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Made in China: Three Albertans reflect on doing business in Asia’s biggest market

The trio joined the Premier on a 12-day trade mission to China in 2013

Apr 1, 2014

by Michael Ganley

005_china_story1a
Left to right:
Mark Smith, CEO, Surmont Energy: Surmont is a privately held oil sands junior. It’s in the midst of seeking approvals for its project, and is seeking investors. Smith has been to China many times.
Mike VanderZee, sales and marketing manager, Willowglen Systems: Willowglen sells and services monitoring and control systems for oil and gas producers. VanderZee frequently travels to Asia and even speaks a few hundred words of Mandarin.
Dale Gregg, president, Handle-Tech: Handle-Tech has developed a series of handles that help workers pick up and manipulate lengths of pipe and hose. This was Gregg’s first trip to China, where he wants to find a manufacturer to licence his product.
Photograph Ryan Girard

Last September, Premier Alison Redford led a 12-day trade mission to China of businesspeople, academics and economic development officers. Six months later, we checked in with three of the people who joined her to find out what they learned during their travels and what came of their efforts.

Click here to listen to the conversation:

AV: What were you hoping to get out of the trip?

Mark
The key thing we’re looking for is investment. In the future we might be looking for markets, but right now we’re looking for a joint venture partner or an investor interested in an oil sands project. A number of companies also approached us to discuss technological advances that would apply to the oil sands, but for the most part I met with people that were either curious or seriously interested in investing in Albertan oil and gas opportunities.

Our project needs approval, which we’re hoping to get later this year. Once we get that, my plan is to go back and meet with these groups to see if we can transact. The biggest advantage of going was realizing that the three big [Chinese state-owned] oil companies have made their investments. But reaching out to the next two or three tiers of potential investors, which are all significant in their own right, is the group that is most likely to work with us.

Dale
I had no expectations, and that was on purpose. I had met a Chinese manufacturer at the Calgary oil show in June, and we had arranged to get together when I was in China. When I got back from that meeting I was happy because it looked like I was going to have a major distributor of our products in China. But when it comes to manufacturing, the last couple of emails I’ve been dealing with, they started realizing the costs of the molds and everything else and they’re asking me to fund the cost of the molds, which I won’t do. With my product, they’re about $2 million, and me investing that much for them to pay me a royalty, I won’t do that.

Mike
I travel to Asia several times a year and have been doing so for quite a few years. On this trip, knowing this was an Alberta government-organized, invest-in-Canada take on it, I identified a specific goal and that wasn’t to find customers for our software but to find a distribution network. I had these speed-dating sessions with five or six companies who expressed an interest. They’re 10 or 15 minutes and you figure out if there’s reason to talk further and that’s something the two of you do on your own.

AV: Were the speed-dating sessions done through an interpreter?

Mike
No. At this level of business it’s quite common for the people in China to speak enough English to carry on. There was an interpreter available to me, but I only really needed her once and she added some subtle nuances to the other conversations.

There was traction between my company and three of the others, and so I did ensure I had time in China afterwards to do my own follow-up. Others may have had the appetite for it but they didn’t have the infrastructure to follow through. It’s not my job to teach them the business. I’m interested in someone that already has experience and is looking for our technology. I may have found that with one small company and I’m heading back to China on a CNOOC organized event in March.

AV: Mark, you also took part in those speed-dating sessions. How’d they go?

Mark
It was good. Talking about translators, I had one translator twice. The first time she struggled a bit, but the second time she almost did my job for me because she had learned so much about the business and was able to answer questions without me being too involved.

AV: Did you find skepticism among the investors you spoke with?

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Mark
Some of the [businesspeople] were very clear that they were frustrated with how long it was taking for approvals for various things, in particular pipelines and infrastructure. We also got a clear message that they were concerned about how aboriginal rights were being dealt with and how that could delay projects. The third thing was that they didn’t think Canada was doing as good a job as other countries – Australia, for example – at calling for investment. They thought Canada was expecting people to make their way to us on the basis that we’re Canada and everyone knows that we’re a wonderful place. They said, ‘For China, Canada is a small piece of the pie and other countries are being extremely proactive.’ We didn’t do ourselves any favours with the way we dealt with the CNOOC and Petronas investments.

AV: Do you have a favourite memory of your trip?

Mark
One of my favourite experiences was taking a day off and walking along the Great Wall on a quiet day. It’s not an unusual thing, but it was foggy and had a mystical look to it. [It was impressive] to see how big it is and how much effort had to go into building such a big structure.

Dale
I flew from Beijing to Qingdao and the manufacturer I was meeting with had sent a limo to the airport to pick me up. It was a four-hour drive from the airport through the countryside and it was very impressive. When you’re driving down the highway you almost feel like you’re in Alberta. You see some of the same crops growing, although they’ll plant peanuts right beside corn, and you’ll see them out harvesting by hand. And every 15 or 20 miles you’ll see a big factory, and then more farmland, and then another big factory.

Mike
I’m curious, Dale, when you were driving, what was the quality of road? Was it an Alberta-quality highway?

Dale
I would say it was in better condition than the Calgary to Edmonton highway. We’re talking double lane highway in better conditions.

AV: And Mike, did you have a favourite moment?

Mike
I did. I hung out with the rep from Edmonton Economic Development. We had some spare time and I’d been to Beijing several times before and it was his first time so I said ‘I’ll show you something neat.’ I don’t know if you know, but in Tiananmen Square, in the centre of the city, the body of Mao Zedong is on display. So I took him to see it. Often, there’s quite a queue, but we walked right in. I’ve also seen Lenin in Red Square, and Ho Chi Minh in Vietnam.

AV: Do you have any advice for someone who is thinking about a first business trip to China?

Mike
One of the differences is the importance of personal relationships. It’s like there’s a corporate foreplay that has to happen in the meeting room, but the real business is done over drinks and dinner. I would make sure you don’t take the attitude, ‘I’m going to have my meeting then go back to my hotel room and relax and go to bed early.’ No, no, no. That’s when the real business happens.

Mark
Also, if you can find someone who is local, who is familiar with the local customs and culture and spend even just half an hour on some of the key things to pay attention to it can make a massive difference. Expecting to go for drinks after a meeting in Cairo is a different experience than in Beijing. When are you expected to be there? What are you expected to wear? What are you expected to avoid talking about? What hand gestures should you avoid? A friendly wave in one country can mean quite the opposite in another.

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