Beijing's anger since December at the detention on an American warrant of Meng Wanzhou, chief financial officer of Huawei Technologies, has drastically changed the atmosphere for Canadian businesses operating in China.
With Meng remaining under house arrest pending her extradition to the U.S. to face charges of bank fraud involving alleged company dealings with Iran, Canada is stuck inconveniently between the world's two most powerful nations.
The diplomatic tensions between Beijing and Ottawa have led my peers and me to question the costs and benefits of doing business in a country like China.
According to a survey published this week by the Canada China Business Council, 53% of Canadian respondents have modified their China business plans due to the changed environment and nearly as many said they have postponed or have been considering changing plans to travel to China. Almost one in five companies said they had had contracts or investment deals delayed or canceled and had experienced a drop in demand from China.
Until recently, it had seemed we Canadians had a golden ticket for China trade and were immune from political disturbances in our relationship with the country. The rise of e-commerce in China had been a particular boon for producers of food and other consumer goods sending their products across the Pacific.
From my impressions, the vast majority of Chinese still hold Canada in high regard. Many Chinese have told me that what happens on a political level has nothing to do with a country's people and businesses. Indeed, since the crisis over Meng's detention emerged, Canadian consumer brands have continued to fly high in China.
Canada Goose, a prominent brand of winter wear, opened a flagship store in Beijing later the same month Meng was arrested. For days, shoppers lined up to buy its famous coats. Coffee shop chain Tim Hortons got a similarly warm reception when it opened its first Shanghai outlet in February.
In my view, Chinese consumers want to buy brands they believe in, regardless of political circumstances. Unfortunately, they do not always get the chance.
Canadian companies shipping out canola oil, soybeans and pork to wholesale customers have suddenly experienced major difficulties in recent months in getting their goods through Chinese customs. These troubles emerged after two Canadian businessmen were abruptly detained by the authorities.
To this day, although I have faced numerous challenges as a Canadian entrepreneur living and working in China for most of my adult life, I still believe the opportunities in the country are bigger than the inconveniences. My company and I have felt no direct impact from the recent political developments between Beijing and Ottawa, save for the cancellation of a few official, government-related events.
I have been distributing Canadian liquor in China for more than 10 years, counting on the economic trajectory that suggests there should be more people in a few cities there than in all of Canada who might be willing to pay for premium products. Building on my experience, two years ago I launched my own dessert wine brand in the country.
China is indeed one of the most hostile markets in the world for entrepreneurs for reasons we all know too well: the fluid interpretations of business agreements, the copycats, the cultural barriers and more. But despite such difficulties, for companies from Canada as much as anywhere else, hundreds of millions of potential new consumers simply cannot be ignored in a present-day business plan. Notably, according to the Business Council survey, two-thirds of Canadian companies active in China still plan to expand their operations in the coming five years.
Indeed, the international media has overinflated the risks of continuing to do business in China amid the current situation. To be on the safe side, though, it is always important to carefully follow local laws and regulations, now as much as ever. Canadian entrepreneurs, however, are not willing to sell our souls just to do business in a country and will stick to our values.
As complex as it is, our political leaders must resolve the current situation as quickly and as smoothly as possible, bearing in mind the value of the China market for Canada's economic future. Chinese interests in Canada are also vast.
It is to be hoped that business and politics can be separated to the maximum extent possible. I am grateful to the Chinese government for how much they have opened their markets to Canadian entrepreneurs so far. Prime Minister Justin Trudeau's efforts to nurture a more intimate relationship with China and pave the way for a free trade agreement are also to be applauded, even if not fruitful as yet.
All the tools are at hand to make this a new era of profitable trade between Canada and China. Let us hope for the best on a diplomatic level so that a new generation of Canadian and Chinese entrepreneurs can benefit from the full potential of prosperous relations between our nations.
Louis-Olivier Roy is the founder and president of Soon Spirit, a Canadian liquor made from ice wine and marketed in China. He also acts as a consultant to Canadian companies about China sales.
