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global commerce insider - china

Vancouver pastry chef Marco Ropke is opening a cooking school in Nanjing after finding local partners.

When Marco Ropke, owner and operator of the Pastry Training Centre of Vancouver, received an e-mail asking him to teach classes in China, he thought it was a hoax. But after meeting the e-mail sender a year and a half ago, one thing led to another and this year they plan on opening a cooking school in Nanjing.

The partnership came about in a roundabout way, and illustrates how important personal connections can be when seeking to do business in China.

When they first received the e-mail request, Mr. Ropke and his wife, Cathy, who hails from China and whom he had met while working in Beijing years earlier, started corresponding in Chinese. They realized the e-mail was sent by a vice-president for digital media company Sina.com, so they felt reassured the request was legitimate.

They also welcomed the Sina.com executive into their home during a visit to Vancouver to assess cooking schools. Mr. Ropke says they found they share the same philosophy: to offer home cooks professional bread baking and pastry classes, using quality ingredients.

After this, they agreed that Mr. Ropke would conduct pastry classes in Nanjing for two weeks, with Cathy translating.

"We arrived last August with no plans beyond teaching, but the pastry classes hit social media within two days – Sina.com was happy with the outcome – and we had a long waiting list."

Before this experience in Nanjing, Mr. Ropke's Vancouver classes at his school, also called the Vancouver Pastry Institute, had had waiting lists. He had considered opening a second location but found the city's exorbitant real-estate costs and compensation for highly trained instructors were prohibitive. "Sure, I would have more work but not necessarily more profit," he says.

Because of his previous work experience in China and his personal connection to the country, and because Chinese people are starting to embrace Western cooking, Mr. Ropke had also considered looking into business opportunities there.

But he knew there was an element of risk involved in opening or expanding a business in China, particularly with issues around intellectual property, such as recipes.

After the success of his classes in Nanjing, however, Mr. Ropke says the idea of opening a school emerged. He partnered with the Sina.com vice-president's wife, (Mr. Ropke is the majority partner), and 20 per cent of the business was allocated to a consortium of investors.

Aside from their investments, including raising funds to build the school, Mr. Ropke's local partners bring good "guanxi," or network of relationships.

Zaichi Hu, a partner in Vancouver at law firm Blake Cassels & Graydon LLP, tells clients that finding the right partner is crucial – ideally a Chinese partner familiar with complicated regulatory issues.

"A pastry school would require several permits, including a food safety permit and another to teach. And different permits are required for certain types of food services," says Mr. Hu.

"Due to so many previous issues with fake and contaminated food, the Chinese public are very concerned about food safety."

Mr. Hu warns that local governments can order businesses to close shop if they suspect anything untoward, such as doubting a food labelled as organic, while they investigate.

There are about 400 Canadian companies of all sizes active in China operating in a variety of sectors, according to the Canadian Trade Commissioner Service. "Overall I think opportunities are there and increasingly the Chinese economy is consumer driven and consumption based," says Vancouver-based accountant Peter Guo with MNP LLP, "but due diligence is essential."

Another Canadian who found business opportunities in China is Rozemerie Cuevas, co-founder and fashion designer at Jacqueline Conoir.

"Finding the right partner is destiny," Ms. Cuevas says "We started out in Vancouver back in 1986 and for the next 25 years I tried to expand but production costs were too high. If I didn't leave, my business would have died."

Fortunately, Ms. Cuevas met a Chinese couple in Vancouver and they became industry associates. Two years later she asked them to manufacture her clothing in China – where they have machinery, raw materials and skilled workers. "Because we had been kind, they reciprocated and agreed, even though it wasn't financially viable for them because our quantities were too low."

Since Ms. Cuevas moved to Hangzhou five years ago, her JAC clothing is sold in 70 locations throughout China.

Sarah Kutulakos is executive director of the non-profit Canada China Business Council (CCBC). Based in Toronto, she recently met with a delegation from the China Entrepreneur Club. A Chinese woman in the fashion industry told Ms. Kutulakos how a Canadian retailer established a chain in China but exited when the business did not work out.

They didn't take the time to find the right partner, Ms. Kutulakos says. "Serendipity is not a strategy," she adds. "We see companies spending a significant amount of time in China at tons of trade shows and they understand what a potential partner can bring to the table. But the 'I know a guy' strategy isn't enough. Find a partner with similar goals and corporate values and you won't have a problem getting paid."