The ability to look into the future and see opportunity is vital to the entrepreneurial DNA. Douglas asks innovative thinkers how emerging global trends will influence how we do business on Vancouver Islan When you ask realtor Tony Joe about 2015 and beyond, he looks to China.
“We are seeing a lot more Mainland Chinese purchases on the real estate side. I have a team member who just handles our Mandarin Chinese clients,” he says. “And it has taught me a couple of things. All this time of being a local here, from Victoria, I always had the impression that the Chinese ended up going to Vancouver because Victoria was too small and quiet.”
Turns out, it is small and quiet that the Chinese like, along with Victoria’s English-Canadian cultural environment.
“When they are in Vancouver, they are in Richmond, and they may as well be in Shanghai,” says Joe.
What Joe is talking about is what futurist Bob Treadway calls “an early indicator.” Treadway, a keynote presenter at the 2014 Vancouver Island Economic Summit, should know. For 27 years, he’s been helping businesses look into the future.
“All you have to do is look at what happened to Vancouver real estate prices when the big influx of population from Hong Kong came into the area,” says Treadway. “It was dramatic, and if there is another exodus out of China, I think that is going to be substantial.”
But the Chinese are not just buying homes. “Now we’re seeing a lot of people buying businesses here because they want to settle their roots here,” says Joe. “A lot of Island business owners are seeing this as a time to cash out. It is a reminder for businesses that if they are thinking of retiring to get going on their exit strategies now so they have everything in order.”
George Hanson, president of the Vancouver Island Economic Alliance (VIEA), has also noted the growing interest from China. “It is evident that in 2015, we will see a continuation and perhaps acceleration of Chinese investment on Vancouver Island,” he says. “Investment spans from large-scale development projects to capital investment to spur business expansion to the purchase and management of small businesses.”
This trend shows every sign of continuing, says Ali Dastmalchian, professor and former dean of the University of Victoria’s Gustavson School of Business. He says Chinese interest is shifting away from Richmond. “Southern Vancouver Island will become much more of a favourable place for prosperous Chinese to invest, both in property and in businesses.”
Dastmalchian adds that a trend within China is also having an influence on business here. Years ago, China was viewed as a place for Western companies to set up manufacturing; that has all changed with the 2008 economic downturn, when the aggressiveness of many Western businesses disappeared.
“China is now looking at understanding how can they set up Chinese businesses in different parts of the world. That trend is going to continue.”
Overall, it means the presence of Asian companies in North America is going to grow, and Canada is seen as a safer, more attractive destination with a secure banking system.
Treadway says with the exception of the U.S. — Canada’s largest trade partner — no other country has a bigger impact on South Island business than China. He doesn’t expect China to take over as Canada’s largest trade partner, but says our trade with China is growing at four times the rate of our trade with the U.S.
“As a business person, looking about five years out, I am going to think about that and about the potential impact on my business,” he says. “If the Island is ready, it could be a huge benefit economically.”
Key areas to watch include ”The Hong Kong crackdown” and whether it triggers an exodus, says Treadway. China’s economy is another watch point. “If their government can navigate a real estate bubble, hold down inflation, and stimulate their economy by encouraging consumer spending, then it’s good news,” says Treadway. “This move to consumption-driven, upward growth is bound to be spotty and disruptive. The exposure of Canada’s banking system to economic wobbles in China is unknown but may be significant.”
If the U.S./EU-Russia trade war escalates, China may position itself as a “wild card,” he adds. “While it’s not in China’s interest to cut back on imports of Canadian potash, canola and fish, there may be positioning if Putin moves to forge a stronger Russia-China alliance.”
Who Else is Coming?
As significant as China’s influence is, it’s not the only country eyeing the Island.
Pedro Márquez of Royal Roads University believes global trade and commerce will continue to expand. “Although we do see some signals of nationalism and lack of confidence in free trade,” he says, “the truth is that this process will continue to evolve.”
For Dastmalchian, the growth of international business is the fulfilment of the goal of UVic’s international business program.
“Our hope has always been that Canada becomes less dependent on the U.S. economy and more internationally oriented. Watching it over the past two decades, we see incredible changes have happened in this landscape.”
