Immigrant Entrepreneurship: Bringing Yanjing Beer to Canada case solution

9B14A013

IMMIGRANT ENTREPRENEURSHIP: BRINGING YANJING BEER TO CANADA

Kimberley Howard, William Wei, and Kaijin Nie wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. This publication may not be transmitted, photocopied, digitized or otherwise reproduced in any form or by any means without the permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) [email protected]; www.iveycases.com. Copyright © 2014, Richard Ivey School of Business Foundation Version: 2017-07-26

Gazing out of a pub window one rainy February evening in 2014, Shu Guo, the owner of Hi-Bridge Consulting Corporation, recalled the summer of 2009 when she obtained the exclusive rights to import and distribute China’s best-selling beer, Yanjing, in the Canadian market. She also recalled the exciting moment when Yanjing beer won the bronze in the International Beer Competition at the 2011 Calgary Beer Festival. Despite numerous challenges in the Canadian beer market, Hi-Bridge and Guo had made significant headway. Five years later, however, Guo understood that many Canadian consumers still did not know about Yanjing beer and that she needed to find an effective and efficient way to increase market share. HI-BRIDGE CONSULTING CORPORATION Guo moved from China to Canada in 2000. She held a bachelor’s degree in computer science from China and an EMBA from the Netherlands. With her education and background in enterprise management development, information systems, and training and consulting, Guo wanted to start a business in Canada but she struggled with English. She worked temporarily in retail and washed dishes in a restaurant and eventually pursued an MA in Education at the University of British Columbia. After completing her degree in 2004, she considered pursuing a PhD in business but decided to conduct business instead through her company, Hi-Bridge Consulting (Hi-Bridge), which was established in 2000 in Vancouver, Canada. Hi-Bridge originally focused on Chinese and Canadian education co-operative projects, Chinese and Canadian marketing services, project consulting, Chinese public relations, Canadian insurance and investment, and importing and exporting between Canada and China. The company’s vision was the integration of Chinese and Canadian resources by leveraging talent, technology and finances on both sides. Hi-Bridge became a corporation in 2006 and started to focus on importing Chinese liquor to Canada. In addition to managing Hi-Bridge, Guo was the winner of the Excellent Canadian Chinese Entrepreneur award (2010), designed, organized and chaired the International Personalized E-Commerce Symposium held in Beijing (2000), and was China’s representative at the Fourth World Conference on Women (1995).

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Page 2 9B14A013 Guo contacted Yanjing, a well-known brewery in China about representing their products in Canada. Yanjing already had several importer-distributors for their alcoholic products in Canada, but no importer- distributor for their non-alcoholic products. In 2006, Guo spent $12,0001 of her own money to purchase a container of non-alcoholic Yanjing beer (0.5 per cent alcohol). Yanjing’s entry into the Canadian market was due to Guo’s efforts rather than Yanjing’s marketing strategy and she paid full price up front and assumed all the risk through Hi-Bridge. Even though Yanjing was virtually unknown in Canada and Chinese beer did not have a great reputation, Guo eventually sold the entire container (2,200 cases) through major grocery chains (often in their Asian sections), Chinese groceries, wholesalers and restaurants. She also continued to visit customers and hire promoters at government liquor stores, private liquor stores and licensed restaurants. Chinese consumers recognized the Yanjing brand and often bought the product without realizing it was non-alcoholic beer. By importing non-alcoholic beer, Guo avoided many duties, taxes and mark-ups that applied to alcoholic beer. Guo sold her first shipment within a year and placed a second order with Yanjing. A year later in 2007, Hi-Bridge was granted the right to represent Yanjing in Canada and Guo started importing alcoholic beer and hard liquor to Canada. The first liquor product Hi-Bridge brought to Canada was Bai Nian Gu Du, a product of one of China’s best liquor producers. The product was completely unknown in Canada and government liquor stores only listed products with previous selling records. In order to introduce the product to the Canadian market, Guo knocked on doors of Chinese restaurants and private liquor stores and offered lots of tastings. Consumers in blind taste tests likened Yanjing beer to Heineken and dubbed it “Chineken.” Yanjing’s main Chinese competitor was Tsingtao. Tsingtao beer had been available in Canada for over 25 years and both Chinese and non-Chinese consumers were familiar with it, particularly through Chinese restaurants. Guo decided to use a higher price point for Yanjing at $12 for a six-pack compared to Tsingtao at $11.45 for a six-pack. Guo was hoping to position the product as a high-quality product. Challenges were not limited to the Canadian side of the business. Chinese companies tended not to have a clear international strategy, the product size and packaging used in China was not always suitable for Canada and Chinese manufacturers often did not have the ability to process purchase orders from Canada. These challenges in China impacted strategy, marketing and inventory control in Canada. Guo often proposed and implemented a Canadian marketing strategy as well as advised on product size and packaging. When inventory was not appropriately managed, it resulted in either steep warehouse and pallet charges (because of too much inventory) or lost shelf space and sales (because of too little inventory). In 2008, Hi-Bridge conducted a large marketing campaign, promoting Yanjing through television, radio, magazines, newspapers and websites and it offered samples of Yanjing at beer and wine festivals, liquor associations and liquor store tastings. Guo also expanded from British Columbia and Alberta to Saskatchewan, Yukon, Newfoundland and Ontario. Guo tried the Quebec market briefly, but found it too protective and difficult to break into. Guo also painted her vehicle with Yanjing advertising. Yanjing agreed to sponsor the advertising as Hi-Bridge was executing an international expansion strategy for them. By this point, Guo was importing 20 liquor products from six different liquor manufacturers2. Due to the company’s hard work and marketing efforts, Hi-Bridge was granted exclusive importer rights and sales agent status in Canada for Beijing Yanjing Brewery in 2009. By 2013, Hi-Bridge sold their liquor products in 150 stores and made $1.5 million in retail sales. Beer proved to be a loss leader for Hi-

