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Balance of B.C.'s export market shifting to China

Jack Mar was born in China but moved to Vancouver as a boy. Now he's the CEO of Richmond-based Star Solutions International, which does a lot of work in China. There, Mar has the advantage of knowing the language.

Jack Mar was born in China but moved to Vancouver as a boy. Now he's the CEO of Richmond-based Star Solutions International, which does a lot of work in China. There, Mar has the advantage of knowing the language. But not knowing the language hasn't stopped him from going elsewhere in the world, like India, Afghanistan and Malaysia.

"If you want to do business you just go," Mar said. "It's not that foreign out there."

Star Solutions designs, manufactures and sells the infrastructure for cellular networks - basically everything except the handset, Mar said. Its specialty is finding cellular solutions for remote areas. Less than 10 per cent of the company's business is in Canada. The rest is divided equally between Asia and Africa.

China is fast becoming the world's largest economic power with gross domestic product of $7.3 billion US. While that still lags substantially behind the United States, with its GDP in 2011 of $14.5 billion, China is predicted to surpass the U.S. within the decade.

As China grows, so too do British Columbia's exports to it. In 2011, B.C. exported a total $32.7 billion of merchandise, $5 billion of which went to China.

The United States is still B.C.'s biggest export market, importing $14 billion worth of goods last year, but the balance is definitely shifting. A decade ago, in 2001, exports to China from B.C. were worth only $700 million while the U.S. bought $22.1 billion worth of B.C. goods.

No industry better reflects this shift than B.C.'s forest products industry.

In 2005, B.C. was shipping 9.75 billion board feet of SPF lumber to the U.S., said Paul Newman, executive director of market access and trade at B.C.'s Council of Forest Industries and president of Canada Wood Group. In 2011, B.C. only shipped four billion board feet to the U.S.

But during the same time frame, shipments to Asia jumped from 731 million board feet, or seven per cent of export shipments, to 3.5 billion, or 47 per cent.

The forest products industry has been helped by both the federal and provincial governments who have funded industry organizations like Canada Wood and have led trade missions to Asia.

Those efforts started long before the housing market in the U.S. collapsed. "We were probably six or seven years into the exercise before we started to get traction and see increased sales," Newman said.

James Brander, Asia-Pacific professor of international business and public policy at the University of B.C.'s Sauder School of Business calls the shift in lumber exports to China from the U.S. "amazing."

"China is now a really important market for us. And softwood lumber is our most important single export."

But China wants other B.C. goods as well. In 1993, China became a net importer of oil and in 2010 it became the world's biggest consumer of energy. That is why the B.C. government is anxious to get liquefied natural gas plants operating in Kitimat - to send gas to China.

So when including energy and mineral exports and some manufactured products, "it's just natural that China has become a very important market for us," Brander said.

Geography is key, with China's relative proximity to B.C. making it a good market to target. The forest products industry, for example, has no plans to expand to Eastern Europe, an area its Eastern Canadian counterparts are looking at.

There are other reasons why B.C. tends to focus on Asia for trade, said Jock Finlayson, executive vice-president of the Business Council of B.C.

"A lot of the immigration coming into British Columbia is from Asian jurisdictions and that actually has an impact, I think, on prompting more interest," Finlayson said.

The International Monetary Fund is predicting China will continue growing at more than eight per cent a year, down from the 10-per-cent annual growth it has been enjoying.

For the full story, visit www.richmond-news.com.