Are you a company in the construction industry that wants to do business in China? The time is right, provided you are properly prepared and guided in your efforts.
A favourable context for foreign companies
The leading construction market worldwide since 2010, China has a new five-year plan for 2016-2020 that emphasizes greater openness and joint development to attract foreign businesses. 1
This is in addition to the Chinese government’s desire to invest in green buildings, with the goal of having them account for 30% of new constructions by 2020, 2 another decisive factor for innovative companies with expertise in green and smart buildings, who are well versed in doing business internationally. These projects are mainly in cities, since “urbanization should accelerate, growing from 55% of the population in 2015 to 60% in 2020,” resulting in “the relocation of 100 million people over the next five years,” 3 according to Yves Tiberghien, director of the Institute of Asian Research at the University of British Columbia.
There are two top business destinations in China. The first is Shanghai. One of the main sectors of activity in this city of 23 million – or the equivalent of the population of Québec, Ontario and New Brunswick – is construction, specifically skyscrapers. The second is the special administrative region of Hong Kong. According to the Acclr team of experts, this region has a business climate that is open to foreign companies and that is particularly dynamic in urban reconstruction and planning. Architecture and design firms are well positioned to tap into this market.
The situation is even more favourable for entrepreneurs because of the authorities’ desire “to create Chinese-Canadian success stories,” backed by “the interest of major Chinese investors,”4 as Jean-Philippe Desjardins, president of The Wallrus, points out.
Travel made easier
New direct flights from Montréal are making it much easier to do business with China. In September 2015, Air China, in partnership with Air Canada, launched a Montréal-Beijing direct flight. This year, travel to Shanghai will take less than 15 hours, starting February 16, the date of Air Canada’s inaugural flight.
The business opportunities are stuff dreams are made of for local companies, but beware! Penetrating the market requires prudence and preparation, particularly for SMEs.
Preparation and guidance: the mantra of companies that break into China
There is no shortage of documentation and training on the topic. Here is a quick recap:
- Know your market
Studying the market is one of the keys to your project’s success. It will allow you to make informed decisions.
Bear in mind that China is not a uniform market and that each region has its own particularities. Your product or service needs to be adapted to a target market within a specific territory.
Developing a product or service in China requires time and money. It takes two to three years before your efforts pay off. 5
- Decide where you want to do business
This piece of advice goes hand in hand with the first point.
For example, did you know that it is easier to establish a presence in Hong Kong? The region has a Common Law system, and the language of business is English. It is an excellent springboard to the rest of Asia. 6
As for Shanghai, it is a “test zone,” according to Debra Lodge, HSBC’s managing director for global markets and head of business expansion, North America, RMB. “New financial rules are more likely to be tested and implemented in the free trade zone of Shanghai,” she explains. “You could even be asked to be part of a pilot program. 7
- Surround yourself with trusted partners
This is a strategic challenge for your project’s success.
Choose people who speak the local language and who can bridge the two cultures for you. This is invaluable if you have to do any crisis management, as well as to help understand administrative vagaries, because it is important to be able to work with Chinese authorities. 8
- Protect your company’s intellectual property
Some entrepreneurs advise keeping the product development in Canada, to protect against the risk of being copied.
The Acclr team of experts recommends developing an intellectual property strategy, including registering your patents, trademarks and copyright in China. 9
- As the head of an SME, be aware of the challenge that awaits you
Given the size of the country, be realistic about your capacity for production and delivery. Quantities need to be adapted to the market served.