1 All currencies are in CDN$ unless otherwise stated. 2 See www.yanjingbeer.ca for examples of Hi-Bridge’s imports.

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Page 3 9B14A013 Bridge; the company made more profit on their hard liquor products than it did on beer. Guo found that beer shoppers were price and promotion sensitive, whereas hard liquor consumers were more taste oriented. The shelf life of beer was between a year and a year and a half and it took up to one month to get the product from Yanjing’s brewery to the shelf in Canada. Hi-Bridge decided not to import Chinese wine as there were more than 500 wines available in Canada, and some very good Canadian wines. Instead, Hi-Bridge started experimenting with exporting Canadian wine to China. YANJING Beijing Yanjing Brewery was established in 1980 and the Yanjing Beer Group/Beijing Yanjing Brewery Company Limited was created in 1993. Shares were publicly traded on China and Hong Kong’s stock exchanges beginning in 1997. The company produced and distributed more than 80 types of beer and non-alcoholic beverages such as tea, mineral water and soft drinks. By 2012, Yanjing employed 43,000 people, owned 40 beer production facilities and two ancillary product facilities, produced 540.5 million litres of beer, held tangible assets of ¥18.7 billion,3 and turned a profit of ¥942 million.4 Yanjing exported to over 20 countries, but its largest market was China5. Yanjing sales were US$1.94 billion in 2012, an increase of 8 per cent from 2011 sales.6 The company held approximately 11 per cent of the beer market in China, 50 per cent of the beer market in northern China and 85 per cent of the beer market in Beijing.7 All brewery equipment was automated and imported from Germany and the company invested heavily in research and development. In fact, of the 25,000 employees, more than 25 per cent were technicians or engineers.8 Yanjing was also a sponsor of the 2008 Beijing Summer Olympics. When China became a member of the World Trade Organization (WTO) in 2001, Yanjing concentrated on aligning processes, technology and equipment to international levels, increasing brand strength, strengthening their marketing networks and increasing profits to more than ¥$200 million annually. Yanjing’s strategic plan by 2015 was to increase annual beer production and sales to 800 million litres, become one of the world’s top six beer producers, form beer enterprise groups, develop Yanjing’s brand both domestically and internationally, and expand in the non-alcoholic beverages, bio-food and bio- pharmaceutical fields. Yanjing had won many awards and accolades, including China’s Most Admired Companies (2010) and ninth place on China’s 500 Most Valuable Brands (2012)9 as determined by China’s World Brand Laboratory. Yanjing was the first Chinese company to enter the U.S. market through sports sponsorship. When the Houston Rockets had the first overall NBA draft pick in 2002, they chose China’s Yao Ming. At the same time, the Rockets were looking for a sponsor. Through Harbrew Imports — which held the exclusive licence for Yanjing in the United States — Yanjing became the Rockets’ sponsor. The deal was worth US$6 million.10

