Around 30 B.C. businesses are heading to Shanghai in November for the sixth China International Import Expo (CIIE) with the intention of raising the profile of their businesses and securing new deals in the market, despite cool Canada-China relations.
This year, the majority of B.C. businesses attending CIIE – an annual event hosted by the Chinese government – are from the agriculture and nutrition, including vitamin and supplement maker Herbaland and wineries Mission Hill and Phantom Creek.
“The Chinese government is behind the CIIE so attending it is a great way to win reputation and trust from Chinese consumers. For Canadian nutrient companies like ours, getting credibility among Chinese consumers is key,” said Hong Yang, owner of CAC Naturals, which has attended CIIE for the past six years.
Richmond-based Sunnylife Health Enterprises CEO David Tan said he hopes to secure new deals, and build connections in China and with exhibitors from other countries at CIIE to increase his company’s competitiveness in a “very desirable market.”
“Frankly, the cost of doing business in China is very high – no one would buy your products if you don’t do promotions and you need to invest a lot to have a big effect,” said Tan, who revealed that his company has seen a slight decline in sales to China over the past few years.
“This has added costs to small and medium businesses. It’s a very competitive market and businesses in countries such as Australia and New Zealand are doing the same to fight for this market.”
Penetrating the Chinese market during uncertain times
Canada and China’s relationship hit a low in 2018, following the arrest of Huawei executive Meng Wanzhou and China’s detention of Canadians Michael Spavor and Michael Kovrig. Earlier this month, Prime Minister Justin Trudeau said at the G20 in Delhi, India that there is no room for “rapprochement” with China, and that a normal relationship between the countries is impossible for now.
The Indo-Pacific Strategy released by the federal government looks to expand and diversify trade in the Indo-Pacific and away from China’s economy, which took a hit during the pandemic.
However, businesses say the Chinese market is too large to ignore and that they are looking to penetrate it while exploring new markets such as Southeast Asia.
“The biggest market for [our] company is in China. This is the foundation,” said Brian Mclernon, trade representative for Air Nutri, a company that specializes in charged particle waves.
“China has 1.4 billion people so the middle class would be at least 100 million people probably – that’s like two and a half Canadas for a market, so we’re not going to ignore it by any means.”
China’s economy was impacted by the pandemic when its normal-for-China growth rate of six per cent dropped to 2.2 per cent in 2020. It bounced back to 8.4 per cent in 2021 from a relatively low base, and dropped to three per cent in 2022. The World Bank projects China’s GDP growth will rise to 5.6 per cent in 2023.
Tan said he is not too concerned about a potential slowdown in China because, for small and medium-sized businesses like his, even a small share of the Chinese market is more than enough to keep the company alive.
“The Chinese market is an established market and there is no way we are going to give it up. We just need to penetrate it, for example, explore new markets like second-tier cities instead of focusing only on Beijing and Shanghai,” said Tan.
“Meanwhile, we can spare 20 per cent of our energy to explore the Southeast Asian market. Our company has opened a branch in Hong Kong targeting that market.”
For Yang, the consumer market in China is still there, despite political tensions and his company’s export to China, mostly through e-commerce, has increased steadily every year.
“The government has its political purpose but non-government interactions are still going on,” he said, adding that there is a growing demand for health products in China after the pandemic.
“The Chinese market hasn’t fully saturated yet and we aim to take up a larger share.… Under any [political] circumstances, there is always a path and solution.”