Vancouver, B.C. - January 17, 2011 - Canada is expected to benefit from China’s increasingly active private enterprises, which are poised to invest abroad in industries beyond the resources sector, according to a report published today by the Asia Pacific Foundation of Canada.
The China Goes Global 2010 report, launched during a workshop on Chinese Investments in Canada at Simon Fraser University’s Segal Graduate School of Business, also indicated that Chinese enterprises consider the Canadian economy to be one of the most open toward Chinese outward investment.
The report further found hope for Canada’s troubled manufacturing sector with Chinese enterprises expressing 49% investment interest in the North American manufacturing sector. Other sectors of interest include hospitality (14%), wholesale and retail shops (14%), and finance (13%).
“Contrary to popular belief, Chinese investments interests are not only composed of state-owned enterprises looking for Canadian oil and resources,” noted Yuen Pau Woo, President and CEO of the Asia Pacific Foundation of Canada. “Our study suggests that a sizable group of non-state owned enterprises are also attracted to Canada because of technology, market access to the US, and a dynamic labor force.”
The survey results coincide with an announcement on Friday that Beijing has made it easier for Chinese companies to move Renminbi offshore for investment purposes. Mr. Woo added, “All the signs point to rapid growth in Chinese outward investment. The question is whether Canadians will be receptive to Chinese capital.”
The survey, which polled 1,377 Chinese firms, found 8% of respondent companies reported an intention to invest in Canada in the next three years. The scale of overseas investment for these enterprises stood on average at US$16.1 million. This contrasts with the US$3.7 million average intended overseas investment by companies with no plans to invest in Canada.
Nearly 56% of companies with intentions to invest in Canada described their mode of entry into North America as establishing their own sales channels, while 14% indicated joint ventures and 12% noted mergers and acquisitions.
Among the barriers that Chinese firms continue to face in their investments in North America, the top three issues indicated were a lack of managerial competence, difficulty in finding business partners in Canada and lack of knowledge about legal and market risks in Canada.
“The barriers that Chinese enterprises face are not insurmountable,” noted Kenny Zhang, Senior Research Analyst with the Asia Pacific Foundation of Canada. “There is a role for government, industry associations, investment promotion agencies, and professional service firms to reduce the barriers to Chinese investment in Canada.”
The full report can be viewed here.
China Goes Global 2010 was prepared by the Asia Pacific Foundation of Canada in partnership with the China Council for the Promotion of International Trade. The publication was supported in part by Western Economic Diversification Canada and the Jack Austin Centre for Asia Pacific Business Studies –a joint venture of Simon Fraser University’s Segal Graduate School of Business and the Asia Pacific Foundation of Canada. The survey results are based on a sample of Chinese firms which are members of The China Council for Promotion of International Trade. The response rate to the survey was 46%, producing 1,377 valid responses during the period of December, 2009 - March, 2010.
About APF Canada
The Asia Pacific Foundation is an independent resource for Canadians on contemporary Asia and Canada-Asia relations. As a national not-for-profit organization established by an Act of the Federal Parliament in 1984, the Foundation brings together people and knowledge to provide the most current and comprehensive research, analysis and information on Asia and on Canada's transpacific relations. It promotes dialogue on economic, security, political and social issues, helping to inform public policy, the Canadian public and Canada’s Asia practitioners. The Foundation is funded principally through an endowment from the Government of Canada and by corporate and individual donors.
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