3 ¥1 (Chinese Yuan Renminbi) = CDN$0.176, as of April 24, 2014. 4 www.yanjing.com.cn/ConTent.asp?MainId=1&BigClassid=1, accessed November 19, 2013. 5 Company details, www.yanjingbeer.ca, accessed May 30, 2013. 6 www.corporateinformation.com/Company-Snapshot.aspx?cusip=C156XA200, accessed May 30, 2013. 7 www.researchinchina.com/Htmls/Company/1421.html, accessed May 30, 2013. 8 www.yanjingcanada.ca, accessed May 30, 2013. 9 www.yanjing.com.cn/ConTent.asp?MainId=1&BigClassid=1, accessed November 19, 2013. 10 M. Kotler, “Yanjing Beer Comes to America,” www.kotlermarketing.com.cn/chinese/en/2007/0425/706.html, accessed May 30, 2013.

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Page 4 9B14A013 In 2010, Asia accounted for 33.6 per cent of the global beer market, and China was the largest beer- consuming country in the world, a title it had held for the previous eight years11 (see Exhibit 1). Although China ranked 49th in global per-capita beer consumption (2010), per-capita beer consumption within China increased by 80 per cent from 2001 to 201012 (see Exhibit 2). THE CANADIAN BEER MARKET13 Canada’s beer production was estimated at 21.9 million hectoliters per year. Beer was the number one alcoholic beverage in terms of both production and consumption in Canada with an estimated 10 million consumers. Micro-breweries and large commercial breweries produced many varieties of beer including light, pilsner, lager, ale, porter, stout, draft and specialized beers. Breweries led the Canadian alcohol beverage sector, followed by distilled alcohol and wine. Domestic beer consumption (bottled, canned or draught) decreased from 94.3 per cent (1999) to 87.4 percent (2009). In addition to consuming a large proportion of domestically produced beer, Canada imported $641.6 million of non-Canadian beer in 2009. The value of imported beer to Canada was $639.4 million in 2010, an increase of 195.6 per cent since 2000. Exports of Canadian beer were significantly lower at $240.2 million in 2009 (see Exhibit 3). Canada had 209 breweries employing 8,377 people in 2009. The largest, Labatt Brewing Co. Ltd. (Labatt) and Molson Inc. (Molson) accounted for 85 per cent of the Canadian beer market share. Though both were originally Canadian companies, Labatt was purchased by a Belgian company and Molson was purchased by an American company. There were also an increasing number of micro-breweries across the country which met consumers’ demands for variety, creativity and local flavours. Though beer continued to be the beverage of choice for Canadians, per-capita consumption actually peaked in 1975 as consumers increasingly switched to wine. One explanation for this decline in beer consumption was that Canada’s aging population was becoming more health-conscious. Approximately 80 per cent of beer sold in Canada was consumed at home versus in a restaurant or bar. In Canada, retail sales of beer were included in the same category as wine and liquor. Sales in this category grew from $11.1 billion in 2000 to $18.2 billion in 2010 14 (see Exhibit 4). In terms of household expenditures, beer was included in the alcoholic beverages and tobacco categories. From 1999 to 2009, household expenditures in this category increased from $1,172 to $1,506,15 although it is not possible to determine how much was spent on beer specifically (see Exhibit 5). Canada was the world’s 14th largest exporter of beer in 2010 at 336.8 million litres. The largest export market for Canadian beer was the United States. Exports of Canadian beer declined from 8.5 per cent of domestic production in 2000 to 5.1 per cent of production in 2009. Canada was the world’s sixth largest importer of beer in 2010 at 340.7 million litres. This increase may be partially explained by the removal of import duties on foreign beers in 2000. Three countries accounted for over 60 per cent of beer imports to Canada in 2010: the Netherlands (21.5 per cent), the United States (21.3 per cent) and Mexico (18.4 per cent).

