Podcast Transcript: Don't miss these opportunities in Qingdao

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 we’re looking at Qingdao — home of world-renown Tsingtao beer. Tsingtao beer has a strong Canadian connection in fact. You’ll find out why in a minute. Of course, the city is much more than just a beer producer. My next guest says Qingdao is a great place for Canadian companies. So let’s find out why.

On the phone with me is Martin Charron, Senior Trade Commissioner at the Canadian Embassy in Beijing.

Thanks for being here Martin.

Martin Charron: Nice being with you.

Michael Mancini: So, Martin, tell me, what are the top three reasons Canadian companies should do business in Qingdao?

Martin Charron: Well, Qingdao is a bustling city of like eight million people and it's also the metropolis of Shandong Province which is a large province in eastern China with a population of 92 million. Qingdao also has a well diversified economy. It covers the primary sectors in agriculture and fisheries, the industrial sector both in the heavy industry as well as the new technologies as well as the service industries. Qingdao is a location of China's second largest trading harbour, so Qingdao is well connected to the rest of China and as well as its hinterland. So that's make three good reasons for Canadian businesses to look at Qingdao.

Michael Mancini: How big of an impact does Qingdao's port have on whether companies consider one city in China over another? What does that mean for Canadian companies?

Martin Charron: Well, it means that if you want to bring your products here in China I mean you have good facilities to get it on land, to store it, to unload it, but as well it's because the city is being a big port for the whole of China it does provide good rail and road connections. So if you are based in Qingdao or if you have an agent or distributor based in Qingdao, it means that your goods can go into a wide part of China fairly easily

The industrial sector I mean as like heavy industry, petrochemical industries in Qingdao, manufacturing of automotive, rolling stock is there. We see for example that the largest Canadian investment in China is the Bombardier plant located in Qingdao which manufactures railway cars and subway cars that are sold all over China. There's also a big food processing capacity because Shandong Province is an agriculture province, therefore we have processing facilities for oil seed, for peas, and to come back to your introduction, this is where Canada is selling a lot of malting barley used to make Qingdao Beer.

Qingdao is also a very beautiful city, it's by the coast, lots of modern infrastructure, new construction and therefore we see there's a need for building materials, architectural services. The Canadian wood industry has worked there promoting Canadian wood in residential construction in the retrofitting of smaller apartment buildings. In landscaping projects, I mean try to get the people to accept wood. And it is well... it's one of the most beautiful city in China. They want for example to integrate wood in its landscaping and parks and public projects.

Qingdao has the reputation to be a green city and it makes a lot of effort to keep that reputation to be at the forefront of China's effort to modernize its infrastructure, its public infrastructure and transportation to be as green as possible. An example is we have a Canadian company who has been able to establish an office in Qingdao to sell solar walls.

Michael Mancini: It's interesting that the green technology sector would be something that Canadian companies should consider Qingdao for.

Martin Charron: They should. I mean there's also a fair number of like universities and colleges in Qingdao looking at, you know, environmental technology, and because of its location I mean Qingdao is the main centre in China for marine research.

Michael Mancini: Tell me why it was important for the Trade Commissioner Service to open an office in Qingdao as opposed to having our closest office in Beijing cover that territory?

Martin Charron: I mean China is a combination of various markets. As I mentioned before, I mean Shandong Province alone has 92 million people. It's a vast territory with many large cities. Qingdao is the largest. But I think a presence in Qingdao gives us a beachhead where we can help out Canadian businesses to go and explore market opportunities in this vast territory and fairly promising.

Michael Mancini: So what would you say are some of the big challenges Canadian companies should be prepared for when it comes to doing business in Qingdao?

Martin Charron: Qingdao has always been open for business... I mean it has lots of like foreign influence in being a harbour and being directly across from Japan and Korea. In Qingdao one thing you notice is that there's lots of Japanese investment, lots of Korean investment. One of the problems we face is that although Qingdao has been a very open city, lots of its experience with overseas business and overseas investors has been with Asians. And therefore the knowledge of Western business practices, you know, could be at times an issue. The city is trying to be very welcoming to all investors.

They're reducing the red tape as much as they can, but you will be noticed as a foreigner in the city of Qingdao because I mean the majority of the investors and business people there are Asian.

Michael Mancini: Can you give me an example of a specific Western business practice that they might not be familiar with or might not know how to interpret?

Martin Charron: One of the problems Canadian companies are facing all over China, not only in Qingdao, is also to be able to determine who is the actual decision maker in the business process. It's much less obvious in China than it could be in a western country.

And if you're dealing with a state owned enterprise, a state owned enterprise may need to report to various government agencies and to get the permission to enter in that different business or enter into an agreement with a foreign company. This is the type of challenge at times that we are faced with.

But this is the type of service that we as Trade Commissioners being posted here in China can help you to find the right way, the right person and you know, help you clinch the deal.

Michael Mancini: Now, Qingdao is obviously a second tier city. Does that mean there's less competition there and therefore would that make it easier for Canadian companies to stand out in that kind of a city as opposed to a major center like Shanghai?

Martin Charron: Qingdao is becoming more and more open to foreign business. We see lots of like, you know, foreign investors, foreign businessmen being there. But it is still... the number of foreign business visitors in the city of Qingdao is still smaller than what you would see in a city like Shanghai or Beijing. So therefore you will get more attention, you will get noticed more easily and the local authorities are still very welcoming of foreign business visitors and therefore they are much more able or willing to come out and do the extra mile to make sure that you are like comfortable and able to do business there. That's one of the main advantage in being in a smaller city. But smaller is all relative here because, as I mentioned before, Qingdao has a population of eight million people.

Michael Mancini: So, Martin, I'm sure that you can expect many calls from Canadian companies now, at least we hope. What should they do now? Who should they call?

Martin Charron: Our new office in Qingdao has been staffed by a nice guy called Peter Hu. The coordinates of the office can be found on the Trade Commissioner's Website at www.tradecommissioner.gc.ca/china. And our office in Beijing is fully supportive of the new office in Qingdao. We work in close collaboration and the type of expertise that we can provide out of the embassy in Beijing will help Peter to provide service to the Canadian business community in Qingdao.

Michael Mancini: Well, great, Martin. Thank you very much for your time.

Martin Charron: A pleasure to be with you.

Well, that’s all for this podcast edition of CanadExport.

Stay tuned for our next podcast which looks at another city in the expansion of the Canadian Trade Commissioner Service in China.

As Martin said, don’t forget to contact Peter Hu at our office in Qingdao, to find out how he can help your company. Go to www.tradecommissioner.gc.ca/china to do that.

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.tradecommissioner.gc.ca 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.”