Abstract

This paper examines how Canada can gain a competitive advantage in selling information technologies (IT) to China.  Specifically, it investigates how certain trade barriers lower Canadian firms’ interest of doing business in China, how the Asian crisis affects Canada’s ability to market IT, how Canadian firms can best market IT products and services to China, and how Canada can be more competitive in the Asian “trade wars”.  Results show that trade barriers can generally be divided into five different environments: political and legal, cultural, economic, technological, and physical.  With regard to the effects of the Asian crisis, Canada plays two roles: an exporter and a trading partner.  The best ways for Canada to market its IT products and services are by understanding the target market in China, applying the appropriate marketing strategies, and developing effective government programs.  Canadian firms can be more competitive if they know “how to compete”, “what to sell”, and “whom to compete with” in the IT market.  By following this program, Canada can increase its competitive ability in the China market, create value-added benefits for its Chinese clients, and prepare to win the IT “war” in China.
 

Executive Summary

This paper integrates the concepts of moral influence, heaven, terrain, commander, and doctrine from Sun Tzu’s The Art of War into selling Information Technologies (IT) to China.  A literature review is conducted to investigate the general trade barriers in the IT industry, to study the external business environment in China relative to other Asian countries, and to evaluate Canada’s strengths and weaknesses in the IT market.  In-depth interviews were used to develop insight from three different sample groups: government, business, and the media.  Thirteen (13) subjects completed the administrated questionnaire which focused on four major issues: (1) trade barriers, (2) the effects of the current Asian market, (3) marketing strategies for the IT industry in Canada, and (4) Canada’ s competitiveness in the global market.

Results indicate that Canadian companies have encountered the following trade barriers: a hierarchical structure, high taxation, corruption, language barriers, differences in business practices, currency devaluation, high debt payments, limited “free flow of information”, a lack of high-tech knowledge, long geographical distance, and different time zones.  The effects of the Asian crisis can be analyzed in terms of two different roles with respect to Canadian companies’ short-term and long-term business strategies.  One is an exporter who sells IT products to China; and the other is a trading partner who buys components or labor in China.  Canadian IT firms have received various degrees of positive and negative impact depending on how closely their business is involved with the Asian market.  The best ways to market IT products and services to China is to know the target segments, apply the right marketing mix, and use the proper government programs.  The Chinese government and global firms are the two major segments in China.  High-quality products with innovative designs, local presence, local staff, local contacts, lower tax rate, competitive trade agreement, good Canadian image and reputation, customer awareness, educational seminars, government sponsorship, and industry consolidation are ways that can assist Canadian firms in selling IT products to China.  By knowing how to compete, who to compete, and with whom to compete, Canada can create value-added benefits for its Chinese clients and gain competitive advantages in the Asian trade “wars”.

It is recommended that Canada should position itself as “an innovator” in the global IT market, targeting the Chinese government and ministries. Canada should build its strength by focusing on human creativity and product development, capture business opportunities by developing flexible marketing strategies, and minimize the potential threat of losing human capital to other countries by establishing appropriate reward systems in Canada.  With unique products and superior services, Canada can adopt high pricing strategies with strong promotional campaigns and selective distribution in China.  The marketing plan for the Canadian government concentrates on both the short-term and long-term strategies in the political and legal, cultural, economic, and technological environments.  The marketing plan for IT companies, on the other hand, emphasizes reward systems, flexible business processes, cultural understanding, and social responsibility.  Last but not the least, it is very important to compare our strategies with our competitors’ strategies if we want to win the Asian trade “wars”.  In Sun Tzu’s view, strategies should be flexible and adaptive to the changing environment.  Canada can profit from the Asian trade “wars” only if it can continuously create new product designs, meet customer needs, and keep up with its competitors.  Only then, will Canada be able to achieve success in the dynamic IT market.
 

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