CANADA-CHINA PANDA ACQUISITION NEGOTIATIONS

Chinese Team

Confidential Instructions for WANG Zhongping, Vice-President & Secretary General of the Chinese Association of Zoological Gardens (CAZG)

You are assuming the role of WANG Zhongping (the family name appears first), the

vice-president and secretary general of the Chinese Association of Zoological Gardens

(CAZG), in a negotiation with Canadian zoo representatives who seek giant pandas for an

extended stay at their zoos. It is the spring of 2010, and you are meeting in Beijing.

Giant panda conservation is a top priority of your organization. You will be accountable

to high-level government and party officials for the performance of your three-person

team in this negotiation.

CAZG

Established in 1985, CAZG is a non-profit organization affiliated with the central

government's Ministry of Housing and Urban Development. CAZG plays a largely

advisory role in the management of zoos and parks with animal exhibits, although it is

trying to become an accreditation agency. Most of its 200 members, which represent a

third of China's total number of zoos, are government-funded. With respect to giant

pandas, CAZG oversees their care in zoos whereas the China Wildlife Conservation

Association (CWCA), an affiliate of the State Forestry Administration, is responsible for

pandas in wildlife refuges. CAZG and the CWCA are the only organizations through

which foreign zoos may legally obtain giant pandas.

Giant Pandas

Giant pandas are cute, intriguingly human-like, and rare bears. They are native only to

your country and appear on international and individual nations' lists of endangered

species. The pandas are sought by zoos throughout the world for their ability to draw

large numbers of visitors.

Historically, the Chinese government has treated the pandas as a national treasure, and

final decisions regarding international transfers have been made only at the highest levels

of government. Until the early 1980s, China presented giant pandas as state gifts to

countries (albeit a few). Then the government began allowing short, non-permanent

visits of the animalsbut only to zoos in selected countries. Nonetheless, the mid-1980s

became known as the "rent-a-panda" period, when official and other agents charged

roughly US$100,000/month per panda pair.

In 1992, following protests by international conservation organizations against the

"commercialization" of an endangered species, CAZG and the CWCA developed a new

framework for panda loans to foreign zoos. It emphasized long-term cooperative

research. Still in effect in 2010, the typical loan of a breeding pair of pandas is for 10

years at an annual fee of US$1 million. These fundswhich you prefer to call

"contributions"are designated for panda conservation in China.

Canadian Zoos

You expect the Canadian negotiating team to include the CEOs of Toronto Zoo and

Calgary Zoo.

Toronto Zoo, Canada's largest (and one of the world's largest), hosts 5000 animals of

500 species on 710 acres. The zoo is well-known for animal research, particularly in the

area of reproduction. About 1.3 million people annually visit the zoo. (The City of

Toronto has a population of 2.5 million while the Greater Toronto Area population stands

at 5 million.) According to the Zoo's website, general admission is C$21 per person.

Further, publicly available reports put annual expenses for 2009 at C$44 million. The

new CEO is John Smith.

Giant pandas have previously visited Toronto Zoo only once. Some 25 years ago, in

1985, CAZG loaned a panda pair to the zoo for 3 months. The zoo reportedly

experienced a huge jump in visitors and revenue, but exact figures were not made public.

Calgary Zoo is Canada's second largest zoo. Situated on 80 acres, it is home to more

than 1000 animals from 290 species. It is best known for research on endangered species

and expertise in reintroduction of species to the wild. Notwithstanding its physical size,

Calgary Zoo is comparable to Toronto Zoo in terms of annual visitors and revenue: 1.2

million people and C$42 million in 2009. (The population of the Greater Calgary Area is

1.3 million.) General admission is C$16 or 18, depending on the season. The zoo is

operated by a non-profit organization, the Calgary Zoological Society. The CEO is Dr.

Clement Dupont, a career zoo manager and veterinarian by training.

Calgary Zoo exhibited giant pandas in 1988 for 7 months. As in Toronto, the number of

zoo visitors spiked.

