MUNICIPALITY OF CHATHAM-KENT CHIEF ADMINISTRATIVE OFFICE ECONOMIC DEVELOPMENT SERVICES INFORMATION REPORT

TO: FROM: DATE: SUBJECT:

Mayor and Members of Council Michael Burton, Director, Economic Development Services August 19, 2013 India/China Trade Missions

This report is for the information of Council. BACKGROUND Foreign Direct Investment (FDI) is a critical element in the marketing mix for attracting investment to Chatham-Kent. Chatham-Kent Economic Development Services is focusing on three main geographic priority areas in FDI. These include Europe, India and China. Chatham-Kent has been developing relationships in the China market for approximately 18 months with considerable success. In the past eight weeks, the Municipality has hosted six delegations from China; two universities and four private companies. Files in North America generally take two years plus to close. With the need to develop personal relationships, the language challenges and the distance in Asian countries, the process abroad can be twice as long. As indicated in prior reports, in India and China, relationships are a critical factor in business matters. Prior company relationships drive investment decisions before business factors. If the relationship does not exist, the business discussion will not commence. The role of the Office of the Mayor is a critical factor in FDI in Asia for gaining access to top level CEOs in both China and India. The Mayors position is held in very high esteem in both countries. That is why many mayors coordinate trips with their economic development staff. Many jurisdictions recognize the value of FDI outside North America in their economic development efforts. The reason for that focus is quite apparent when reviewing the developments with major US corporations. Ford Motor Co., GM, Navistar, Caterpillar, Raytheon and many more, present examples where US companies are focusing solely on consolidation and retraction. Some US companies looking at repatriating off-shore operations to North America, focus on the political points by repatriating operations to the US, not Canada.

2 India/China Trade Missions Asian companies have the opposite mindset. Most are privately-owned and have economies that are experiencing 7-10% growth rates. They have typically not expanded abroad but now are developing strategies to spread inherent business risk to markets outside of their own home countries. These companies are generally multi-billion dollar companies where decisions are made with a long-term return on investment (ROI) focus, not with a short-term next quarter to satisfy impatient shareholders. This is the target group the Municipality is beginning to influence. The process is slow and the business opportunity has to be compelling, but with continued effort, the Municipality should be on their radar when the timing is right. COMMENTS India The purpose of the mission to India was to introduce Chatham-Kent to a number of major companies in the energy, agriculture and manufacturing sectors. The Municipality also met with the top Canadian trade official in New Delhi. An additional objective was to develop export opportunities for Chatham-Kent based companies. Chatham-Kent representatives also visited with a number of companies to further previous discussions that have taken place about specific investment opportunities. One of these companies has visited Chatham-Kent while another group, met with ChathamKent officials in Toronto. China In China, the objective was to meet officials at the provincial and city levels, critical influencers in offshore investments. As well, further discussions with two universities that indicated on previous missions, an interest in exploring an international research & development centre and possible campus in Chatham-Kent, were visited. This trip allowed the Mayor and the Director of Economic Development Services, to introduce Chatham-Kent to a number of government officials, key influencers and companies. Detailed discussions on a number of potential investment decisions were held with companies. In some cases, these were follow-up discussions, in other cases, new prospects for Chatham-Kent. Intensive meetings were held in China with two companies looking at major investments in Chatham-Kent. In order to keep critical information confidential, this report will not identify the names of cities nor the companies visited, Chatham-Kent has engaged one agent in India and two agents in China well connected with investor companies that pre-qualify all meetings prior to Chatham-Kents staffs departure. All three agents have been successful in developing connections with major firms and governments to open doors for ChathamKent.

3 India/China Trade Missions OUTCOMES: India 1. In India, contacts and meetings were held with the Chief Executive Officer or Board Chair of the organization. Chatham-Kent held meetings with seven major global corporations in India and also introduced Chatham-Kent to the Canadian High Commissioner staff in New Delhi. 2. Promoted the potential for Research and Development Centres to be based in Chatham-Kent. 3. Identified a major $60 million dollar contract in India that is open for bid by a Chatham-Kent company. The company concerned is currently preparing a multimillion dollar bid submission. If successful, the business will represent a major business and employment expansion opportunity in Chatham-Kent. As a followup, the Company representatives are in Bangalore August 22-25, 2013 and meeting with the Indian local partner to further the business discussions. 4. Established a distribution arrangement in India for a local Chatham-Kent manufacturer. 5. Explored with a leading Indian wind turbine manufacturer, the potential to consider relocating manufacturing operations to Chatham-Kent. 6. Local investor signed an agreement to joint venture with IL&FS, a global infrastructure company and are now seeking Canadian institutional support to launch the business. 7. Held detailed discussions on the potential acquisition and relocation of a western manufacturer of heavy industrial vehicles and axles to Chatham-Kent. China 1. In China, met with eight corporations and a senior agricultural official in the PRC Federal Government in Beijing. Meetings focused upon the University of Guelph, Ridgetown Campus International Agricultural Research and Development Institute initiative and specific new company investment proposals for ChathamKent. Two reciprocating visits with two corporations were also held. 2. Coordinated joint-venture discussions with a local Chatham-Kent manufacturer which is seeking a joint-venture partner to expand market potential with increased employment potential in Chatham-Kent.

4 India/China Trade Missions 3. Continued extensive meetings with two private corporations on two multi-million dollar investments which would create 400 new area jobs. CONSULTATION The Chief Administrative Officer was consulted prior to committing to these investment attraction missions. FINANCIAL IMPLICATIONS India/China Activity Travel Costs Accommodations (12 nights including consultant) Meals/Entertainment/Other Consultants Other including translation, gifts/presentation materials Total Federal Contribution Net Municipality Cost China Activity Travel Costs Accommodations (8 nights) Meals/Entertainment/Other Consultants Other including translation, gifts/presentation materials Total Federal Contribution Net Municipality Cost Amount $ 6,730.03 $ 755.25 $ 0.00 $ 0.00 $ 1,743.18 $ 9,228.46 ($ 714.08) $ 8,514.38 Amount $ 7,772.78 $ 4,668.90 $ 348.45 $20,458.70 $ 5,139.18 $38,388.01 ($10,028.06) $28,359.95

The net amount of the mission trips were covered out of the Economic Development Services base budget.

5 India/China Trade Missions Prepared by: Reviewed by:

____________________________ Michael Burton, Director Economic Development Services Attachments none

__________________________ Don Shropshire Chief Administrative Officer

P:\RTC\ECODEV\2013\Sept 9 India China Trade Missions.docx