BCBusiness

Partnership Possibilities Despite China's apparent slowing economy, B.C. companies aren't steering away from doing business in Asia—and nor should they T he proliferation of alarming headlines in 2015 regarding the state of China's economy is enough to deter even the most stalwart entrepreneur from doing business in Asia: "China's Economic Problems are Everyone's Economic Problems" (Business Insider); "China's Economy: Caught in a Vicious, Stubborn Cycle" (Fortune); "China's Problems and Missteps Provoke Global Recession" (Forbes). But most experts agree that taking the long view is necessary in successfully doing business with any Asian country. Moreover, Qu Hongbin, chief economist for Greater China, HSBC, points to an RMB 10-trillion infrastructure package focusing on telecoms, oil and gas pipelines, power grids and transport as one example of the scale of investment being undertaken in a so-called "slowed" economy. "Re-capitalizing policy banks and accelerating municipal bond issuance have eased the funding bottleneck, which was previously a constraint on infrastructure investment growth," Hongbin adds. "Real retail sales growth remains above the GDP growth rate and is still strong, despite the correction in the equity market. Growing tourism, at home and abroad, shows consumers are willing to spend. And although car sales have slowed, other items, such as mobile phones, are still growing very strongly." Hongbin concludes: "We expect another 3.5 percentage points of reserve- ratio cuts this year and forecast another half percentage point of policy rate cuts by the end of 2016. The combination of monetary and —scal easing measures should lead to a modest growth recovery, and we forecast full-year 2015 GDP growth of 7.1 per cent, rising to 7.2 per cent in 2016." More assuring still is the swelling ranks of people with disposable incomes. "The middle class of China numbers 300 to 400 million people in the urban areas, as is the case in India," says Ananth Krishnan, head of business development, global trade & receivables —nance, HSBC Bank Canada. "These people are looking for better quality goods and have the ability to pay for them." Despite economic challenges abroad, new partnerships between B.C. and Asia continue to be forged. This fall, for example, Vancouver-based Western Potash Corp. signed a Memorandum of Understanding for Strategic Cooperation with China Development Bank and Beijing Tairui Innovation Capital Management Ltd. The agreement is to develop a potash project in Canada. Also this fall, Chrysalix Ener¢y Venture Capital, a Vancouver-based clean-tech venture capital —rm, announced a new partnership with the Hong Kong Science and Technolo¢y Parks Corporation ( HKSTP), a technolo¢y incubator in Hong Kong. But no matter the type of venture or the state of the economy, Krishnan says the key to success is to do plenty of research beforehand. "For example, compare what you have to what other countries can provide. Go on a trade mission to your target country and learn the landscape. And be sure to speak to the right advisors: lawyers, bankers and insurers." As the largest international bank in Canada and China, HSBC is well equipped to help develop prospective partnerships between B.C. and Asia. "We have a presence in almost every Asian country and provide information and access," says Krishnan. The law —rm of Bull Housser is another indispensible resource for anyone considering o¤shore business relations: its lawyers not only understand and advise key industries in B.C., they are intimately acquainted with foreign investment regulations. Bull Housser partner Jay LeMoine says now is as good a time as any to consider business opportunities with the Asia- Paci—c region. "There are new markets in Korea and other locales, and in Japan the big question for business leaders is: where are they going to invest the capital they're sitting on?" he says. LeMoine says that while every country has a di¤erent culture that must be learned in order to prosper, "all business relationships are built on trust. And the only good way to develop a strong relationship is to show your face, so to speak, and keep showing it. Nothing can replace the bene—ts of regular business trips and —rst-hand networking." As for the types of sectors ripe for partnerships between B.C. and Asia, LeMoine says: "The obvious ones are LNG and other resource-based industries, but the technolo¢y sector is also huge." LeMoine suggests that a careful study of the Trans-Paci—c Partnership should also be considered "to identify areas where barriers and tari¤s will be diminished." Making the most out of business relationships with Asian countries is complex enough to —ll several volumes, but Krishnan says the most important thing to keep in mind is that, over the medium- and long-term, "you can't go wrong dealing with China—and that goes for the Asia region in general." A S I A - P A C I F I C T R A D E S P E C I A L F E A T U R E

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