Brett Bundale was invited by the Canada China Business Council to take part in a one-week media fellowship in China from Nov. 23 to 30. She travelled to Shanghai and the Yangtze River Delta area, and met with local businesses, consumers, students and trade experts. This is the first in a series of stories that will focus on the growing trade relationship between Atlantic Canada and China.
Customers can have the crustaceans cooked on site: Fried with vegetables, covered with cheese or seasoned with local spices. They can have them packaged up to take home or – as with nearly everything in China – they can order online and have them delivered.
“I can have a live lobster at my door in an hour,” says Jacob Cooke, co-founder and CEO of WPIC Marketing and Technologies, an e-commerce firm that helps foreign brands sell in China.
Over a meal in Hangzhou, a city in China about 175 kilometres southwest of Shanghai, he says Atlantic Canadian seafood has a competitive edge in the East Asian country.
“Lobster has done really well here in part because of how expensive the Australian lobster is … and because U.S. tariffs have made it cheaper,” Cooke says.
The ubiquity of Canadian crustaceans in China epitomizes the growing trade relationship between Atlantic Canada and the Asian giant.
Nova Scotia is leading the charge, with the province’s exports to China quadrupling to $793 million in 2018, up from $197 million in 2013. Seafood alone accounted for about two-thirds of trade.
Exports are on track to hit $1 billion this year, buoyed in part by a U.S.-China trade dispute pummeling the lobster industry south of the border. Lobster from Yarmouth has a seven per cent tariff in China, compared to a whopping 35 per cent tariff on lobster from Maine.
But price isn’t the only factor. The red maple leaf stamped on Canadian products is appealing to Chinese consumers, signalling a high-quality, healthy food choice.
“Canada is generally associated with a clean environment, large land and friendly people,” says Edward Dai, the Shanghai chapter director of the Canada China Business Council.
“Food products especially are seen as clean, safe and good quality.”
Expanding market, ‘obvious’ market
For Canadian exporters, China’s expanding middle class and rising incomes makes it a highly sought-after market.
More than 100 cities in the country have a population of more than one million residents. And the spending power of those residents is multiplying at an extraordinary rate.
Take the country’s biggest shopping day of the year, known as Singles Day. The online shopping event on Nov. 11 eclipses Black Friday, with e-commerce juggernaut Alibaba saying it sold more than US$38 billion on its online platforms in one day.
In Shanghai alone, one of the world’s most populous cities, tracts of land that only a few decades ago included farmlands are now teeming with soaring towers and residential high-rises.
With companies from around the world vying for the coveted Chinese consumer, competition to tap into the fast-growing market is fierce.
Premier Stephen McNeil says that’s why Nova Scotia developed a China strategy – a pillar of the Liberal government’s economic agenda.
“When we looked at seafood consumption and the growth of the middle class in China, it became an obvious market for us,” he explains. “It has certainly kept our price of seafood high, which has been positive for rural communities across Nova Scotia.”
But McNeil says there’s more to the relationship “than just selling seafood,” citing agri-foods, beverages, education, tourism and cultural exchanges.
Yang Xue, managing partner of the Atlantic Canada Business Network, says he’s working on diversifying Nova Scotia exports to China. His consulting firm is helping companies like Oxford Frozen Foods break into the Chinese market.
“The first Costco in China opened up in Shanghai in August, and we worked for months to get Oxford products into the store,” he says in an interview from the Greenland Global Commodity Trading Hub in Shanghai.
“Now you can buy 1.5-kilogram bags of frozen Nova Scotia blueberries here, the same that are sold in North America.”
Xue says there are other value-added products he’s helping enter the market, like apple and blueberry pies from Apple Valley Foods in Kentville.
“We’re trying to get these products into local cafes,” he says, noting that he anticipates demand will be strong. “Chinese consumers recognize the maple logo as a Canadian product, and consider it high quality.”
The Port of Halifax has also honed in on Southeast Asia in recent years, including the Pearl River Delta area of China.
In an exit interview before stepping down as president and CEO of the Halifax Port Authority, Karen Oldfield says Halifax is an expeditious trade route for some parts of Asia via the Suez Canal.
Repeat business, repeat visits
“You can’t just dip your toe in the market and think that’s going to be good enough.”
– Karen Oldfield, CEO, Halifax Port Authority
“We clued into this in the early 2000s,” she says. “We had to find a way to attach our wagon to the fastest-growing parts of the world.”
Oldfield says she learned over more than a decade of doing business in the region that companies have to be prepared to “play the long game” in China.
“The lesson is it’s a market that you have to go back to again and again,” she says. “You can’t just dip your toe in the market and think that’s going to be good enough.”
Oldfield adds that Canadian companies have to be open to doing business in different ways.
Given cultural misunderstandings can occur – botching a business deal before it gets off the ground – experts say it’s essential to have the assistance of locals or people who understand China.
“The way Chinese people do business is like water, it’s like a flow,” says ChiChi Wang, an associate with the Earnscliffe Strategy Group in Vancouver. “It doesn’t always appear logical like A leads to B. Sometimes A can lead to C.”
In an interview from Hangzhou, her hometown, she explains that North American businesses sometimes hit a wall in China due to misunderstandings.
“It’s very important to hire someone locally,” she says, noting that it’s not just about language but also maintaining relationships – or guanxi, a Chinese term that refers to connections or networks.
McNeil suggested that emphasis on personal connections in China is one of the reasons it’s important for Nova Scotia to remain committed.
“One of the things we were told very early on was you can’t just show up once and not come back,” he says. “You have to keep coming.”
Despite the economic potential of increasing trade with China, concerns have been raised about the province’s ongoing engagement amid rising tensions between Ottawa and Beijing.
McNeil’s repeated visits – he recently returned from his eighth trip to China since becoming premier in 2013 – have been the subject of scrutiny.
Canadians Michael Kovrig and Michael Spavor were detained on espionage charges last December, shortly after Huawei executive Meng Wanzhou was arrested by the RCMP at the request of the U.S.
McNeil acknowledges the tensions, but says “at no time in global history has isolation or protectionism ever worked.”
“If you want to change something, you do it through dialogue and interaction. I don’t go into China and tell the Chinese government what to do … that’ll be driven by Chinese citizens.”
He adds: “You can’t go and force your values on someone … The more they see Canada, the more they see Nova Scotia, the more that they will want to emulate what we do.”
To increase tourism to Atlantic Canada from China, there are plans to launch a direct charter flight between Guangdong province – Nova Scotia’s sister province in China – and Halifax to test the market.
About 3,500 Chinese students study in Nova Scotia each year – about 41 per cent of the province’s international students. In addition, 15 schools in China use the Nova Scotia curriculum, a figure McNeil says the province hopes to increase to 20 next year.
“Education is a great equalizer,” he says. “It is also the one thing that generates sustainable change.”
Sarah Kutulakos, executive director of the Canada China Business Council, says the premier’s commitment to China will open doors for Nova Scotia companies.
“The government relationship is important here,” she says, adding that “face time” and developing a personal connection is key to doing business in China.
“It’s not often that a leader of a jurisdiction will put their money where their mouth is and actually keep going,” Kutulakos says between meetings during a recent media tour in the Shanghai area.
“Nova Scotia has a lot of seafood to sell and there’s demand for it here. If there’s economic benefit to be generated from that, the province should go after that.”
While human rights issues and consular cases continue to be top of mind, Kutulakos says increasing ties through tourism and education can be a positive influence.
“When you teach students about Canadian values, there has to be good that comes from that.”
This article ran in the PEI Guardian on December 9, 2019.