Ventures Dialogue

“Canada will lose out in the global quest for talent in the knowledge-based economy unless it updates some of its ideas and policies on immigration.“  This is the first line of a bulletin by the Asia Pacific Foundation of Canada, which speaks to two recently published studies about Canada and retaining international talent.  The first, “A Limited Engagement: Mainland Returnees from Canada,” delves into how international student exchanges and overseas education by people from mainland China contribute to the exchanges between Canada and China.  Three main questions were asked.  First, how do the returning students feel about Canada and how they feel about their Canadian educational and work experience?  Second, to what degree do returning students maintain contact with Canada and why?  Is there a pattern that explains this behavior?  Third, what importance is the Canadian experience to the returnee’s life?  

The second study, “Transnational Entrepreneurs as Agents of International Innovation Linkages,” focuses on brain drain or brain loss, the concept in which countries lose their smartest and best educated citizens to other countries which can offer better economic and political lifestyles.  Specifically researched were those innovation linkages of migrating internationally educated mainland Chinese professionals who do business in both Canada and China, but maintain Canada as their base. 

Both studies outline that there are tremendous advantages to engaging foreign talent. However, they also highlight that to benefit Canada as well as their home country, Canada as a whole should be doing more to retain connections with foreign students and entrepreneurs.  Suggestions range from creating a Canada-based innovation and entrepreneurship program to empowering Canadian consulates to better engage the returnees.

Photo by  noticelj

A grant to Ontario based Pillitteri Estates Winery, to study study the viability of icewine in China is now raising eyebrows here at home.

In 2006, Pillitteri received a $108,263 grant from the Canadian International Development Agency (CIDA).  Pillitteri, one of the largest producers of icewine in Canada, collaborated with Xingiang winery in Xinjiang and The Great Wall Winery in Beijing as part of its project.  From this, Pillitteri is soon to sell its icewine under the Xingiang Winery label.  Currently, Pillitteri’s icewine sales in China are around $1 million a year via six agents in the country. 

What has put the winery in the headlines lately, is that CIDA is currently undergoing an audit (and with it, some criticism as well) to determine if CIDA’s funding is going towards the right activities.  For example, one question raised is if its funding should be used in China at all.  Funds are intended to be used to help the poorest countries, and yet China is a quickly emerging powerhouse.   Another question is that are investments in alcohol and lingerie what CIDA should be funding?  Pillitteri, as well as a Montreal underwear and lingerie manufacturer that received $103,000, were two companies singled out in a recent article.    

Charles Pillitteri told the Canadian Press his project is successful and worthwhile as he is not only meeting, but exceeding the goals he set out to do.  His winery spent four times as much as his grant amount, and is set to go beyond his goal of creating 30 jobs in China. He also said he guided his Chinese partners on the hiring of women and other human rights issues.  In addition to this, Pillitteri is instructing his partners on how to make the icewine themselves. 

Since its creation in 1978, CIDA has given over $1 billion to Canadian companies for nearly 4,000 projects.  To date, 972 have been successful.  CIDA remarks that more than $10 billion were invested in “recipient” partner countries, and this in turn has increased the Canadian sales by $6 million.  CIDA’s 2006-2007 report is slated to be released in six weeks, and the auditors are still at work, but there remains questions in the minds of many.  So for now, judgment is left to the court of public opinion.

Photo by by dagmar61

Currently, exported auto parts to China are assessed a 10 per cent tariff rate, however, if these foreign parts account for 60 per cent or more of the value of a completed vehicle, China then charges an additional 15 per cent, for a total 25 per cent tariff rate.  According to Chinese officials, this is looked upon as if the vehicle was imported completely built.  This tariff practice, which China began in 2004, was the subject of a World Trade Organization (WTO) dispute brought forward by Canada, the European Union and the United States.  It will soon change due to a WTO Appellate Body ruling which upheld a previous settlement that this practice violates China’s WTO obligations. 

