RECOMMENDATION:

That the report entitled “Leveraging Contacts in China for Markham Businesses” be received

And that the Town authorize the Economic Development Department to further develop a program with select partners for Markham businesses to capitalize on trade and strategic alliance opportunities in China.

EXECUTIVE SUMMARY:

Since the Markham Delegation’s trip to China in 2002, the Town has hosted select delegations from its two key partners in China – Zhongguancun Science Park in Beijing and the City of Wuhan. Memorandums of Understanding (MOU) have been signed with the Zhongguancun Science Park (September 2002) and Wuhan (October 2003). Part of the MOU with Zhongguancun involved their commitment to set up a representative office in Markham which was opened in December 2003.

With the solid relationships that the Town has built with the Zhonnguancun Science Park and Wuhan, the timing is now right to leverage our friendships into business opportunities for Markham companies. A medium/long term goal is investment by Chinese companies in Markham.

DISCUSSION:

China is not an easy market to enter/participate in and it is a market with challenges. However, with China’s membership in the World Trade Organization the door is opening to more and more business opportunities. China is Canada’s 4^th largest export market (after the USA, Japan and the U.K.). In 2001, China had a middle class population of some 100.0 million out of its total 1.271 billion population which makes for enormous market potential. Recently Goldman Sachs said that in the next 20 years, China will be the number one economic power followed by India and the USA. Because of the prestige and economic development potential of Markham’s two Chinese partners, the Economic Development Department has focused on these two partners, and has reduced its involvement in hosting delegations from other speculative markets. This has resulted in savings in Council and staff time and in marketing funds.

Given the limited staff time and budgetary resources, it is recommended that the Town continue to foster our relationships with the Zhongguancun Science Park and Wuhan and not embark at this time on exploring other markets.

Action Taken and Proposed Next Steps

There are 4 key steps that the Economic Development Department (herein referred to as “EDD”) proposes to help facilitate exchanges between the Town’s Chinese partners and Markham businesses. The four steps are: discussions with valued partners; survey/focus group of Markham businesses; web enhancement of Markham’s Economic Development site; and the possible formation of a Markham-China Export Club.

(i) Discussions With Valued Partners: (February/March/Ongoing)

Over the past month the Economic Development Department engaged in external discussions as to how the Department can work with its Chinese partners to achieve results for the business community. Of the partners contacted thus far, there is interest in working together.

Zhongguancun Science Centre in Markham:

As China’s largest science park with over 10,000 businesses in IT, Biotech, and Pharma and 39 institutions of higher learning, the EDD has started a dialogue as to what specific products and services the science park needs that the EDD could in turn try and match up with Markham (and/or other Canadian) companies. Representatives of the science centre have started preliminary discussions with Markham based Polarbear Energy Inc. and the EDD and are planning on introducing the representatives to Jacques Whitford Environment Limited in the near future. The Zhongguancun Science Centre representatives have committed to participating in any seminar that the EDD decides to put on regarding opportunities in China. At an appropriate time, the EDD will also introduce the Zhongguancun Science Centre representatives to York University, Seneca and University of Toronto for possible collaboration on research projects.

City of Wuhan:

The East Lake High-Tech Development Zone of Wuhan is reported to be the second biggest “intelligence area” in China, next to Zhongguancun. A United Nations report in 2002 said that Wuhan was ranked 6 out of the 25 most promising cities in China. American futurist Mr. Mckinly Conway predicts that Wuhan will be one of the top ten future super cities of the world in the 21^st century. Wuhan is focused on building what it calls its five industrial bases: optoelectronics (includes optical devices, laser products, office automation equipment etc.) and IT ; automobile manufacturing; steel and new materials; bio-engineering and new pharmaceuticals; and the environment.

Mayor Cousens hosted a small delegation from Wuhan on March 5th during which it was agreed that the EDD would try and identify specific opportunities to work on. The Mayor was invited to participate in the upcoming Wuhan Electronics Fair in September. Following the meeting, the delegation had a meeting with Dr. Tang of Jacques Whitford Environment Limited during which some possibilities were explored. JWE has done extensive work in China and interestingly enough Dr.Tang had been a professor at a university there. The EDD will also be introducing Dr. Tang to Jack Tsui of Peak Gardens in Markham (who operates a company in Wuhan called Parrot Gardens which builds residential projects).