11 “Global Beer Consumption by Country in 2010,” Kirin Institute of Food and Lifestyle Report, Vol. 33. www.kirinholdings.co.jp/english/news/2011/1221_01.html, accessed May 23, 2013. 12 Ibid. 13 All information in this section summarized from The Canadian Brewery Industry, 2012, www4.agr.gc.ca/AAFC- AAC/display-afficher.do?id=1171560813521#s1, accessed May 23, 2013. 14 www.statcan.gc.ca/pub/12-581-x/2012000/eco-eng.htm#t24, accessed May 23, 2013. 15 www.statcan.gc.ca/pub/12-581-x/2012000/is-rd-eng.htm, accessed May 23, 2013.

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Page 5 9B14A013 Although reductions in trade barriers both nationally and internationally had increased the trade in beer, there were still a number of challenges. Canada had both federal and provincial requirements that had to be met. As listed in Canada’s Food and Drug Regulations, health, quality, composition and labelling requirements had to be followed. The Canadian Food Inspection Agency (CFIA) worked with provincial liquor boards to ensure that beer (both domestic and imported) conformed to Canadian standards prior to being sold. Other considerations in Canada’s heavily regulated brewery industry included:  Consumer Packaging and Labelling Act — Required that products “must not bear any false or

misleading information regarding their origin, quality, performance, net weight or quality.”16  Mandatory Nutrition Labelling — Beer is exempt from nutrition labelling unless a health or nutrient

content claim is made.  Agreement on Internal Trade (AIT) — The Agreement on Internal Trade (1994) set out the

requirements on inter-provincial trade.  Importation of Intoxicating Liquors Act — A federal statute that all imported liquor to Canada must

go through provincial or territorial liquor boards. Regulations and control of liquor sales — including the licence to sell beer — was managed by provincial governments. Provincial governments collected duties and taxes, added their own mark-up to products, controlled advertising and marketing, and established minimum prices for beer.

 Excise Act — Federal tax included an excise duty (a levy at the production phase on domestically produced products), and provincial taxes on both the volume and the value of the product. At the time of consumer purchase, a federal goods and services tax was added as well.

 Environmental concerns — Breweries had to meet all federal laws and provincial legislations and regulations regarding the environment. In the brewery industry, environmental concerns were mainly about packaging (whether or not it could be recycled) and water usage (it took approximately five litres of water to produce one litre of beer).

 Organic Products Regulations — These regulations stipulated which products could claim to be organic.

IMMIGRANT ENTREPRENEURS IN CANADA Canada welcomed approximately 250,000 immigrants each year; about 40,000 (16 per cent) of these immigrants became entrepreneurs.17 There were two categories of immigrant entrepreneurs in Canada: opportunity-seeking entrepreneurs (pull motivation) and those who became entrepreneurs out of necessity (push motivation).18 Immigrants had slightly higher rates of self-employment (19 per cent) compared to non-immigrants in Canada (15 per cent).19 Typical traits of successful immigrant entrepreneurs included “a keen sense of adventure, reverence for education, love and respect for family, eagerness to collaborate, tolerance for risk and failure, passion — often born of desperation, and a tendency to dream.”20 Among Canadian immigrants, self-employment rates increased with age and number of years in Canada; immigrants in Canada longer than 10 years had a higher self-employment rate than those who had been in

16 The Canadian Brewery Industry, 2012, www4.agr.gc.ca/AAFC-AAC/display-afficher.do?id=1171560813521#s1, accessed May 23, 2013. 17 Podcast 111: “Immigrant Entrepreneurs,” www.profitguide.com/startup/best-practices/podcast-111-immigrant- entrepreneurs-30258, accessed October 18, 2013. 18 F. Hou and S. Wang, “Labour Force Survey Data, Immigrants in Self-employment,” Statistics Canada Perspectives on Labour and Income, Autumn 2011, 3. 19 Ibid., 4. 20 R.T. Herman. and R.L. Smith, Immigrant, Inc: Why Immigrant Entrepreneurs are Driving the New Economy, John Wiley and Sons, Hoboken, N.J., 2010.

