Far East represents opportunities for Canadian firms, but pitfalls exist: panel

The roaring digital economies of the Far East, and especially of China and India, represent exciting business opportunities, a panel audience recently heard, though pitfalls exist that must be considered by Canadian firms considering doing business overseas. A session at Toronto’s Digital Exchange venue held May 30 called Insight: Digital Asia, brought speakers from Toon Boom Animation Inc., IMAGINA Corp., and Mindwalk Studios together to address an audience of around 30 people about the media marketplace in Asia. The discussion turned, unsurprisingly, mostly on China as a consumer of content and as an exciting location for outsourced animation service work. Participants heard that the biggest Asian economies will continue to grow at a blistering pace, but that Canadian firms choosing to do business in the East should beware of widely varying quality and prices, intellectual property issues and security challenges. The biggest opportunities, according to Robin King – president and CEO of IMAGINA and well-respected former head of Sheridan College’s internationally known multimedia program – could eventually be in selling content for animation, gaming, interactive properties, special effects and information graphics. In each case, he said, entertainment is just one piece of the pie, and markets exist in fields such as education, e-government, health, and others. The Far East market, he said, "is crying out for these types of content, and Canadians are leading the way." But, warned Mindwalk’s Ashley Liu – a Canadian doing business in China with her Mindwalk Studios service shop – Canadians should consider now the right time to just "dip your toes" in the Chinese waters, and not necessarily charge full-bore into the arena. She noted that shops in China often require close supervision and several tries before they can come to grips with the creative aesthetic demanded of them. Further, work in China will be service-oriented for the foreseeable future since in her observation companies there aren’t yet ready to begin creating original intellectual property. She also cautioned that IP is rarely safe in Asia, and briefly described her own security policies that include giving programmers and animators as little access to networks as possible, as well as physical measures such as the use of hardware keys. But, she noted, Canadian companies may have an advantage in selling IP into the Chinese market since shops here are likely to bring greater cultural sensitivity to their offerings. For her part, Toon Boom president and CEO Joan Vogelesang noted that Asia has become a very important consumer of its animation software, though it has dropped relatively steadily compared to North America since 1999. When the company’s global distribution numbers are looked at on a regional basis, the clear trend for the past five years has been the steadily growing proportion of business Toon Boom is doing in the Philippines and Thailand, as well as Korea. Today, markets such as Vietnam, Malaysia, Singapore and Japan account for virtually none of its sales, and India has also suddenly disappeared from the sales picture. All three speakers noted the demographic underpinnings of China’s sudden surge, as well as the strong role being played in the region’s media and communications industries by government. In his presentation, King noted that the Far East marketplace is being driven by a population boom that will see Asians as a proportion of the world’s population increase from its current 38% to 54% by 2025. The Chinese economy alone, he noted, has an urban population of 500 million people, and is seeing an 8-10% annual rise in Gross National Product. He cited figures from PricewaterhouseCoopers that show the Asia-Pacific region will have an entertainment and media industry rising from $13.3 billion in 2003 to $17.3 billion in 2008. The region’s compound annual growth for the entertainment and media market is expected to be 9.8%. He noted that much of the growth in Asia is being driven by content clusters enjoying strong government support in the form of creative, flexible incentives, increasingly affordable bandwidth and high penetration rates in Asia, access to newly-affordable software production tools, and improved training and educational programs. King noted that while Asian markets represent a significant and exciting opportunity, smart firms will ensure they’re introduced into them by organizations already on the ground, preferably those with credibility such as a prior history of dealing with Asian companies or governments.

Far East represents opportunities for Canadian firms, but pitfalls exist: panel

Broadcast | June 10, 2005

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