Doing
Business in China
Remarks by
David Kilgour,
Secretary
of State for Asia-Pacific and M.P. (Edmonton
Southeast)
to the China-Canada
Business Association, the Cathay Community
Foundation, and the Canadian Chinese Professors
Association Holiday Inn Express
September
12, 2002, Edmonton
As some of
you know, I recently returned from a visit
to China. Let me share some of my observations.
Shanghai:
Shanghai has regained its place among the
world’s commercial capitals and is
becoming the epicentre of Canada’s
economic relations with China. What struck
me from the start was the glittering skyline
which was only a wild dream ten years ago.
In many ways, the skyline was predestined;
the very first skyscrapers in Asia were
in Shanghai’s Bund. In fact, since
the implementation of the reform and opening
policies of Deng Xiaoping in 1979, we have
since seen a renaissance of commercial life
in a city cut adrift from the business world
for the better part of thirty years.
Guangzhou:
While in Shanghai, I visited Nanjing and
Suzhou, and then made my way to yet another
captivating city - South China’s Guangzhou.
Guangzhou opened my eyes to the opportunities
for economic prosperity and growth in the
country. It is a vibrant city. My only regret
is that we couldn’t spend more time
there.
Shenzhen:
Finally, there is Shenzhen, the earliest
and most successful of the five Special
Economic Zones set up twenty-two years ago
by the Central Government. How many of you
would know that the combined economies of
Guangzhou and Shenzhen are greater than
the economies of Shanghai and Beijing? I
certainly didn’t. It is truly a wonder,
having transformed itself from a fishing
village of 300,000 in 1980 to vibrant metropolis
- and a leading high tech centre - with
a population of 10 million in 2002. Now
that’s progress!
A word about
9/11. Like all of you, I know exactly what
I was doing at 6am Alberta time a year ago;
attending a Special Assembly of the Organization
of American States in Lima Peru as a follow-up
to the Quebec City Summit. Representatives
from 34 OAS countries that morning passed
unanimously a Democratic Charter about an
hour after the collisions in Manhattan,
Washington and Pennsylvania.
Many of us
there thought the American Secretary of
State Colin Powell would leave immediately
but after a dignified statement to the delegates
he said he would not leave until the Charter
had been adopted.
A lot of
both wise and foolish things have been written
and said about 9/11. I understand that an
estimated 1500 books about the events of
the day have been published in the U.S.
but only one in Canada, Canada and September
11th: Impact and Response. Let me make only
a couple of comments for your consideration:
Charles Kraht
Hammer in Washington DC wrote in the National
Post that the 9/11 events did not change
the American national character. Instead,
it forced “the emergence of a bedrock
America of courage, resolve, resourcefulness
and, above all else, resilience…how
many thought that sheer resolve, fearsome
technology, heightened vigilance, brute
force, and a dragnet stretching from Yemen
to the Philippines would make the enemy
the hunted and give us all a year of respite.”
Our 23-year-old
daughter Eileen wrote to our family last
December from Thailand that the year 2001
was one where poverty, violence, HIV/AIDS
had worsened.
The good
news in Canada according to some is that
apart from some isolated and unfortunate
incidents, our commitment to respecting
diversity, inclusivness and human dignity
have all gone up.
We started
our visit in Guangzhou with a presentation
by our Consul General, Paul Lau, on the
opportunities in South China, entitled "The
Pearl of China." As I mentioned while
I was there, I've never thought of a city
or region as a pearl, but there seems to
be no better way to describe this incredible
place!
To borrow
a few stats from Paul Lau, it ranks #1 right
across the board #1 in trade volume, #1
in trading history, and #1 in foreign direct
investment. It is the wealthiest region
of China.
With a population
of 165 million a full 13% of China as a
whole it is an incredibly important regional
force. Total imports and exports in and
out of this region total $220 billion a
year (CAD), representing 40% of China's
total. Foreign direct investment to the
region is higher still a staggering $220
billion (CAD). Not surprisingly, the region
is leading the country in terms of disposable
income and economic growth.
Canada-China
Relations
Canada’s
strategy has been to follow a balanced constructive
approach to our relations with China. This
‘constructive engagement’ or ‘quiet
diplomacy’ has been particularly effective.
In addition, the ‘people to people’
links between China and Canada bring our
countries even closer together. Because
these ties are harder to define than trade
statistics, this element of our relationship
is sometimes overlooked. Yet, on the immigration
front, China is our largest single source
of new Canadians. Moreover, students, academics,
and administrators on shortterm exchanges
form a ‘humanbridge’ that brings
us closer still. Chinese university students
alone now number more than 20,000. CIDA
estimates that more than 47,000 Chinese
have come for shortterm learning stays since
1982.
Let’s
look at our record. In 1960, Canada made
its first grain sale to China. It was an
act that would help to end China’s
isolation. In 1970, we became one of the
first Western countries to establish diplomatic
relations with China. There was disengagement
after the brutal suppression in Tiananmen
Square in 1989, but since 1992, we have
gradually but consistently escalated our
re-engagement, and much of the credit must
go to you.
The result:
·
In 2001, China was Canada’s fourth
largest trading partner, with total bilateral
trade of $17 billion, an increase of 13%
over 2000.
·
Over 400 Canadian firms are established
in China with more than 4,500 projects funded
with Canadian dollars.
·
Chinese firms are also sending money to
Canada and creating jobs for Canadians.
For example, the ‘China World Best’
investment in Drummondville, Quebec created
300 new jobs alone.
Canadian
Companies – Leaving Their Mark
The interest is clear: with our Department’s
support, the Canada China Business Council
recently opened three new offices in China
to support further growth. As we saw in
Shanghai, Suzhou, Guangzhou, and Shenzhen,
Canadian companies are leaving their mark.
