Perspectives from Business Leaders and Policy Experts in Asia: A Cross-country Analysis
To gauge Asian perspectives on deepening economic engagement with Canada, the Asia Pacific Foundation of Canada launched a multinational research project comprising surveys with business leaders and interviews with policy experts in Asia.
This project was conducted in six major Asian economies – China, India, Japan, Singapore, South Korea, and Vietnam – with a focus on nine industrial sectors that are of bilateral interest and have the greatest potential for Canada’s economic growth. This project is supported by Export Development Canada, Global Affairs Canada, and Invest in Canada.
We conducted surveys of 1,124 business leaders in China, 1,110 in India, 1,082 in Japan, 1,084 in Singapore, 1,088 in South Korea, and 1,112 in Vietnam, for a total of 6,600 surveys. Additionally, we conducted interviews with 8 policy experts from China, and 10 each from India, Japan, Singapore, South Korea, and Vietnam, for a total of 58 interviews.
15 Key Takeaways:
1. THE BUSINESS COMMUNITIES IN ALL SIX COUNTRIES HAVE ESTABLISHED A MODERATE LEVEL OF ENGAGEMENT IN CANADA, WITH VIETNAM’S LEVEL OF ENGAGEMENT THE LOWEST AMONG THE SIX COUNTRIES.
Twenty-two percent of the Chinese business leaders surveyed say they are conducting business in Canada, compared with 15% of Indian businesses, 12% of Singaporean businesses, 11% of Japanese and South Korean businesses, and 8% of Vietnamese businesses. Furthermore, measured as a share of international business engagement, Canada is the least important region for Singaporean businesses. That is not true for any of the other five countries surveyed.
2. MOST ASIAN COMPANIES’ ENGAGEMENT IN THE CANADIAN MARKET IS EXPORT-RELATED.
For all six countries, exports to Canada is the most common type of business in Canada (44%), followed by contractual relationships (20%), imports from Canada (10%), and joint ventures with Canadian companies (10%).
3. ON AVERAGE, ASIAN COMPANIES FIND THE CHALLENGE OF CONDUCTING BUSINESS IN CANADA COMPARABLE TO THOSE OF OTHER INTERNATIONAL MARKETS.
Indian and Japanese business leaders doing business in Canada find it easier to conduct business in Canada than in other international markets. For their part, Vietnamese and Chinese leaders find it slightly more difficult. Finally, South Korean leaders stand out among the respondents, as only 5% of them think it is easier to conduct business in Canada, compared with 28% who think it is harder. The remaining 67% think it is either “about the same” or responded “don’t know.”
4. BUSINESS LEADERS EXHIBIT A STRONG DESIRE TO MAINTAIN AND ESTABLISH MORE BUSINESS RELATIONSHIPS IN CANADA, WITH INDIAN BUSINESSES THE MOST ENTHUSIASTIC.
Except for Japan, companies from all other Asian countries that are already involved in the Canadian market are looking to expand their engagement in Canada. Japanese companies are split on wanting to expand (43%) and maintain business engagement (47%). For companies not doing business in Canada, 76% from India say that they are either considering or planning to enter the Canadian market. That is true for 68% of companies from South Korea, 56% from Vietnam, 48% from Japan, 43% from China, and 38% from Singapore.
5. ASIAN BUSINESS LEADERS, EXCEPT IN JAPAN, SHARE A POSITIVE VIEW OF THE CANADIAN MARKET, PRODUCTS, AND THE QUALITY OF BUSINESS PARTNERS IN CANADA.
Fifty-one percent of the business leaders from China, India, South Korea, Singapore, and Vietnam believe that Canada is at the technological forefront, as opposed to only 12% of Japanese respondents. Similarly, on an average, 51% and 58% of Asian business leaders believe that Canada is an important supplier of energy and environmentally friendly products, respectively, whereas only 28% and 33% of the business leaders from Japan feel likewise. Concerning product quality, only 19% in Japan believe that Canadian products have a superior price-quality ratio, while 57% in other countries think the same. Lastly, only 16% of Japanese business leaders believe that Canadians are reliable business partners, contrasting with the opinion of 56% of business leaders in the other countries.
6. BUSINESS LEADERS SHARE A FAVOURABLE VIEW ON THE CANADIAN BUSINESS ENVIRONMENT.
Companies believe that all 19 proposed factors related to the Canadian economy are more positive than negative factors for business. The business leaders were specifically optimistic about factors related to networking and in-market knowledge, such as their own knowledge about Canadian business culture (58%) and Canadians’ knowledge about the respective Asian countries’ business culture (55%). Among regulations, mobility of business travellers was considered the most positive factor (52%), and among factors related to the Canadian market, technical or technological knowledge transfers to the respondents’ country (53%) was perceived as the most positive factor.
7. SEVEN OUT OF TEN BUSINESS LEADERS SURVEYED DO NOT UNDERSTAND THE CANADIAN BUSINESS OPERATING ENVIRONMENT. BUSINESS LEADERS NOT INTERESTED IN CANADA IDENTIFY LACK OF FAMILIARITY AND NETWORKS AS THE TOP REASONS FOR THEIR LACK OF INTEREST.