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Page 6 9B14A013 Canada for less than 10 years.21 Canadian immigrant and non-immigrant entrepreneurs typically shared the same profile: older males with university degrees, married with children at home.22 Canada was an attractive destination for immigrant entrepreneurs in part due to its general openness to multiculturalism. Immigrant entrepreneurs could target those who shared their background, but there were also opportunities to sell to those who did not share the same ethnic background. Canada recognized the importance of immigrant economic stimulus and, in 2013, Citizenship and Immigration Canada (CIC) announced the implementation of a program specifically targeted at immigrant entrepreneurs. The program connected immigrant entrepreneurs with organizations that provided advice and resources on start-ups in Canada. Application to the start-up visa program required applicants to have the support of either venture capital or an angel investor. CIC provided a number of free services for new immigrants such as “language assessments and classes, help finding a job, help with daily life such as finding a place to live and filling out forms and applications, [and] information about community services such as mentoring.”23 Larger cities in Canada had other non-governmental organizations that new immigrants could access, such as Metropolitan Immigrant Settlement Association (Halifax), Catholic Social Services (Edmonton) and the Mennonite Centre for Newcomers (Alberta). These associations and groups tended to provide general support. Canada’s growth through immigration continued to increase and surpass Canada’s birth rate with Asian migrants (including those from the Middle East) accounting for the largest number of immigrants to Canada and Chinese comprising one of the largest groups of Asian immigrants. In 2006, there were 1.269 million Chinese in Canada with projections of 2.714 million Chinese in Canada by 2031. By 2011, there were over a million Chinese speakers in Canada. (See Exhibits 6 to 9.) Canada also offered a consumer base with comparatively high purchasing power. There was a skilled and highly educated labour force to staff companies; this was due in part to the high quality of Canada’s education system. The process for setting up a company in Canada was transparent and obtaining permits and licences did not require government or personal connections. With the exception of some remote regions, infrastructure systems including power and transport by road, rail and water generally functioned well. There were a number of challenges that immigrant entrepreneurs faced. A survey of successful entrepreneurs in Ontario listed the obstacles faced by immigrant entrepreneurs (from most to least) as: “financing/access to start-up money, marketing/finding customers, dealing with bureaucracy, networking/lack of social and professional networks, lack of knowledge about rules and regulations, high cost of business expenses (e.g., taxes, rent, products), language/accent, lack of knowledge about where to go for help, and lack of knowledge on how to start and grow a business.”24 Financing for small businesses in Canada was provided by the Canadian Small Business Financing Program (CSBF). Obtaining financing was contingent on a review of the past two years’ credit history in Canada, which most immigrants did not have. Financial institutions usually granted credit on a review of financial statements, which could not be produced for start-ups. There was also a false belief that the Canadian government provided grants for new businesses. Lack of financing could create challenges such

21 Winning Strategies for Immigrant Entrepreneurship in Five Communities, March 2012, Citizenship and Immigration Canada. www.hamilton.ca/NR/rdonlyres/98D76227-C319-4C2C-9021-4847FEADCFC8/0/Jun20EDRMS_n324659_ v1_6_1__ Workforce_Planning_Hamilton__Final_Project_Report.pdf, accessed May 17, 2013. 22 Hou and Wang, 2011. 23 www.cic.gc.ca/english/newcomers/map/services.asp, accessed May 17, 2013. 24 Winning Strategies, op. cit.

