Part of the Going Global Series Despite physical borders, entrepreneurs now have far more agency—and far more opportunities—to choose not only where to start their businesses, but also where to grow them. China continues to emerge as a compelling market and destination for Canadian startups and small businesses. Several factors must be evaluated before committing to a particular geography: there is far more fiction than fact on doing business in China. This session helps you understand: The motivations and actual decision-making authority of the people in China with whom you're considering entering a business relationship Where and how various levels of government in China operate and how to navigate these frameworks

2. OVERVIEW
1. Why China?
2. Separating Fact from Fiction
3. You’ve decided to take the plunge – now what?
4. Protecting your IP
5. On second thought, maybe China can come to you (aka: The Golden
Bridge to the West)
6. China’s stock market turmoil and what it means for your business
(hint: probably not as much as you think)
7. Wrap and Q and A
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3. 1. WHY CHINA?
We’ve all heard the bad economic news
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4. 1. WHY CHINA?
But it is hard to ignore the size of the market
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5. 1. WHY CHINA?
And there are still many high growth sectors and niches
Source: McKinsey
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6. 1. WHY CHINA?
China’s economic transformation is bringing more opportunities for
Ontario companies
• Shift from China’s export- and investment-driven growth model
• Many gains reaped, now moving up value chain – doesn’t mean shutting down
factories
• Focus on consumption, services and sustainable growth
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7. 2. SEPARATING FACT FROM FICTION
Overwhelming amount of information. Where to start?
Have a real ally on part of your team – a Chinese teammember can definitely help – who
deeply understands you and your business as well (costs).
Lots of free or inexpensive resources:
- Trade Commissioners Service
- Government-sponsored trade missions
- Embassy, consulates and provincial economic development offices
- Canadian trade groups
- MaRS
- Canada China Business Council
- Other Canadian companies
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8. 2. SEPARATING FACT FROM FICTION
YOU
NEED
TO
GO
TO
CHINA.
REALLY.
And not for five days. Please.
Make your own soft landing or have people like MaRS help (trade missions)
What is torch partnership and who is (STIC in Shanghai)
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9. 2. SEPARATING FACT FROM FICTION
THINK.
CRITICALLY.
Are things as they appear?
Are things here as they appear to your Chinese colleagues?
Translators – yours? Real? Good? WHY? (delivering bad news?)
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10. 3. TAKING THE PLUNGE
Where to set up shop?
• The choice is likely to be made for you
• China is not one market
• Tier 1 city vs. anywhere else
• West vs. East
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11. 3. TAKING THE PLUNGE
Cultural issues
• Establishing trust is critical (and time-consuming)
• Deference to authority
• Guanxi is overrated (money is NOT)
• The Golden Rule
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12. 3. TAKING THE PLUNGE
Understanding government and government policy is fundamental
• Where are the opportunities and were are they going
• What path do you need to follow to pursue those opportunities
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13. 3. TAKING THE PLUNGE
EXAMPLE:
SHANGHAI
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14. 3. TAKING THE PLUNGE
Robust compliance mindset is de rigeur in China in 2015 (no corner-cutting)
• Before you do anything, make sure your China business plan is legal
• Adopt a “best practices” business culture and back it up
• If you are relying on advisors, distributors or other intermediaries, make sure they are
vetted and on board with your compliance program
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15. 3. TAKING THE PLUNGE
Business structures – what options are available?
• Simple contracting (e.g. licensing, distribution, etc.)
• Being on the ground in China:
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Options Pro Con
Representative Office Inexpensive, quick Very limited scope
Wholly Owned Foreign
Enterprise
Wholly owned subsidiary Longer timeframe to
implement
Joint Venture Benefits of partnership
Possible access to restricted
sectors
Challenges of partnership
Mergers & Acquisitions “Instant” market access Complexity

16. 3. TAKING THE PLUNGE
DOING
THINGS
THE
CHINESE
WAY
Here’s a brief tale from the last 90s about locked hotel meeting rooms
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17. 4. PROTECTING YOUR IP
China’s reputation for IP infringement is well-known
But China has become serious about IP protection in recent years and the
situation is improving:
• Legislation on IP is excellent
• China leads the world in filed patent applications
• New enforcement mechanisms are being adopted, including
specialized IP courts
• Large increase in patent litigation – mostly among Chinese companies
Still, issues remain
story: Aron’s Medium piece on what is real and what is fake re: Tumi
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18. 4. PROTECTING YOUR IP
SO,
GIVEN
THAT
IT’S
NOT
PERFECT
Best defense = good offense. Adopt a comprehensive IP protection plan.
Key considerations:
• Business partner selection
• Legal strategies
• Register your IP in China
• Contractual protections
• Non-legal strategies
• Make sure that your Canadian IP house and corp. structure is in order
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19. 5. CHINA VIA ONTARIO?
Shifting focus of Chinese foreign investment
Then: Resources, state-owned companies, large transactions, focus on
control
Now: High value added sectors, private companies and VC investors, often
minority investments, focus on collaboration
Motivations:
• Access to new brands, technologies and markets
• Plan to assist target in overseas expansion, including in China
• Stability of Canada’s economic environment
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20. 6. VERY TIMELY: MARKET REALITIES IN 2015
Stock market
Currency (look at past 10 years)
Cost of living
**Cost of mfg
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21. SO.
DO YOU REALLY NEED TO DO BUSINESS IN
CHINA?
MAYBE.
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22. FINAL THOUGHTS
China
is
an
awesome
place.
It
is
huge.
It
is
glorious.
It
is
perplexing.
It
is
not
easy.
It
is
beauYful.
It
is
disturbing.
It
is
magnificent.
It
is
very
far.
It
is
only
12
hours
away.
It
can
bankrupt
you.
It
can
make
you
fabulously
rich.
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23. Q AND A. YOU Q, WE A….
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24. HEY! THANKS!
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