The Canada China Business Council has announced the results of its 2019-2020 Business Impact Survey examining the impact of bilateral tensions on Canada-China business in 2019. Conducted in partnership with the Rotman Institute for International Business, the survey fielded from February 20 to March 14, 2020, and generated 282 responses. The survey reveals that three main factors affected Canada-China business in 2019: Canada-China relations, the US-China trade war, and economic developments in China, with COVID-19 becoming a significant impediment to business in early 2020.

Survey results reveal that Canada-China business was markedly impacted in 2019, with 43% reporting business was down following a record year for trade with Canada’s second-largest trading partner in 2018. Key differences were apparent across sectors, with business up for 22% and stable for 34%. Respondents reported an overall greater cancellation and postponement of travel, disruption to business development, interruptions to signing deals and contracts and, in some cases, decreasing demand for products and services.

Two other factors – economic developments in China and the US-China trade war – also affected industry disproportionately. Where some Canadian companies were met with unprecedented challenges, others found new business opportunities. Industries that aligned with China’s economic goals reported more positive business results, and while some Canadian firms suffered bans or tariffs, others won business that may have originally belonged to US competitors.

Overall business outlook in 2019 remained largely positive, with 43% of respondents claiming optimism about the future of their organizations’ Canada-China business. Nonetheless growing uncertainty has led 33% of Canadian respondents to make China a lower priority in their global plan, with 5% exploring opportunities in other countries. This finding speaks to the wearing down of companies managing multiple challenges in maintaining their Canada-China business.

In the wake of the bilateral tensions, survey results show that the majority of respondents feel the Canadian government strategy with regard to China has not been clearly communicated. Survey feedback reveals a clear call from organizations for a specific Canadian government strategy to help alleviate the impact of challenges weighing on Canada-China business while helping to dispel uncertainty, provide direction and better position Canada-China business to succeed and grow.

COVID-19 began affecting Canada-China business in January, and respondents largely predicted long-term negative effects on business. Now as China leads the movement to go back to work, Canadian companies working with China are already active in economic recovery. As China gets back on its feet before the rest of the world, business opportunities in China may be more attractive, and Canadian companies should be poised to make the best of those opportunities.

“China’s middle class continues to increase its consumption of imported products. Looking forward, Canada’s ability to benefit from China’s growth will be aided by a removal of the challenges highlighted in this survey. Survey respondents were emphatic in their call for support via a clearer Canadian government strategy for China, which echoes the conclusions of our 2019 survey, where respondents felt that both governments were equally responsible for diffusing the bilateral tensions caused by the detention of citizens of both countries,” says Sarah Kutulakos, Executive Director of the CCBC. “For the situation to improve, we need a strategy that is in Canada’s best interests, one that allows Canada to thrive and to leverage the economic opportunities that China’s market growth brings.”

“Canada remains a long-term non-political supplier of high-quality goods and services to China,” says Graham Shantz, President of the CCBC. “China is a key, growing market to diversify Canada’s economic interests. China’s government is currently working on its next five-year plan and other key target documents. Canadian companies and educational institutions and governments need to be ready.”

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