REPORT TO ECONOMIC DEVELOPMENT COMMITTEE
TO:	Mayor and Members of Council
FROM:	Jim Baird, Commissioner of Development Services Stephen Chait, Director of Economic Development
PREPARED BY:	Ted Northcott, Sr. Business Development Officer
DATE OF MEETING:	2006-Jan-24
SUBJECT:	Business Mission to China and Next Steps

RECOMMENDATION:

That the report entitled “Business Mission to China and Next Steps” be received,

That the Town re-affirm its commitment to strengthening its economic development relations with China,

And that the Town authorize the Economic Development Department to develop a 3-year alliance program with Beijing and with Wuhan, to be based on the recommendations in this report.

EXECUTIVE SUMMARY:

In November 2005, Councillor Virgilio, Sr. Business Development Officer Ted Northcott, and Albert Yong of Markham’s LComm Inc. met with key business and government representatives in Beijing and Shanghai, Wuhan, and Hong Kong. The purpose of the meetings was to continue to promote the Town and its businesses as the ideal location for investment and trade opportunities. LComm signed a $5 million letter of intent with Beijing Longshine Technology Ltd., and Wuhan University signed a joint venture agreement with Ecotech (of Vaughan) that will result in a new Ecotech joint-venture opening its office in Markham. The total cost of the trip was approximately $13,000 which is under the Council approved amount of $15,877.

With Council’s commitment to strengthening economic development relations with China, there are six core steps that should lead to increased investment and trade opportunities for Markham: 1) Markham-China Advisory Group; 2) Markham “Ambassador” or Representative in China; 3) Leverage Existing Contacts; 4) Development of a 3 Year Markham-China Action Plan; 5) Sister City Relationship with Wuhan; 6) Annual Markham Investment and Trade Mission to China.

DISCUSSION:

Town participated in Premier’s Mission to China.

The Markham delegation began its trip as part of the 120 person Ontario delegation to Beijing and Shanghai led by Premier Dalton McGuinty and Minister of Economic Development & Trade Joseph Cordiano before heading to the City of Wuhan, one of the Town’s four economic alliance partners.

In Beijing and Shanghai, the Markham delegation, primarily through our own network of contacts, met business and government representatives with the purpose of promoting the advantages of Markham as an ideal investment location and trading area for Chinese businesses. These meetings included our alliance partners at the Zhongguancun Science Park in Beijing; Mr. Chris Cuff (a former Toronto resident), Executive Director for Asia of real estate giant Cushman Wakefield; Mr. Johnson Jia, a Markham resident who is a practicing lawyer at a top Beijing law firm; June Chuang of Petroff Partnership Architects; the Shanghai Zhangjiang Hi-Tech Park and various Canadian Government trade and investment staff. Literature that was provided to us from Markham’s Virtual Engineering Inc. was shared with various contacts we met.

In Beijing, Councillor Virgilio and Ted Northcott had the pleasure of witnessing the signing of a letter of intent between Markham’s LComm Inc. and Beijing Longshine Technology Ltd. for $5 million licensing agreement to market LComm’s products in China.

Town’s delegation advanced economic development program in Wuhan.

The Markham delegation left the Provincial delegation and proceeded on its own to the City of Wuhan. The City of Wuhan has a population of eight million people. Representatives of Wuhan have visited the Town of Markham on a number of occasions since 1997. In 2002 Regional Councillor Tony Wong (as he was then) and T. Northcott visited the City of Wuhan, as did Deputy Mayor Frank Scarpitti in 2005.

On arriving in Wuhan, the Markham delegation was joined by Jack Tsui. Mr. Tsui is a principal of Markham-based Peak Garden Developments Inc. Mr. Tsui is also principal of a Wuhan development company, Parrot Garden Developments Inc. Parrot Garden Developments has developed a 2,800 townhouse and low rise North American style complex in Wuhan.

In the City of Wuhan, the Markham delegation was received by key government officials including Vice Mayor Tu Yong (who was in Markham November 2004) and Mr. Liu Shan Bi, Chairman of the Wuhan Municipal Committee of the C.P.P.C.C. (who led a ten person delegation to Canada and the United States in October 2005 and visited the Town of Markham). Letters of introduction from Deputy Mayor Frank Scarpitti and a letter from Red Cross representative Mr. Kai Tao of Markham who had worked with Wuhan during the floods in 1998, were presented by Councillor Virgilio to Vice Mayor Tu Yong.

Mr. Tsui made arrangements with local City of Wuhan officials for the Markham delegation to make a presentation to businesses, government representatives, academics and media. The presentation took place in the historic and prestigious Wuhan Donghu Guest House. Over 130 people attended the presentation. The Town of Markham’s presentation highlighted the natural and economic attributes of Canada as a country, while placing particular emphasis on Markham as an ideal investment location with its diverse population, strong economy, access to the USA market (as a result of NAFTA) and enviable quality of life. Albert Yong made a presentation regarding LComm and their wireless services.

As part of the presentation, Markham attended a signing ceremony between Ecotech of Vaughan and Wuhan University College of Life Sciences that will result in a joint venture being established in Markham. The presentation was picked up by the local television station and was presented during a newscast that evening.

The Wuhan municipal officials indicated that they were pleased to have the Town of Markham delegation attend. The City of Wuhan officials continue to be interested in establishing closer ties with the Town of Markham and have requested that the Town of Markham consider forming a sister city relationship with them. We were advised that a delegation from the City of Wuhan plan to visit the Town of Markham early in 2006.

A commitment to a higher level of investment and activities is required to achieve greater economic development success.

