China: Canada’s new opportunity?

Canada’s new lanGetImage1d of opportunity?

The world is a fascinating place. That’s probably an understatement. Yet one part of this planet seems to be getting more attention than most others: China. 
There are reasons for that. From a marketing 
perspective, what makes China so appealing is that 
it has so much as-of-yet untapped potential — 
which comes with considerable risk. 
We have decided to explore some of that potential — and risk — to find out what opportunities might 
await our industry in a land once dubbed
the Middle Kingdom.

One industry player that has decided to take that leap into the unknown is Anderson Hardwood Floors. The American manufacturer opened a new concept store in a Shanghai mall in March — and it will offer American products, only. According to the company, China is expected to surpass Japan as a luxury goods market in 2015, thus making Anderson’s already established relationship with the Chinese consumer that much more paramount.

There are a number of factors involved in China’s emergence as a consumer goods market. One is pure demographics, combined with a dose of economic reality. The country has already established its plan to essentially displace about a half a billion people from the underdeveloped countryside to a newly built maze of cookie cutter cities.

A massive new consumer market

Think about that phenomenon for a second. Twice as many Chinese will be affected by this shift than there are total people in the United States of America and Canada. In other words, a huge new consumer market is emerging.

What makes this market even more potentially appealing to the West, and to marketers like Anderson, is China’s addiction to brands. Any entry into a foreign market involves an understanding of the new culture involved. And, in China, they just love Western brands: cars, furniture, flooring — you name it.

In fact, they tend to love just about any brand, just as long as it’s a brand. As an example, a walk down a street in Shanghai will get you to the Famous Square — a mall. You see, it doesn’t actually have to be famous, just as long as it’s telling everyone that it is. That’s what’s important to large swaths of the Chinese culture. It should also be noted that the sign for the Famous Square is in English beneath the Chinese version — as many are in the country — and right beside the square is a big KFC. Yes, towards the West they are looking.

One thing they see in the West, is Canada, it’s affluence and its reputation for quality. Our suppliers are already selling floor-covering products into China, and China is selling floor-covering products here. However, there is more to selling a custom flooring job than just the material. Is it possible Canada can capitalize on China’s focus on the West and market Canadian interior design and Canadian installation as part of a package incorporating high-profile niche products? The voices in Shanghai say yes.

So, with all of this opportunity awaiting the West in China, and with some large American manufacturers already taking advantage, how can Canadian marketers get in on the action? Already, Prime Minister Stephen Harper has held high-profile talks with the Chinese to open up their markets to us, especially since they are doing as much for the Americans, including Anderson.

Niche opportunities

According to Gordon Houlden, director of the China Institute at the University of Alberta, there is still much work to be done before economic ties between China and Canada are fully developed. However, Houlden says Canadian small businesses are already taking advantage, at least in small niche areas.

Given that the Canadian floorcovering industry, on the global scale of things, would have to be considered a niche player, it’s these smaller opportunities in China that can be pursued further. To that end, the Canadian government has developed a number of resources to help Canadians enter an otherwise unknown and potentially risky market.

For example, all the hard work any company does to establish itself in China can go to waste if one’s intellectual property isn’t protected: trademarks, patents, copyrights and even trade secrets. Based on some past examples, companies have set up shop in the country all ready to go, only to see that their trademark has been registered by someone else, or their Chinese partner has gone up and walked away with the client list. Canadian government officials are specifically available to help with these kinds of problems, and more.

Indeed, it would be remiss for any discussion of business opportunities in China to go by without discussing the elephant in the room: corruption. The Chinese government is just another fascinating, and even perplexing, component of a country that is overflowing with fascination and perplexity. On the one hand, the communist government brings a kind of stability you won’t find in places like Russia and India — both of which contain their own share of corruption, of course.

Some Chinese realities

On the other hand, the kind of control that the Chinese government has to exert over its enormous population leads to a kind of institutionalized form of corruption; where it’s just expected that certain things must be endured, and so they’re endured. So, if men in suits claiming to be government officials “audit” company offices every once in a while, and demand payment on the spot, it’s endured.

Still, maybe this kind of structural corruption can’t be 
endured forever. An international scandal has rocked the foundations of the Chinese government. A prominent politician, 
Bo Xilai, and his wife have been have been implicated in the murder of a British businessman. To add to the intrigue, it would appear as though Mr. Bo ran his own little wiretapping system, thus potentially bringing down various other government officials with him.

While it’s doubtful that scandals like these will bring down the Chinese regime any time soon, what such incidents do highlight is that even the Chinese government is vulnerable to things like unpredictable events, international media exposure, and even a dose or two of reality. The Chinese know that they must make their country welcome to foreign visitors and investment, and have made great efforts in that regard. The 2008 Beijing Olympics might serve as an example of just that.

Impossible market to ignore

Currently, there is some debate among so-called economic experts about the direction of the Chinese economy. It doesn’t take too long to find predictions about a looming “bursting of the bubble,” as they like to say, even if they don’t know quite what it means. And they probably don’t, because a bad year for China’s economy might mean only seven percent growth of GDP. Ask President Obama if he’d like to see that kind of growth in his country, or even Stephen Harper in ours.

Regardless of predictions, even of the cautious variety, there are just some realities that won’t go away. China’s economy will keep growing; its population will keep moving to the 
cities; its market will keep becoming more consumer-oriented. And we’re talking about countless millions of people here that are hungry for Western brands and the status it brings. If that’s not a market to be interested in, even for Canadian flooring, then just what is?

Speak Your Mind