Canadian businesses should do more to capitalize on growing ties with China, say experts
Prime Minister Stephen Harper and former Chinese president Hu Jintao look on as Canada’s Minister of International Trade, Ed Fast, and China’s Minister of Commerce at the time, Chen Deming, sign the Foreign Investment Promotion and Protection Agreement between the two countries in September 2012. GOVERNMENT OF CANADA
By Chris Freimond, Managing Editor
The United States remains firmly entrenched as Canada’s major trading partner, but China, now in second place, represents a significant opportunity to diversify trade and open new markets in Asia’s leading economy, says HSBC Bank Canada executive vice president and head of commercial banking Linda Seymour.
“Trade between China and Canada increased by a remarkable 57 per cent between 2007 and 2012,” says Ms. Seymour. “By 2017, China is expected to be the fastest-growing market for Can-adian exports after India, Brazil and Indonesia, with petroleum products as the main driver.”
With bilateral trade in goods and services valued at just under $79-billion in 2013 according to federal government figures, China represents less than 10 per cent of Canada’s global trade. Its growing importance to the economy is illustrated by increasing interest in business opportunities and rising global confidence in Asia as a whole.
The Foreign Investment Promotion and Protection Agreement (FIPA) between Canada and China, which came into effect on October 1, is expected to further strengthen trade ties between the two countries.
FIPA’s main purpose is to ensure greater protection for foreign investors against discriminatory and wholly arbitrary practices, to provide adequate and prompt compensation in the event of an expropriation and to enhance the predictability of the policy framework affecting foreign investors and their investments.
About the CCBC
The Canada China Business Council is Canada’s bilateral business, trade and investment facilitator, catalyst and advocate. Founded in 1978 as a private, not-for-profit business association, the CCBC provides unparalleled insight into Canada-China business, trade and investment issues and develops connections that ensure its members’ success.
For more information visit www.ccbc.com.
FIPA is also expected to boost Canadian confidence in doing business in China, which, along with sentiment toward the rest of Asia, is rising.
September’s HSBC Trade Confidence Index Survey showed that the number of firms specifying Asia as offering the best opportunity for business growth over the next six months has risen from 23 per cent to 24 per cent over the previous period. By comparison, the number of firms identifying North America as offering the best opportunity for business growth over the next six months has risen from 52 per cent to 54 per cent.
But confidence in China as a trading partner needs to be matched by knowledge of how to do business on a global scale, says Ms. Seymour.
“Businesses that have succeeded globally share some common traits: they know the importance of presence, relationships and commitment; they build smart partnerships; and above all, they share a commitment to innovation.”
The biggest obstacles that Can-adian companies typically face in doing business in Asia revolve around confidence and understanding, adds Ms. Seymour.
“Many lack an understanding of international opportunities,” she says. “They are unsure of how to position their product or service in other markets; they lack cultural understanding and are uncertain of how to navigate the regulatory environment.”
Peter Harder, president of the Canada China Business Council (CCBC), an organization that facilitates bilateral business, trade and investment between Canada and China, says it’s very import-ant for Canadian businesses that wish to thrive in the next generation of the global economy to have an Asian presence, particularly in China.
“But to do so successfully, they need a business plan that speaks to how they can participate in the Chinese economy,” he adds.
Mr. Harder agrees that China is important to Canada’s efforts to diversify its global trade, particularly in the energy sector.
“We haven’t accomplished anywhere near the diversification that we are seeking,” he says.
“China and Asia are very import-ant markets for Canada, and we need to strengthen our presence and our relationships both on trade and on investment.”
For full report visit globeandmail.com/adv/asiapacifictrade