Mapping Networks of Innovative Clusters Between China and Canada

Although there is a very large Chinese immigrant community in Canada, economic linkages between the two countries are still quite limited. In this report, we examine the patterns of Canadian investments in China at the cluster and city-region levels, and the process through which Canadian firms acquire, mobilize, integrate, and generate knowledge through investment networks.

We find:

1. Canadian investments in China are structurally different from the trade patterns between the two countries. In trade, comparative advantages of the two countries generate resource exports to, and manufacturing imports from, China. However, in investment flows, industries such as telecommunications, finance, automobiles, and mining dominate – areas in which both China and Canada have developed international competitive strengths that generate strong innovation and knowledge creation.

2. In knowledge-intensive industries, a distinct pattern of Canadian cluster firms investing in similar cluster areas in China can be identified. This generates global cluster networks for transnational learning and innovation. It should be noted, however, that fewer investments across clusters have occurred since the peak of the global financial crisis in 2009.

3. Many Canadian firms are still in a relatively early stage of building knowledge networks in China, and are focused on the process of acquiring market information and knowledge about business practices. Only a few Canadian firms can be identified that have entered a mature stage of knowledge creation between the two countries.

4. Public knowledge facilitators, such as governments and business associations, along with private knowledge facilitators, such as consulting firms, law firms, and banks, play crucial but different roles in supporting Canadian investments in China. While public facilitators tend to provide general information and make referrals, private facilitators leverage specific knowledge and expertise across borders.

We recommend:

1. Develop stronger communities of knowledge facilitators. This involves nurturing a larger group of individual facilitators and promoting communication and collaboration among organizational facilitators.

2. Upgrade knowledge networks. This includes designing policy programs to provide detailed information about the changing Chinese economy, to develop platforms for sharing experiences and expertise among investing firms, and to mobilize the knowledge bases of transnational immigrant communities in Canada.