Negotiations to Date

Since the early 1990s, Toronto Zoo has been communicating with representatives of the

main zoo in Chongqing, Toronto's sister city. In 2003, Chongqing Zoological Gardens

and CAZG signed a letter of intent with Toronto Zoo to "provide a breeding pair of

pandas." In November 2009, two Toronto Zoo representatives came to China and

received reconfirmation of the letter. One month later, Canada's prime minister, Stephen

Harper, paid a state visit to China. During his visit, he expressed to China's president his

wish to obtain giant pandas.

After the prime minister's return to Canada, Toronto Zoo's Board of Management

evidently established a Giant Panda Task Force (GPATF). Its chair, Dr. Ming-Tat Li, has

been in touch with you and is leading the Canadian team that will meet with you and your

colleagues.

About Dr. Ming-Tat Li

In addition to his role on the GPATF, Dr. Li is a member of the zoo's Board of

Management. He is a practicing cardiologist who is widely known for his community

involvement and humanitarian work. Among other examples, he spearheaded the

building, just outside Toronto, of the largest Chinese Cultural Centre in North America,

and played critical roles in relief efforts for the SARS (flu) crisis and the Sichuan (China)

earthquake. In sum, he is an influential member of the Chinese-Canadian community

who has garnered the trust and respect of high-level government officials on both sides of the Pacific Ocean. He may be a useful intermediary or messenger as well as a

negotiation counterpart.

Current Agenda

In panda negotiations, topics for discussion generally include: the duration of the pandas'

visit at the foreign zoo, loan fee ("contribution"), delivery (transportation, accompanying

Chinese personnel, etc.), panda accommodations (housing, food), veterinary and other

care, offspring ownership and care, subjects for cooperative research, and more.

This negotiation need not cover all of the above items. Your priorities are the

contribution to conservation, additional funds, and the basic organizational structure of an effective partnership. You may rank these items as you see fit.

Your Objectives

Your main goal is to obtain significant financial and other support for CAZG's giant

panda conservation program and CAZG's work with China's zoos. They are generally

underfunded, and you see this negotiation as an opportunity to source funds for zoo

improvement projects. At the same time, you want to uphold, if not exceed, the terms of

the "model agreement" for panda loans to foreign zoos. (Remember that CAZG itself

helped to establish these terms.)

In the model agreement, the central financial clause is the annual US$1 million

contribution to conservation over 10 years, but there are other terms. They include a

US$600,000 annual fee to exhibit any offspring of the adult panda pair and additional

funds to cover panda research expenses such as scientific equipment and salaries of

Chinese scientists. (See the exhibit below.) All of these terms were agreed to by the four

American zoos that currently host pandas when they negotiated with CAZG and the

CWCA. These agreements were reached with San Diego in 1994, Atlanta in 1999, the

National in Washington, D.C. in 2000, and Memphis in 2003. The value to China of

each of these 10-year deals approached US$15 million.

With respect to organizational structure (keep this simple for now), you want to

maximize Chinese control and knowledge/technology transfer to China. For instance,

you would require a Canadian zoo with pandas to submit monthly reports on their

condition to the CAZG deputy secretary general. Any monies sent to China as a result of

a panda loan would be managed solely by CAZG and dispersed at its discretion. On

cooperative research projects, you prefer the principal investigator to be Chinese and

when this is impractical, to designate two lead investigatorsone Chinese, the other

Canadian. You want research results to be fully and promptly shared with CAZG.

It is up to you to set specific aspiration levels (objectives) and initial offers for the

conservation contribution, additional financial contributions, and the basic organizational

structure. A few exceptions have been made to the standard fee level. In 2008, when San

Diego Zoo negotiated for an extension of their lease, the CWCA agreed to let the zoo pay

US$500,000 per year for the next five years. Zoos in Australia and Thailand also

concluded deals with low annual fees (respectively, $300,000 and $25,000), but these

cases involved special circumstances. You are not bound by these precedents. For some

agenda items, you may even choose to pursue higher than standard terms.

Bear in mind that giant pandas are popular throughout the world. There is lots of demand

from many zoos for these animals. If the Canadian team will not meet your demands,

you have many alternatives.

Negotiation planning

- What are your strengths and weaknesses/limits?

- What are the other party's strengths and weaknesses/limits?