Canadian business optimistic about potential in China: Export representative

OTTAWA - Canadian business is punching below its weight in China, and should tap the potential in second and third-tier cities to expand presence there, a Canadian trade representative has told Xinhua.

"I think Canadian companies are still very conservative... We are not aggressive enough in promoting ourselves" in China, said Chia Wan Liew, Export Development Canada (EDC)'s chief representative for the Greater China area.

There are currently over 1,000 Canadian companies doing business in China, more than 600 of them supported by the EDC, the country's export credit agency which offers trade finance, export credit insurance, bonding services and foreign market expertise, Liew told Xinhua in a phone interview from Hong Kong.

Canadian companies are faring well in China, he said, citing aerospace and transportation giant Bombardier and leading automotive supplier Magna which "currently have about 40 operations" there.

"There are some food companies from the maritime provinces that have experienced exponential growth bringing their products into the country," he said.

But "a lot of multinationals tend to converge" in first-tier cities like Beijing, Shanghai and Shenzhen, making the game there extremely tough, he said. "Even among the big multinationals they are tramping over each other."

"Then the second and third-tier cites are very, very big and present a lot of potential," he said.

"Look at the second and third-tier cities that are upcoming -- cities like Chengdu, Wuhan, Chongqing and Hangzhou. These are all very good cities," he said, adding that those cities are by no means small, with 15 million people upwards.

Out of his five years as EDC's trade representative and eight months in China, Liew viewed China as a place where business is conducted uniquely in many ways.

"Relationship is so important. You need to invest up front, making sure that you nurture the relationship (and) gaining the trust of your business counterparts here in China," he said.

"They prefer to deal with business partners in person," he said, adding that "social media is also a very important part of doing business here."

Chinese companies expect their foreign partners to have staff that are proficient in Mandarin, he added.

China and Canada plan to double their bilateral trade volumes during the decade from 2015 to 2025. China remains Canada's second largest trade partner, second largest export destination and second largest import source for years.

To keep the momentum, Liew suggested Canadian companies should mind more legal and geographical frameworks as they angle for better business in China.

Liew raised a "legacy issue," saying that "Canadian companies have been very comfortable doing business with our neighbor in the south."

"Over 75 percent of our exports went to the United States for decades," he said.

However, Canada and the United States, along with Mexico are stuck in contentious renegotiation of the North American Free Trade Agreement (NAFTA) as US President Donald Trump has threatened to withdraw from the 24-year-old deal if Washington doesn't get bigger benefits from it.

"Canadian companies are just starting to realize that they have to be serious about diversification, and look beyond the shore of North America," said Liew.