Adding to that list, policy experts note Canada’s lack of value chain role or trade complementarity with the Asian countries, uncertainty following the Canada-United States-Mexico Agreement (CUSMA), and complexities related to Canada’s business operating systems as barriers to business engagement in Canada. The geographic distance from the Asian markets further adds to the complexity of conducting business.
8. DOMESTIC TRADE POLICIES AND REGULATIONS OF THE ASIAN COUNTRIES ON OUTBOUND INVESTMENT ARE VIEWED POSITIVELY BY MOST ASIAN BUSINESS LEADERS.
Respondents from all Asian countries, except Japan, think that their respective country’s trade policies and regulations on outbound investments are more positive than negative factors for doing business in Canada. At the same time, most Japanese companies find their domestic trade and investment policies to be irrelevant factors for Japanese companies to conduct business in Canada.
9. BUSINESS LEADERS IN INDIA AND VIETNAM BELIEVE CANADA’S ECONOMIC RELATIONS WITH THEIR OWN COUNTRY IS PERTINENT FOR THEIR SECTOR.
Respondents indicated the importance of their country’s economic relations for their sector with eight international markets – Canada, the United States, India, Japan, South Korea, Australia, the United Kingdom, the European Union, and Southeast Asia. Among the eight markets, Canada is considered an important economy by 84% of the Indian business leaders and 72% of the Vietnamese leaders. Interestingly, Canada is seen as an important market by only 26% of Japanese business leaders.
10. THE IMPORTANCE OF CANADA FOR ASIAN COUNTRIES VARIES BY SECTOR: ENVIRONMENTAL GOODS AND SERVICES, AND INFORMATION AND COMMUNICATION ARE THE MOST IMPORTANT SECTORS FOR THE COUNTRIES SURVEYED.
Environmental goods and services is the most important sector in Canada for Singaporean businesses and the second most important sector for Japanese businesses. The information and communication sector is the most important sector for engagement with Canada in both Vietnam and South Korea. In Singapore, it is the second most important sector for engagement with Canada. Non-renewable energy and agriculture are also among the most important sectors for engagement with Canada, and top the list for India and Japan, respectively.
11. ARTIFICIAL INTELLIGENCE, TECHNOLOGY, EDUCATION, TOURISM, SERVICE INDUSTRY, AGRICULTURE, AND NATURAL RESOURCES ARE CONSIDERED CANADA’S PRIMARY STRENGTHS FOR TRADE AND INVESTMENT ENGAGEMENT.
Most policy experts believe Canada needs to better promote these sectors to the Asian markets. Indian and Vietnamese experts also call attention to the fact that both countries, which are fast-growing economies, are interested in inward investments from Canada in various sectors including manufacturing, transportation, and AI.
12. PROPOSALS TO EXPAND ENGAGEMENT WITH CANADA GENERALLY DRAW STRONG SUPPORT FROM ASIAN COMPANIES.
Despite some concern that trade relations with Canada will benefit Canada more and may generate pressures on Asian companies and workers, there is strong support for the instalment of measures favouring economic engagement with Canada in all countries except Japan, where there is instead strong opposition to those measures. The low support from Japanese businesses cannot be explained by the concerns mentioned above, but perhaps can be explained by a lack of perceived benefits to economic engagement with Canada.
13. MOST COUNTRIES ARE IN FAVOUR OF NEGOTIATING A BILATERAL FOREIGN INVESTMENT PROMOTION AND PROTECTION AGREEMENT (FIPA) WITH CANADA; HOWEVER, WHILE ALREADY IMPLEMENTED IN CHINA, MOST CHINESE COMPANIES ARE UNAWARE OF THIS AGREEMENT.
Nearly 90% of Chinese business leaders are not aware of the FIPA between China and Canada. Accordingly, less than 4% of companies made use of the agreement. In other Asian countries that do not have such an agreement with Canada, around 50% of the respondents believe a FIPA would be valuable for their company, except for Japanese (9%) and Indian (75%) respondents.
14. THERE IS WIDESPREAD SUPPORT FROM BUSINESSES IN CHINA, INDIA, SINGAPORE, AND VIETNAM TO ENTER A FREE TRADE AGREEMENT (FTA) WITH CANADA.
Entering a bilateral FTA with Canada is supported by 80% and 59% of Indian and Chinese businesses, respectively. Furthermore, Canada is exploring an FTA with the Association of Southeast Asian Nations (ASEAN), and businesses in both Vietnam (72%) and Singapore (63%) support this agreement. In South Korea, where the Canada-Korea FTA (CKFTA) is already in place, 45% of business leaders believe the agreement is beneficial for their company, while only 3% believe it is damaging. Overall, companies in the cleantech and environmental goods and services sectors are the most supportive of an FTA with Canada, followed closely by companies operating in the finance and non-renewable energy sectors.
15. THERE IS A STRONG SUPPORT FOR THE COMPREHENSIVE AND PROGRESSIVE AGREEMENT FOR TRANS-PACIFIC PARTNERSHIP (CPTPP), OUTSIDE OF JAPAN.
Business leaders from Vietnam (62%) and Singapore (53%) think the CPTPP will be beneficial for their companies. Less than 2% believe the partnership will be damaging for their company. Additionally, 67% in Vietnam and 55% in Singapore believe in the importance of having Canada as part of the CPTPP. In Japan, 77% of business leaders believe the CPTPP will have no influence and 82% believe the presence of Canada in the CPTPP is unimportant to some degree.