Mr. Tsui has offered to work with the Town to help foster the Town’s relationship with Wuhan and to take it to the next level. Mr. Tsui has suggested bringing Wuhan sector experts to Markham to talk with businesses about opportunities in Wuhan.

Additional Partners:

Additional discussions have taken place, or will be shortly, with: Ontario Exports Inc. (“OEI” is part of the Ministry of Economic Development & Trade); the Department of Foreign Affairs and International Trade (“DFAIT”); the National Research Council (through Bob Glandfield); the Canada Chinese Computer Association; York University; York Region’s two export advisors and the Chinese Consul General’s office.

(ii) Survey/Focus Group: (March/April)

The Synergy Centre has included two general export interest questions for the Economic Development Department in their recent survey which went out to some 500 businesses. With the recently acquired updated database from York Region, the EDD will have the ability to do an email/fax broadcast to Markham businesses to canvas their interest in exploring opportunities with Wuhan and /or Zhongguancun and what methods would serve them best e.g. trade mission, educational seminars etc. Following this the EDD could have a focus group with those businesses that expressed interest in China along with representatives from the groups listed above to plan the most effective strategy.

(iii) Web Enhancement of the Economic Development Site: (April/May/June/Ongoing)

It is important for the EDD to improve the International section of its website to the point that it will be more of a valued resource by the Town’s business community. This would include information on international opportunities with the Town’s partners (including China, Cary, North Carolina; Nordlingen, Germany and domestically with Laval Quebec) as well as relevant web sites and links to MEDT/DFAIT etc. In addition, the EDD will encourage interested parties to provide the department with opportunities of products/services for sale/purchase which will then be posted. The EDD’s role will only be as a facilitator between the parties and will not get involved in the ongoing dialogues between interested parties but only ask to be advised if any deals are concluded. Once the EDD site is ready, a broadcast will be made to the business community and Town partners encouraging them to participate.

(iv) Markham-China Export Club

Though not a new concept, if the survey/focus group indicates a willingness to form a club or export group that wishes to meet on a regular basis e.g. every other month to talk about international marketing topics in a non-competitive environment, then the EDD feels this is something that should be encouraged. The role of the EDD would be to assist in the set up and ongoing activity of the club but it would ultimately be up to the businesses to make it happen. It is recommended that the Mayor, or Chair of Economic Development be involved with the club at least during the early stages to demonstrate the Town’s support. The Economic Development Department will investigate existing export clubs that are currently operating to see if and how such could work in Markham.

FINANCIAL CONSIDERATIONS:

Expenses at this time would be minimal and can be funded from within existing approved budgets.

ENVIRONMENTAL CONSIDERATIONS:

none

ACCESSIBILITY CONSIDERATIONS:

none

ENGAGE 21ST CONSIDERATIONS:

none.

BUSINESS UNITS CONSULTED AND AFFECTED:

none

ATTACHMENTS:

“China an opportunity we can’t miss” by David Crane, Toronto Star
“Export expert helps seal deal” Toronto Business Times
“Park opens window to China” Toronto Star
MOU with Zhongguancun Science Park
MOU with Wuhan
“Deal with Chinese city good for business” regarding Wuhan
Articles from Chinese newspapers regarding MOU signing with Wuhan
Article translated from World Journal after Wuhan’s delegation March 5, 2004
Jacques Whitford’s Dr. Tang’s email of March 8, 2004 after meeting the Wuhan delegation
Wuhan and Beijing notes from November 19, 2002 report to Committee


Stephen Chait, Director of Economic Development		John Livey, Chief Administrative Officer

		ECONOMIC DEVELOPMENT COMMITTEE


	TO:	Mayor and Members of Council

	FROM:	Ted Northcott, Sr. Business Development Officer

	PREPARED BY:	same as above

	DATE OF MEETING:	May 3, 2004

	SUBJECT:	Leveraging Contacts in China for Markham Businesses