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Page 7 9B14A013 as under-capitalization of the business. It was generally more difficult to get financing for businesses that banks perceived as “high-risk,” such as those in the information technology industry. A dearth of knowledge about Canadian culture generally and business culture specifically could also impede immigrant entrepreneurs. There were a number of cultural models that could be used to categorize a country’s culture. In the Hofstede model, Canada’s culture was categorized as egalitarian, direct communicators, highly individualistic, moderately competitive, tolerant and with a short-term orientation25. Presumably, the more an immigrant entrepreneur’s home country culture differed from Canada in each of these areas, the more adjustment there would be. Canada’s businesses tended to be highly regulated, bureaucratic and standardized. Even though these attributes had the potential to present challenges and delays, the upside was that they were transparent and not based on political or personal connections. In terms of business etiquette, Canadians expected punctuality, were direct negotiators and communicators, and hiring was more often based on suitability rather than nepotism and political connections. Again, presumably the more an immigrant entrepreneur’s home-country business culture differed from Canada, the more adjustment would be required. Immigrants might also face challenges if their home-country education and training was not recognized in Canada; some immigrant entrepreneurs started their own businesses to avoid the difficulty of re-qualification. Another issue was that, with the increase in immigration to Canada, larger stores and international chains were providing access to products that were historically available only in small ethnic stores. These chains typically had advantages over smaller entrepreneurs in terms of costs, supply chain, marketing and financing. Several of the factors for success for immigrant entrepreneurs were similar to those for domestic entrepreneurs, including “networking (especially networking outside one’s ethnic community), hard work, motivation, relevant business knowledge and skills.”26 Successful immigrant entrepreneurs often had the following characteristics: voluntarily self-employed, highly educated (often at the graduate level), spoke English or French well, had prior business experience in the same sector or industry in their home or previous country, strong local networks and persistence.27 According to a study of entrepreneurs, the most important factors in success (listed in order of importance from highest to lowest) were: “experience, learning from previous successes, learning from failure, management team and good fortune.”28 In the same study, many respondents credited God over anything else for their success. A study of successful entrepreneurs in Ontario, found they followed a three phase program, as follows:29 Phase 1: Settlement  Upgrading language skills if necessary  Working in a previous field  Learning Canadian business practices and preferences first-hand

25 http://geert-hofstede.com/canada.html, accessed May 12, 2013. 26 Winning Strategies, op. cit. 27 Ibid. 28 V. Wadhwa, R. Aggarwal, K. Holly and A. Salkever, “The Anatomy of an Entrepreneur: Making of a Successful Entrepreneur,” Ewing Marion Kauffman Foundation, 2009. 29 Winning Strategies, op. cit.

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Page 8 9B14A013 Phase 2: Business Conception  Pursuing upgrading if required (including basic business seminars and health and safety workshops)  Building local business networks, including finding a mentor  Writing a business plan  Pursuing financing Phase 3: Business Launch  Achieving financing goals  Tweaking business plan as necessary  Willingness to invest long hours and hard work in the business Immigrant entrepreneurs tended to be more successful with the following supports in place:  Information and referral — There were a number of organizations that supported small businesses

and entrepreneurs by providing information and courses on running a business; this type of service was typically more accessible in larger cities.

 Training — Increasing specific knowledge, skills, abilities and competencies.  Financing — Access and information on potential financing options, including information on

financing specifically for immigrants, such as the Canadian Youth Business Foundation Newcomer Entrepreneur Program.

 Individualized supports — For example, advice, mentoring and counselling based on a specific situation.

 Business incubation — Support for the start-up phase of a business.  Professional networks — Ideally these should be diverse, including others from outside the

entrepreneur’s own cultural group. Some new entrepreneurs to Canada targeted their own ethnic group exclusively or conducted their businesses exactly as they would in their home country. This severely limited their customer base, and consequently their revenue. Opportunities existed to reach the larger Canadian consumer base with either the same product/service or a modified version for Canadian consumers. Understanding the Canadian culture in general and the Canadian consumer culture specifically increased the odds of success. HI-BRIDGE MOVING FORWARD Guo encountered several challenges in the Canadian market. All importers and distributors of alcohol in Canada had to go through the Canadian Liquor Board. Hard liquor was difficult to ship and consolidate and duty and taxes were high. One high-end hard liquor product was unfortunately translated as “100 Years of Loneliness,” making it virtually impossible to sell in the Canadian market. Guo worked hard to create a market for Chinese alcohol in Canada and started selling directly to restaurants, which created a demand for Yanjing products. It took a year of Guo’s efforts before Yanjing products were sold in liquor stores. Business norms and regulations in Canada were significantly different than in China. In 2008, Guo promoted Yanjing as the official sponsor of the Beijing Olympics. She was contacted by the International Olympic Committee and asked to stop advertising Yanjing as Olympic sponsors; Budweiser was the

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Page 9 9B14A013 official North American sponsor of the 2008 Olympics and Yanjing was the official Chinese sponsor. In China, beer was considered to have health benefits such as cancer prevention, cold cure/prevention and settling upset stomachs. In Canada, if a nutritional claim was made, a nutrition label was mandatory so these health benefits were not allowed to be advertised. With the exception of Alberta, alcohol stores were owned and operated by provincial governments. Duties, taxes and markups varied by province and by alcohol type. Guo’s challenge with non-Chinese Canadian consumers was that they did not know Yanjing’s products. Her challenge with the Chinese community in Canada was price. Chinese customers argued that the same liquor that cost $1 a bottle in China should not cost $16.99 a bottle in Canada. Guo had to educate her Chinese consumers about Canadian liquor laws and typically responded that she worked for the Canadian government to help them earn tax. She had to educate her Canadian consumers on the existence of Yanjing beer. Guo admitted that it took a great deal of trial and error and lots of hard work to become a successful businesswoman in Canada. How could Guo increase Yanjing’s Canadian market share and her chances of success as an immigrant entrepreneur?