As a result of the various meetings and the strong economic growth in China (GDP growth of 9 per cent per annum), it became apparent that a new China strategy needs to be developed. It is necessary to be proactive in dealing with China. There are advantages to the Town of Markham with a China strategy in both attracting business and investment to Markham as well as assisting Markham business in tapping into the China market. As the Town’s resources are limited, it is necessary to utilize our resources strategically. It is recommended that Council re-affirm its commitment to further developing economic ties with China, and that a ten step program be undertaken, as follows:

1) Markham – China Advisory Group (“MCAG”)

The purpose of this voluntary advisory group will be to provide guidance and expertise to the Town and Markham businesses on investment and trade activities with our Chinese partners. This will include but not be limited to: which sectors to focus on; help with inbound and outbound missions; assisting Markham companies with their trade activities and the Town with its investment attraction activities.

It is proposed that the MCAG be chaired by the Chair of Economic Development and consist of not more than eight members. The eight could include a representative from the following: Economic Development Dept.; Markham Board of Trade; Federation of Chinese Canadians in Markham; two to three Markham businesses who have an interest in China; Seneca College; and a Bank. It is proposed that this group would meet formally 4- 6 times a year.

Estimated cost: $500 per year

2) Markham “Ambassador” or Representative in China

In order to maximize the Town’s presence and efforts in the City of Wuhan and Beijing’s Zhongguancun Science Park, the Town needs to have its own local presence on a day-to-day basis. A local “ambassador” or representative would provide advice and contacts to the Town, and represent the Town at various conferences, functions and trade fairs. The “ambassadors” would be accountable to the Town and report directly through the Town’s Economic Development Department. The role of the “ambassadors” would be to be the Town’s “ears and eyes” in China in identifying investment and trade opportunities.

Estimated Cost: $20,000 per year ($10,000 per rep. in Beijing area, and in Wuhan area)

3) Leverage Existing Contacts

In addition to Peak Garden Developments (who are well established in Wuhan), the Town should actively investigate if other Markham companies, who are already doing business in China, could be leveraged to help other Markham companies enter the Chinese market while at the same time make investment introductions to the Town.

4) Development of a 3 Year Markham-China Action Plan

The development of a 3 year plan will help keep the Town focussed on its investment and trade activities while at the same time assisting in determining which activities are outside the scope of the plan and therefore not worth pursuing. It is proposed that this plan be prepared by the Economic Development Department with the input of the Markham-China Advisory Group and our alliance partners.

5) Sister City Relationship with Wuhan

It is proposed that Markham evaluate taking our relationship with Wuhan from a memo of understanding level to a Sister City level. There is no additional cost in doing this. Attached to this report is a sample of a twinning agreement that Wuhan has entered into with Christchurch, New Zealand. While sister city relationships are not required for Town business activities abroad, it appears to be crucial for long term relationship building with municipalities in China.

6) Annual Markham Investment and Trade Mission to China

To keep the Town’s momentum in China moving forward, at least one trip per year should be undertaken. It should be led by a Town official and consist of interested members of the business community.

Estimated Cost: $16,000 (2 people)

7) Markham Gifts

Locally hand-crafted gifts are an important and valued part of Chinese culture. On this trip we were able to proudly give gifts that were made in Ontario. Efforts are to be made to find or create gifts that are made in Markham and which are representative of or significant to Markham. This special “made in Markham gift” would not be limited to guests visiting from China but could proudly be presented to all special guests visiting the Town. A competition could be held to ascertain interest from local artisans in creating such a gift.

Estimated Cost: $1,000

8) Thank You & Testimonials

It is recommended that Jack Tsui, Johnson Jia, Albert Yong and Alan Lam be invited to a future meeting of Economic Development Committee to be thanked by the Committee for their work and support of the Town, and to provide them with a brief opportunity to give their perspectives about China.

9) Provincial Survey

The Economic Development Department together with Councillor Virgilio is to complete the Provincial survey about the pros and cons of the China mission.

10) Thank You Notes

The Economic Development Department is to prepare thank you/happy new year cards for Councillor Virgilio to send to the contacts we met in China in November.

Estimated Cost: $100

FINANCIAL CONSIDERATIONS:

Currently the Town budgets approximately $24,000 per annum for the entire China economic alliance program (comprising portions of the Business Travel account, Business Development account, and specific Capital accounts). To implement the ten proposed action steps, it is estimated that a total budget of $37,600 would be required:

1) Markham-China Advisory Group: $500 to cover photo copying etc.

2) Markham “Ambassadors” or Representatives in China: $20,000

3) Mission to China : $16,000 (covers two people)

4) Markham Gifts: $1,000

5) Thank you notes: $100

A review of the budget required to implement an annual program will be conducted as part of the development of the program design in 2006. The results of this review will be presented to Economic Development Committee for its consideration prior to planning for the 2007 budget. Over the course of 2006 the Economic Development Department will maintain its annual program of China-related activities. Any initiative to arrange a business mission to China will result in a separate report to Council detailing the proposal and requesting formal approval.

ENGAGE 21ST CONSIDERATIONS:

The activities of the Markham-China economic alliances are in alignment with the Town’s corporate goal of Economic Development – to establish, promote and support Markham as the best location for diverse high-tech and related business.

BUSINESS UNITS CONSULTED AND AFFECTED:

None

ATTACHMENTS:

1) Media advisory about Markham’s trip

2) Albert Yong of LComm’s testimonial and thank you letter

3) Memo of Understanding between Ecotech and Wuhan University College of Life Sciences

4) Economist & Sun article November 19, 2005 “Trade Mission to China A Success MPP Says”

5) A copy of Wuhan’s proposed twinning agreement with Christchurch, New Zealand

6) Globe & Mail article of Saturday, October 29, 2005 by Heather Scoffield “China Rising 2”

Stephen Chait, Ec.D., CMC Director of Economic Development

Jim Baird, M.C.I.P., R.P.P. Commissioner of Development Services

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