By Ken Su
It’s a big world out there. For companies in the food and beverage sector that want to grow, expanding outside traditional markets can be daunting. The challenge only increases when different cultures, languages and regulatory regimes stand in the way. Yet for companies willing to think outside Canada’s borders, a number of countries offer unparalleled opportunities. Chief among these prospects is China.
Why China? Why now?
After a relatively cool period, the trade relationship between Canada and China is warming up. In September, the two countries announced they were entering exploratory talks related to a potential free trade agreement. Such a move highlights the possible synergies between the two countries and the value each places on working together. While any free trade agreement may be well down the road, the sentiment is that both governments are solidly supporting efforts to work together, especially in key industries like food production and manufacturing.
Big demand for Canadian products
Canadian products are highly sought after in China. From oil seeds and wheat, to dairy, beef and seafood, to consumer ready packaged foods, Canadian products are seen to be safe and produced to a very high quality standard. Over the past several months alone, a number of agreements between Canadian companies and Chinese companies and investors have been announced. For example, COWS Inc., an ice cream company based in PEI, partnered with China based Yintai Group to open a number of COWS stores in the group’s high-end shopping malls. Other recent deals involved the Canada Beef International Institute, Clearwater Seafoods, Whistler Water and Ocean Choice.
Four keys to unlocking China’s potential
There’s no straightforward path when it comes to taking advantage of China’s thirst for Canadian food products. But if you’re willing to put in the work, the market offers boundless potential. As a starting point, consider the following four factors that can help you succeed in the Chinese market or successfully bring on a Chinese investor or partner.
Develop a strategy: To succeed, it’s important to map out the goals for your company or product – such as quickly scaling up, finding a distribution partner or opening new manufacturing facilities or retail outlets – and then stress test these plans. In addition to identifying objectives and opportunities, realistically assess any challenges and risks and identify risk mitigation techniques so you can avoid major pitfalls as you move forward.
Have an open mind: Being open to different ways of doing business is an important foundation. As you begin to investigate opportunities, be open to new ideas, partnerships and lessons learned from others. Recognize that what has worked for you in the past may not work for you now. The more open you are to finding the right approach, the more likely you will be to achieve your objectives.
Identify the right team: People matter.Regardless of how you’re entering the Chinese market or what sort of Chinese investor or partner you may be looking for, make sure your team has the right combination of internal and external experts. This means striking the right balance of experience, authority and accountability within your internal deal team, all while engaging the right specialists in key areas (including legal, tax, accounting, human resources and IT) for diligence, negotiating, closing and integration.
Take a long-term outlook: Being successful in China takes time – time to create a strategy, develop relationships or partnerships and nurture growth. Recognizing the time it will take can help you manage expectations. While you may not achieve success overnight, you will be putting in place everything you need to achieve long-term success.
China is a large, complex and nuanced market and Chinese investors continue to look towards Canada, so it’s important for Canadian food and beverage companiesto have the right mindset to take advantage of China’s potential.
Ken Su is a PwC Canada partner who recently spent 13 years in China helping multinationals invest in China, and Chinese clients invest cross border. He is now based in Vancouver and is the National Operations & Deals Leader for PwC’s China Business Network. He can be reached at [email protected] For more information please visit www.pwc.com/ca/china
This article appeared in the print issue:November/December 2016 edition