The authors would like to thank Shu Guo, Hi-Bridge Consulting, Dr. Noufou Ouedraogo, MacEwan University School of Business and Shanghai University of International Business and Economics’ International Business School for their valuable input and support during the development of this case.

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Page 10 9B14A013

EXHIBIT 1: GLOBAL BEER CONSUMPTION BY COUNTRY IN 2010

Note: Consumption volume in Japan is a combination of beer, low-malt beer and no-malt beer. Estimated Total Volume of Global Beer Consumption 2010: 182.69 million kiloliters (up 2.4 per cent from 2009) 2009: 178.37 million kiloliters Source: www.kirinholdings.co.jp/english/news/2011/1221_01.html, accessed May 23, 2013.

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EXHIBIT 2: PER-CAPITA BEER CONSUMPTION BY COUNTRY IN 2010

Note: Consumption volume in Japan is a combination of beer, low-malt beer and no-malt beer.

Over the past 10 years, per-capita beer consumption has been increasing only in China, where it grew by 80 per cent from 2001 to 2010. Source: www.kirinholdings.co.jp/english/news/2011/1221_01.html, accessed May 23, 2013.

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Page 12 9B14A013 EXHIBIT 3: CANADIAN BREWERY INDUSTRY IMPORTS, EXPORTS AND DOMESTIC SHIPMENTS,

2009

Bar chart displaying brewery imports, domestic shipments and exports in 2009. Imports totalled $641.6 million, domestic shipments (shipments minus exports) were $4,431 million, and exports were $240.2 million. Above the bars is the value of the Canadian market (i.e., shipments plus imports minus exports) in 2009 at $5,072.6 million. Also above the bars is a caption for the value of Sales of Goods Manufactured in 2009 at $4,671.2 million. Source: Statistics Canada, www4.agr.gc.ca/AAFC-AAC/display-afficher.do?id=1171560813521#s1, accessed May 23, 2013.

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Page 13 9B14A013

EXHIBIT 4: RETAIL SALES BY INDUSTRY IN CANADA (2000 TO 2010)

2000 2005 2010

$ millions

Retail trade 287,838 365,994 438,401 Motor vehicle and parts dealers 73,903 86,903 95,445 New car dealers 61,031 71,603 76,417 Used car dealers * 4,212 5,747 Other motor vehicle dealers * 6,434 6,901 Automotive parts, accessories and tire stores * 4,653 6,381 Furniture stores 6,528 8,913 9,670 Home furnishings stores 2,975 4,649 5,359 Electronics and appliance stores 9,212 11,709 14,027 Building material and garden equipment and supplies dealers 13,590 22,598 27,760 Food and beverage stores 68,041 86,117 103,407 Supermarkets and other grocery (except convenience) stores 49,657 62,185 73,644 Beer, wine and liquor stores 11,107 14,365 18,248 Health and personal care stores 17,854 23,667 32,464 Gasoline stations 26,676 37,828 48,656 Clothing and clothing accessories stores 18,193 21,049 24,806 Sporting goods, hobby, book and music stores 7,899 9,383 11,291 General merchandise stores 35,205 43,756 54,657 Miscellaneous store retailers 7,762 9,422 10,861

Note: * not available for a specific reference period. Note: North American Industry Classification System (NAICS), 2007. Source: Statistics Canada, CANSIM table 080-0020, www.statcan.gc.ca/pub/12-581-x/2012000/eco-eng.htm#t24, accessed May 23, 2013.

