned, Shanghai, Beijing, they are all within 1000 kilometres. So for that same reason, it’s actually fairly easy and efficient to import non-finished goods to Wuhan and to export finished goods from Wuhan.

Michael Mancini: OK. So tell me about the actual economy itself. How diversified is it?

Eric Pelletier: Actually, Wuhan economy is quite diversified. Among the main sectors, education figures prominently. Wuhan is actually the third-largest education centre in China. I think there’s something like 30 universities and 700 research centres. So what that means is that the pull of skilled workers in Wuhan is pretty big. So for the Canadian company that needs those workers, there’s an advantage. And the other thing is that the labour costs are relatively cheap in Wuhan, much cheaper than what you would find in cities such as Beijing or Shanghai. So it’s definitely an advantage for companies.

Among the other sectors, we can mention the automotive sector. As you may know, China’s surpassed the U.S. as the largest auto market in 2009. And China’s third-largest automaker, the Dongfeng Motor Corporation, is actually headquartered in Wuhan. Dongfeng Motors is a partner of very strong companies such as Honda, Nissan, Peugeot and Citroen. So for Canadian auto parts companies, Wuhan can actually represent several good opportunities.

Other large companies include Wisco, a Chinese iron and steel corporation, just invested around $240 million in the Quebec mine Consolidated Thompson. So you have several sectors that are pretty strong in Wuhan. The agricultural sector is also one of them. Actually, the Hubei province is also known as the land of rice and fish because the Hubei province is so fertile.

And also, don’t forget the new sectors like the environment, ICT, pharmaceutical and bio-engineering. All those sectors are pretty strong too. Actually, Wuhan is also a leader in fibre optics. So yes the economy is diversified.

Michael Mancini: OK. So you’ve given me some pretty compelling reasons why Canadian companies should be there. Why was it important for the Trade Commissioners Service to even open an office in Wuhan, as opposed to service that office out of our office in Shanghai?

Eric Pelletier: As you may know, relationships in China are very important in doing business — much more important that what you would find in North America. And just sort of being on site is critical. You need to be there to develop your relationships and your networks. And obviously you also need to be there to track the opportunities. And in a city like Wuhan, there are a lot of opportunities.

And because Wuhan is relatively far from a cities such as Shanghai or Beijing — it’s a two-hour flight from Shanghai — we didn’t have the same depth by simply helping out from… from Beijing or from Shanghai.

Michael Mancini: OK. Now, tell me what it would be like for a Canadian company to actually do business in Wuhan. What would you say are some of the big challenges Canadian companies should be prepared for if they are thinking of doing business there?

Eric Pelletier: As you can imagine, to do business in China, the company has to prepare itself. You do have to come here prepared. So doing business in China can be challenging. Bur for a tier-two city such as Wuhan, it can become even more challenging.

One problem that the company might face at the beginning is finding the right contacts or the right partner. Compared to Shanghai, Wuhan is relatively small but it can still be tough to identify the right partner.

And that’s where the Trade Commissioner Service can help you. Having someone based in Wuhan makes it much more easier for us to understand the market and identify potential partners or potential opportunities for the Canadian companies.

I would also say that in China the government is very much involved in business. And sometime that’s difficult. It might be hard for a Canadian company to understand to what extent the government is involved. So our Trade Commissioner in Wuhan can help the Canadian company to understand how decisions are taken, who actually is the real decision maker, and to what extent the government is involved in that sector or in that specific business. So having someone on ground can help a company understand the market and also to help the Canadian company to devise the best strategy to tap into that market.

Michael Mancini: That’s great, Eric. Now, if a Canadian company wants to learn more about Wuhan, the region, and our office there, who should they contact?

Eric Pelletier: They should contact the Trade Commissioner in Wuhan. His name is Will Xiong. Will is a very capable guy and dynamic guy. He will certainly be able to help a Canadian company interested in the Wuhan market.

Michael Mancini: That’s great. And his contact information, for those who want to know, can be found at tradecommissioner.gc.ca/china.

Thank you very much, Eric, for your time this morning.

Eric Pelletier: Thank you. It was great talking to you.

Well that’s all for this podcast edition of CanadExport. Stay tuned for our next podcast.

As James said, don’t forget to contact Will Xiong at our office in Wuhan to find out how he can help your company. Go to www.tradecommissioner.gc.ca/china to do that or you can get Will’s contact information on the CanadExport website, Podcasts page.

While you’re there you can learn more about the other cities in the TCS expansion in China. You might also want to contact one of our 18 regional offices across Canada for help in assessing your export readiness. Again just visit www.tradecommissoner.gc.ca/china to get that information.

I’m Michael Mancini, signing off for now.

To download our other episodes, just go to www.canadexport.gc.ca or go to iTunes and use the searchword “CanadExport.”

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