China looking even better
February 7, 2009
China looking even better
Harper hasn’t visited
By Duncan Mavin, Financial Post
China is clearly not immune from the global economic slowdown, but the world’s second-largest economy is still one of the most sought-after trading partners for any nation or multinational business.
Coca-Cola Co. has a US$2.3-billion Chinese takeover on the table. Last November, PepsiCo Inc. said it plans to divert US$1-billion there over the next four years. Meanwhile, Wal-Mart Stores Inc. has also pledged to redirect its focus on the Chinese market as customers in North America spend less.
Canadians are also forging ahead with China. The big pension funds are all active in the region, recently opening new offices in Hong Kong, from which they are eyeing opportunities among discounted Chinese corporate valuations.
This week, former foreign affairs minister David Emerson announced his appointment to the board of the Canada China Business Council. One of his former Ottawa policy advisors, Barrett Bingley, has gone a step further, moving to Hong Kong in December to establish his own advisory and corporate-finance firm, Sinam Business Bridge, which will focus on bringing together Chinese and Canadian business opportunities.
"Before the financial crisis and recession, Canadian business, particularly medium-sized businesses, had been approaching China expansion with hesitancy and reluctance when they bothered to approach at all," said Mr. Bingley. "Now the recession has hit and the opportunity cost of relying solely on domestic and U. S. business is becoming apparent."
Meanwhile, some giant Canadian companies already in the region may be able to do well out of Beijing’s 4-trillion-yuan stimulus package aimed at getting the country’s economy back on track.
Bombardier Inc. will surely hope to take a slice of the US$280-billion the government has allocated to upgrading and extending China’s rail network. Even embattled Nortel Networks Corp. has found a glimmer of hope in China. While the company deals with bankruptcy procedures in Canada, its Hong Kong-based executives who run its 35-year-old Chinese operations took time this week to tell a local paper that business on the mainland is pushing ahead.
All this is being achieved despite an apparent lack of engagement from Ottawa. Stephen Harper, the Prime Minister, has never visited China and he has publicly snubbed Beijing, refusing to attend the Olympics last year while agreeing to a visit from the Dalai Lama, whom China views as a separatist political leader.
At the same time, other nations are reaching out to the Chinese. Kevin Rudd, the Australian Prime Minister, speaks Chinese fluently and is a regular visitor to Beijing and other Chinese centres. His Trade Minister said last week Australia is reviving stalled talks on a free-trade agreement with China that has "taken on a new dimension given the economic circumstances." Neighbouring New Zealand has already got itself a free-trade agreement with the Asian giant, the first China has signed with a developed country.
"We take quite a lot of pride in having managed that," said Adele Bryant, New Zealand’s Consul General in Hong Kong.
The trade agreement removes tariffs on more than 96% of New Zealand’s exports to China, easing the way for sales of timber, dairy products, beef, seafood and more. It
has also raised the profile of China as an export market for medium-sized New Zealand businesses that otherwise might not have considered selling products or services there, she added.
It is Canada’s medium-sized businesses that most need a push to expand their horizons as far as China, Mr. Bingley said. "At a policy level, the Canadian government can assist Canadian business by considering, and pursuing with vigour, treaty-level instruments that will be beneficial to the trade and investment relationship in the long term," he said. "The clearer the framework within which businesses can partner and trade, the more market entrants will feel comfortable enough to attempt to implement a China strategy."
Mr. Harper’s view of China is apparently softening since he criticized Beijing’s record on human rights shortly after the start of his first term in Ottawa. The Prime Minister was even rumoured to be planning a visit to China this March, until December’s constitutional crisis messed up the parliamentary diary.
If Ottawa does decide the time is right to visit Beijing, it will be doing so at an important juncture, not just for exports to China but also for attracting Chinese investment in Canada, said China-watchers.
"As the global economy recovers, Canada will be able to do better," said John Shou, managing director of the Canada China Business Council in Beijing. "A lot of Chinese resource companies see Canada as politically stable and Canada has a banking system that is also seen as more stable than elsewhere."
Mr. Emerson, the former minister, had a similar message this week: "In these challenging economic times, our trans-Pacific ties with China will be critical to the shaping of our economic future."