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Page 14 9B14A013

EXHIBIT 5: AVERAGE HOUSEHOLD EXPENDITURES IN CANADA

1999 2009

$ Total expenditures 52,616 71,117 Total current consumption 36,984 50,734 Food 5,981 7,262 Shelter 9,865 14,095 Household operation 2,373 3,428 Household furnishings and equipment 1,498 1,896 Clothing 2,290 2,841 Transportation 6,819 9,753 Health care 1,245 2,004 Personal care 699 1,200 Recreation 2,933 3,843 Reading materials and other printed matter 272 232 Education 746 1,238 Tobacco products and alcoholic beverages 1,172 1,506 Games of chance (net amount) 258 255 Miscellaneous 832 1,180 Personal taxes 11,451 14,399 Personal insurance payments and pension contributions 2,815 4,269 Gifts of money and contributions 1,367 1,715

Source: Statistics Canada, CANSIM table 203-0001, www.statcan.gc.ca/pub/12-581-x/2012000/is-rd-eng.htm, accessed May 23, 2013.

EXHIBIT 6: POPULATION GROWTH IN CANADA

1990/1991 2000/2001 2010/2011p

number

Births 402,929 327,107 386,013

Deaths 192,439 219,114 252,561

Immigrants 221,382 252,527 258,906

Emigrants 43,692 47,766 52,456

Returning emigrants 15,208 17,910 25,364

Net temporary emigrants .. 25,563 20,163

Net non-permanent residents -52,853 39,592 11,495

p preliminary

Note: not available for a specific reference period. All figures are for the one-year period ending June 30. Source: Statistics Canada, CANSIM table 051-0004, www.statcan.gc.ca/pub/12-581-x/2012000/pop-eng.htm, accessed May 23, 2013.

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EXHIBIT 6 (CONTINUED) Population growth

Source: Statistics Canada, CANSIM table 051-0004, www.statcan.gc.ca/pub/12-581-x/2012000/pop-eng.htm, accessed May 23, 2013.

EXHIBIT 7: MIGRATION TO CANADA FROM 2001 TO 2006 BY REGION

Notes: Includes immigrants who landed in Canada prior to Census Day, May 16, 2006. ‘Other’ includes Greenland, Saint Pierre and Miquelon, the category ‘other country,’ as well as a small number of immigrants born in Canada. Source: Statistics Canada, 2006 Census of Population, www.statcan.gc.ca/pub/12-581-x/2012000/pop-eng.htm, accessed May 23, 2013.

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Page 16 9B14A013

EXHIBIT 8: POPULATION BY GROUP IN CANADA

Population projection, by visible minority group

2006 20311

thousands % thousands %

Total population 32,522 100.0 42,078 100.0

All visible minorities 5,285 16.3 12,855 30.6

Chinese 1,269 3.9 2,714 6.4

South Asian 1,320 4.1 3,640 8.7

Black 815 2.5 1,809 4.3

Filipino 427 1.3 1,020 2.4

Latin American 317 1.0 733 1.7

Southeast Asian 250 0.8 449 1.1

Arab 276 0.8 930 2.2

West Asian 164 0.5 523 1.2

Korean 148 0.5 407 1.0

Japanese 85 0.3 142 0.3

Other visible minorities 213 0.7 489 1.2

Rest of the population 27,237 83.7 29,222 69.4

Note: Reference scenario based on current demographic trends. Source: Statistics Canada, Catalogue no. 91-551-X, www.statcan.gc.ca/pub/12-581-x/2012000/pop-eng.htm, accessed May 23, 2013.

EXHIBIT 9: NON-OFFICIAL LANGUAGE SPEAKERS IN CANADA, 2011

Counts for mother tongue include single response of a language as well as multiple responses of a language with English and/or French.

Mother tongue Number of responses

Panjabi (Punjabi) 459,985

Chinese, n.o.s.* 441,265

Spanish 439,110

Italian 437,725

German 430,055

Cantonese 388,930

Tagalog (Pilipino, Filipino) 384,050

Arabic 374,410

Mandarin 255,160

Portuguese 225,530 Note: *n.o.s. — not otherwise specified. Source: Statistics Canada, 2012, Visual Census, 2011 Census. Ottawa, released October 24, 2012, www12.statcan.gc.ca/census-recensement/2011/dp-pd/vc-rv/index.cfm?Lang=ENG&TOPIC_ID=4&GEOCODE=01, accessed May 23, 2013.

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