We saw first-hand how investment energizes
cities, fuels local economies, and stimulates
growth. In many cases - and Suzhou is a
great example - Canadian companies are creating
local jobs. A Canadian manufacturing company
in Suzhou, for example, which I was fortunate
to visit while I was there, went from a
few employees to over 1000 in just a few
years, with plans to reach 3000 by the end
of next year!
Canadian
firms, however, are not only establishing
manufacturing bases; they’re also investing
in R&D. In Guangzhou, for instance,
there is Nortel's centre at Zhongshan University,
which has grown from just a few to about
200 mostly young staff within just a few
years.
It’s
not just large institutions, however, that
are reaping rewards. My office recently
spoke with Ron Drews of Orbital Media Group
from Ottawa who was involved in organizing
the Shanghai International SME Trade and
Economic Conference that took place in Shanghai
at the end of August. It was the first of
its kind in China and is expected to be
an annual event. Ron tells us that the conference
was organized with significant support and
interest from various facets of the Chinese
government and that, in China, the next
wave of development is expected to be driven
by small and medium sized enterprises (SMEs).
This event alone attracted some 500 registrants
along with dozens of high-ranking officials
from municipalities, provinces and special
economic zones. The sectors addressed included:
finance and investment, processing and manufacturing,
ICTs, medicine and life sciences, education,
agriculture, tourism and transportation.
All this
is to say that for many of you - whether
you’re small or medium sized businesses,
sole proprietors or just people with ideas
- you don’t have to be a Manulife or
Nortel to succeed in China. The opportunities
are there. It’s up to you to take them!
A Changing
Economy – The WTO
As business
leaders, you all know that success in China
requires a few key things - you need a cool
head, a strong business plan, good “Guanxi”
and perseverance. You also know that the
landscape is changing, most notably by China’s
accession to the WTO. Let me touch on
a few points that I also raised in China
about the significance of China’s entry
into the WTO.
By most accounts,
it will revolutionize commerce and trade
with and within China. Some things, however,
will not change, and these are perhaps the
possibilities that you might want to explore.
Shanghai, for example, will continue to
play a special role as a testing ground
for further innovation and reform. In fact,
earlier this year, Shanghai’s Mayor
told the Shanghai People’s Congress
that Shanghai will take full advantage of
the new liberalizations stemming from accession
to the W.T.O. to attract foreign investment
in the financial sector to promote the establishment
of Sino-foreign financial companies.
I am also
curious to hear your own experiences ‘from
the trenches.’ What has the accession
meant for you? Are you satisfied with the
pace of change? What about transparency?
Perhaps coincidentally, transparency is
front and centre on many business pages
in North America as well. As the recent
accounting scandals show, strong economies
require confidence and trust. Will the lack
of transparency in China be a stumbling
block to sustained economic growth?
A Changing
World – Recent Trends
As people who follow global trends, you’ll
also know that we are in the midst of a
massive shift in the way we communicate,
live, work and learn, and the way we do
business and trade. You've heard all the
buzzwords "wireless"; "ecom"; "the
power of the Internet";
"globalization";
"the global village." We hear
them so often, that it's easy to dismiss
them, but they really are revolutionizing
how we do business and live.
And they're
picking up speed. In China, for example,
the number of cell phone users is increasing
at a rate of 5,000,000 a month! Technologies
converge. New markets emerge. Mergers and
acquisitions are a commercial "way
of life." Companies are restructuring,
and entire industries are cooperating. Trade
barriers are giving way to trade integration.
The monopolies and stateowned enterprises
of yesterday are being toppled by competition,
efficiency and privatization. In short,
innovation and globalization are making
the world a smaller and often better place
¼¼ and significantly reshaping
our social, economic and political landscape
in the process.
For business,
this translates into exponential opportunities
for foreign investment, global partnerships,
joint ventures, trade. But there's also
the human element something often forgotten
which, in the bigger picture, is even more
important. Allow me, for a minute, to challenge
each of you to try to see things from a
global but human perspective.
Beyond the
Bottom Line
Please don't fall into the trap of thinking
only of profits, return on investment or
the bottom line. As I mentioned when I was
in China, regardless of where we live, we're
all in this together -- all six billion
of us. Whether we're from Edmonton, Shanghai,
Saskatchewan, Guangzhou, Islamabad, Tokyo,
New York or Rome, when it comes down to
it, most of us want the same things happiness;
health; good education for our children;
to be appreciated for who we are; to be
treated with dignity and respect. I encourage
you, as key business leaders, to watch for
the opportunities to help your sisters and
brothers around the globe.
In China,
this could mean taking investment west to
help jumpstart the region that needs it
most. It could mean creating "people
to people" links, particularly in the
areas of education and the arts. Consider,
for example, building educational bridges
anything that brings our youth here and
China's young people to our home. Lend support
to organizations like Junior Team Canada
to bring a Junior Team China to Canada.
Be creative. Think outside the box!
A young pianist
from Western Canada, Martin Mayer, recently
finished a 15 city tour of China. Next year,
theatres across China will open to "Dracula,"
courtesy of the outstanding Royal Winnipeg
Ballet. Cultural exchanges like these inject
life into our relations and corporate sponsorship
and support are often key
In Closing
The Canada-China relationship is strong.
The challenge is how to build on this strength.
That’s where all of you come in –
each of you and the companies you represent.
Each of you have your own experiences and
views on how best to succeed in Canada and
China. If our hosts will permit it, I would
like to take this opportunity to open the
floor and listen to you.
Permit me
to end, though, by assuring you that I am
personally committed, as a friend, to helping
Canadians help China. China is incredibly
important to each of you here. It is also
enormously important to Canada.
Thank you,
again, for the opportunity to address you
today. I’m looking forward to hearing
about some of your own experiences and views.
Thank you.
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