While being less dependent on the U.S. is a goal, Marquez says it’s critical to remember how closely we are tied to the U.S. “Even a slight growth of the U.S. economy will bring shorter-term economic benefits to the region. The short-term emphasis should continue to be placed on the U.S. The longer-term vision needs to be placed on diversity, foreign or international trade,” he says.
First Nations Sees Opportunities
First Nations businesses are also expanding, evidenced by enterprises such as Oyster Bay, Wya Point, Nexus Electrical and the partnership between the Huu-ay-aht First Nations and the Port Alberni Port Authority, along with Salish Seas Industries, a pile-driving and dredging company made up of the Esquimalt and Songhees First Nations and Victoria’s Ralmax Group.
Hanson of VIEA expects this trend to gain momentum, especially in property development, hospitality and tourism, energy and small business. “When treaties are resolved, monies are available to First Nations, enabling business and property development not previously possible,” he says.
“This not only enables First Nations economic development, it contributes to surrounding economies by First Nations contracting for a broad range of services, goods and materials.”
Expanding Interests
Several trends are changing how and where we work. Enrollment Resources, the company Gregg Meiklejohn founded with Shane Sparks in 2003, is a prime example of working locally while doing business globally.
“We’re an internet marketing company and we have spun off a software division and we have one client in B.C. — all the rest are back East or in the States,” says Meiklejohn. “We’ve done all our marketing out of here. Many of our clients have never seen us.”
Meiklejohn’s company is at the forefront of another movement that is gaining ground: businesses who are adopting eco-conscious business practices. Green Business certification and B-Corp certification are two examples.
In essence, B-Corps are to business what FairTrade certification is to coffee. B-Corps must meet rigorous standards of social and environmental performance, accountability, and transparency.
Meiklejohn, whose company Enrollment Services is Vancouver Island’s first certified B-Corp, and one of 1,000 certified B-Corps worldwide, says the trend is in having the consciousness to understand that this is going to be important.
“That’s the key. A lot of these people are just doing good work. They’re intuitively generous. They’re good corporate citizens,” he says. “It doesn’t have to be B-Corp, but business owners who view their business as an ecosystem versus single-purpose vending machines for money will be able to create substantive change.”
Doing good work attracts like-minded suppliers and customers.
“There tends to be a strong degree of mutual loyalty amongst organizations that share similar core values,” Meiklejohn says. “When you connect people around core values, you create really tight and efficient business systems.”
And businesses are interested. Meiklejohn says regional meetings typically attract 150 to 200 people. “It’s energy looking for a place to park,” he says.
Get Ready
Hanson sees many of these emerging trends as the beginning of big changes for Island business. “With substantial foreign investment, large numbers of new-immigrant small business owners and increasing First Nation participation in the economy, 2015 will herald a budding awareness of dramatic changes to an Island business culture that has not seen such change in recent memory,” he says.
At the same time, the growth of B-Corps and the changes in how we do business here demonstrates a strong desire to ensure our Island’s future is sustainable.
Change is clearly coming. The question to ask yourself is: what part are you and your business going to play in the Island’s future?
Other Influences
Micro-lofting
Developments like Victoria’s Janion have proven that there is a market for small square footage and low prices, says realtor Tony Joe.
He notes that the Janion is not the first. “In 1999, we had the Mosaic and we had Mermaid Wharf and those were the first of the loft-style condos and they have stood the test of time. This is a new iteration of that.”
E-Commerce
“The internet is gnawing at the edges of the retail sector,” says Gregg Meiklejohn of Enrollment Resources. “For retailers to survive, they need to reorganize their business model to adopt e-commerce.”
He says consumers are getting very comfortable with purchasing online and some retailers fail to realize that their competition is not Walmart, but the “highly functioning, highly successful, hyper-niche players that are maybe in Terrace or Saskatoon or somewhere else and people search that out.”
Climate Change
It’s impossible to talk about business and environmental trends without mentioning climate change, which is profoundly affecting our planet.
Farmers and forestry companies are seeing the effects of rising temperatures and changing weather patterns on crops and forests; fishery-related businesses are dealing with rising ocean temperatures. Everything is changing and businesses will need to adapt, not only for their own bottom line but also for the common good.
Futurist Bob Treadway says businesses can help other businesses and individuals adapt to the effects of climate change. Examples include vintners planning future plantings and the forestry industry dealing with rainfall changes and insect infestation. Mechanical industries, such as heating and air conditioning, may also become more significant, he says.
