Landing business in Beijing is a matter of selling experience and credibility.
How can we benefit from China’s boom? More than a few Canadian companies may be pondering this question, as one of the fastest-growing economies on Earth continues to expand. Yet, economically and culturally, China is a very different market, into which many North American companies are still cautious to venture. How can Canadians succeed in this uncharted territory? While there is no single recipe for success, there are several factors that make it possible.
One of them is a strong value proposition that makes Canadian partners attractive to their Chinese counterparts – in other words, the ability to “export” what we do best. That means more than physical products or natural resources.
In 2010, China surpassed Japan to become the second-largest economy in the world. A growing number of Chinese believe the nation’s economy will eventually occupy the global top-spot.
China is also one of the world’s largest wealth-management markets, with the total value of Chinese households’ wealth at U.S. $16.5 trillion – next only to the United States and Japan – according to the Credit Suisse’s Global Wealth Report. A senior executive from Guangfa Securities – a major securities firm in China that has over 10,000 employees and dominates the southern China brokerage market – predicts that, in 2015, China will also overtake Japan as the second-largest wealth-management market in the world.
His optimism is not unfounded. At the end of 2009, China had 670,000 households with more than U.S. $1 million in wealth, up 60 per cent from 2008, according to China Daily. The country’s composite wealth grew by some 28 per cent – to U.S. $5.4 trillion – from the end of 2008 to the end of 2009.
China’s economic growth creates opportunities – both for Chinese and for international players. For Canada, establishing a global economic presence and international competitiveness means nurturing dynamic relationships and a culture of co-operation with the world’s economic powers, including China.
Over the years, we have seen increased import-export activities between China and Canada. China’s international expansion and investment moves appear to create another chapter in Chinese-Canadian economic relations, with Minmetals’ move to acquire Toronto-based Equinox – reportedly China’s largest-ever mining takeover bid – being one example.
As China is increasingly integrated into the global economy, the transfer of knowledge and intellectual property driving the country’s innovation and business transformation is another arena where the co-operation between Chinese and Canadian businesses may have a positive impact. In essence, this is an opportunity for Canadians to export the know-how of what we do best.
An international partner should “provide support in addressing our business development needs and boosting our business innovation and transformation,” says a high-ranking executive from Guangfa Securities.
Guangfa has been partnering with CSI Global Education, a Toronto-based global provider of financial education and credentialing solutions, for five years. As a result of this partnership, 33 managers from Guangfa Securities were awarded the CSI Chartered Strategic Wealth Professional (CSWP) designation in Guangzhou, Guangdong, China, this month, joining 26 of their colleagues who graduated with the same credential in December 2010. The “made in Canada” Chartered Strategic Wealth Professional (CSWP) designation has been customized specifically for the Chinese market.
Why did Guangfa Securities choose a Canadian financial education partner to train its wealth-management professionals? The firms’ executives see Canada’s robust and relatively stable financial services system as a best-practice model. As proficiency standards for retail investment advisers – which have been in place in Canada for more than 50 years – are starting to take hold in China, Canada has the experience to offer important lessons learned through decades of both successes and mistakes. Having weathered the financial crisis with greater success than its neighbour to the south and a number of other countries, Canada also has the credibility.
Yet, having the expertise sought after in China is not enough to establish a productive partnership. There are also “soft” factors that can “make it or break it,” as determined by CSI’s 10 years of experience working with a number of China’s financial services institutions.
Open-mindedness, cultural sensitivity, and, above all, patience, are the necessary prerequisites for success. China may seem like a mysterious place that can develop very fast and very slow at the same time. While the pace of business growth is incredibly fast, building meaningful partnerships takes a long time. This is especially important for Canadians to grasp, since we tend to be results- and action-oriented.
China’s business culture is rooted in relationships, which come before contracts and business deals. An integral part of doing business in China is the ability to operate through extensive value-generating relationship networks known as guanxi. Building such relationships requires time, patience, and the willingness to open up and connect with Chinese partners on a deeper, more personal level. Sharing and bonding, getting to know each other, taking the time to build trust and respect, showing humour, and simply having a good time together are all essential. The bonding process may involve singing songs, writing poems, and/or drinking maotai.
Given that many of Canada’s Chinese partners speak English, and are well-versed in the nuances of western business culture, the onus is on us, Canadians, to meet our Chinese counterparts halfway and try to understand them as well as they understand us. Equally important is our ability to commit sufficient resources to operate in the Chinese environment – providing written materials in Chinese, employing Chinese-speaking experts, and using professional interpreters and translators.
Cultural and economic differences may act as a deterrent to Canadian businesses. As Canada is carving out a global economic leadership role, these differences need not result in lost opportunities. Cultural awareness will level the playing field, creating an economic space where national idiosyncrasies become less relevant than competitive advantages and strong business relationships, allowing Canadians to “export” what we do best.