By Michael Darch
The second day of the Consider Canada City Alliance investment and trade mission to China focused on investment attraction. A morning session in Hong Kong consisted of one on one meetings with potential investors and an afternoon roundtable discussion was held with Norton Rose lawyers from Hong Kong, Beijing, Shanghai and Canada.
In our Sunday meetings with the Minister of International Trade and the Minister of industry, and with the Canadian Consulate, it was confirmed that Hong Kong continues to be a major centre for outbound investment. This is not only for Hong Kong investors but also for Mainland China and other Asian investors. The money and opportunity are there, the challenge is finding suitable investment vehicles and investments that provide appropriate value.
More sophisticated and experienced Chinese investors are identifying and executing projects directly. With the push by the Chinese government for increased outward investment and inward trade, there exists a growing number of small and medium enterprises looking to the international market. This sector is less experienced in global markets and is looking to trusted intermediaries to reduce risk.
Our morning session involved some 80 meetings between our members and investors. Having brought projects, the talk was not general but about specific opportunities. Getting participants to move on to their next meeting proved difficult, and is always a good sign. The people in the room were a mix of investors and intermediaries acting on behalf of investors. Several of our earlier observations were quickly confirmed. The opportunity is real, the money is there and these are not tire kickers. Given the global financial crisis, there is concern over finding investments that add value at acceptable risk levels. Hong Kong’s historic strength in financial transactions is making it a service centre for Chinese outbound investment.
The discussions at Norton Rose were extremely valuable to our members. We were talking to individuals who had done it. They have clients involved in a wide cross section of sectors, countries, size of companies and size of deals. The discussions were animated and intense. More proof was given to our earlier observations, but a new reality emerged.
Canada has many strong points: our sound financial system; a highly skilled work force; plentiful natural resources; strong research and development and a positive immigration system. Good that we know it, but does our market know it? Unfortunately, the answer was no. The global competition for investment is intense, the market is crowded and we have to continue to work to hard to get our message out.
As we left Hong Kong for Shenzhen, the education was invaluable. Our veterans gained greater understanding of the evolving role of Hong Kong in Chinese outbound investment. For our rookies, their heads were spinning from the crash course on Chinese investment. For Canadians looking for a better understanding, the Hong Kong Canada Business Association annual forum in Ottawa on June 14 is a must.
(Michael Darch is the founding President of Consider Canada City Alliance Inc.)