The case, which began as a request for consultations back in April 2006 with Canada, and separately the EU and US in a joint request in May 2006, argues that China’s policy is putting foreign companies at an unfair disadvantage.  In September 2006, all three countries banded together to request a WTO panel be assembled.  Japan, Argentina, Australia, Brazil, Thailand, Mexico, and Chinese Taipei later joined as third parties. 

China’s argument was that its 40 per cent local content rule was implemented to prevent tax evasion by those who import whole cars as spare parts to avoid paying the higher tariffs.  This was countered by pointing out that this in effect pushes foreign auto part suppliers to relocate manufacturing to China and more so encourages Chinese car makers not to use foreign auto parts.  This brings the dispute process to a close and also marks the first time China lost a WTO dispute.    

Canadian exports to China totaled $9 billion in 2007 and imports accounted for $38 billion.  Between 2003 and 2007, China imported Canadian auto parts on average of $225 million a year. 

Photo by Cape Cod Cyclist

China and Singapore are strengthening economic ties with a free trade agreement (FTA) that will come into effect January 1, 2009 and implemented in a two-phase process.  In this agreement, the first comprehensive bilateral agreement by China with another Asian country,  the two countries also agree to develop simplified customs processes.  The particulars of the FTA are:

• All goods Chinese imports to Singapore should not have customs duties applied to them as of January 1, 2009.
• More than 85 per cent of China’s imports from Singapore (complying with Origin criteria) should not have customs duties applied to them as of January 1, 2009. Some local excise duties will apply on certain goods.
• About 95% of China’s imports from Singapore (save for 260 products) should not have customs duties applied, “tariff-free”, by 2010.

Goods are eligible under the program if they are wholly obtained or produced in China or Singapore.  If they are not, then they must comply with one of three rules:  1) Regional Value Content Rule; 2) Cumulative Rule of Origin Rule; 3) Product Specific Rules. For more specifics about the rules and the FTA, check out briefing this from Deloitte, as well  the news release from the government of Singapore.

Last year, bilateral trade between China and Singapore hit a record of more than $76 billion.  China ranks as Singapore’s third largest trading partner and the major market for investment.  Singapore as well is China’s eighth largest trading partner and seventh largest investor.

Photo provided by toesoxluver

Clear skies at the Beijing airport lets you see how impossibly far the airport structure curves off into the distance

Carla Kearns has been posting a series of observations made during her visit to both Hong Kong and the Hong Kong Forum. She continued her journey on to Beijing.

After arriving in Beijing on Saturday, I joined up with the Canada China Business Council (CCBC)’s high profile delegation to China on Monday at the gala launch.

Before I report on the events of that day, several minor items impressed me upon arrival at Beijing’s newly opened airport.  First, I was shocked by the clarity of the air.  I knew there were mountains surrounding Beijing, but I had never actually seen them.  Second, I was astounded by the vast scale of the airport; which was so immense that it was like gazing at an optical illusion.  In Hong Kong, one of the speakers noted that the world’s greatest cities achieved premier status, not because of their economic or political power, but because they are important transportation hubs.  The Chinese government seems to have spared no expense to position itself as one of the greatest modern cities. Later I learned that it is in fact the world’s largest roofed structure.

Back to business. After an adventurous Sunday at the Simatai section of the Great Wall (and an equally adventurous time finding a cabbie to take us there), I arrived at the Kerry Hotel first thing Monday morning to join the CCBC events of that day.  This day marked the gathering of some of the highest profile Canadian delegates to China in years, including: four provincial Premier delegations, an official delegation from Quebec, the Canadian Manufacturers & Exporters mission and many of Canada’s top industry leaders. All had convened in Beijing for this important trip.

In stark contrast to Hong Kong, the urgent concern for those in attendance was NOT the global economic crisis.  Although China will be affected along with the rest of the globe, the impact on GDP is expected to result in 8% growth, rather than the recent 10% it has seen for more than a decade.  Not too shabby. Continue reading ‘Beijing diary — opportunity everywhere’