Canadian Companies in China: Market Realities and Strategic Outlook

In early November, CCBC organized a roundtable with more than 10 executives from Canadian companies working in China to discuss opportunities, challenges, and the evolving business landscape for Canadian companies in the market. Representatives from seven member sectors participated, providing a broad perspective on the realities they are facing in China. Below are some of the key insights provided by our members.

Opportunities: Talent, Market Scale, and Consumer Growth

Members consistently emphasized China’s distinctive advantages in both talent and market scale. The country offers unparalleled access to highly skilled professionals, particularly in advanced materials, manufacturing, and other technical sectors where alternative markets often lack comparable expertise. This depth of talent remains a critical factor supporting the international competitiveness of Canadian companies.

Market potential is another major driver. China is projected to become the world’s largest aviation market, potentially capturing 30–40% of global demand, with similar growth trajectories expected in the automotive and rare earth sectors. Despite ongoing macroeconomic uncertainties, and geopolitical headwinds, China remains an essential market for scale and global competitiveness.

Consumption growth also appears to be stabilizing. A CCBC member said that their data suggest that Consumer spending in China could rise by 5–15% this year across a broad range of product categories. A growing middle class, combined with government measures aimed at stimulating domestic demand, has contributed to a renewed, albeit cautious, sense of optimism among members that the most challenging phase of the economic cycle may have passed. Improvements in the core consumer price index similarly suggest easing deflationary pressures, coinciding with targeted policy interventions.

These views align with conversations held with representatives from other foreign businesses and chambers in China. Many foreign firms characterize China as a “fitness club”, a challenging but essential environment where companies can test their capabilities and strengthen their overall performance.

Challenges: Government Support, Communication Gaps, and Geopolitical Pressures

Companies continue to face notable challenges. In recent years, members have observed that Canadian federal government’s support for commercial activity in China has been limited, leading to a more cautious approach and fewer opportunities for bilateral engagement or routine commercial interactions. In some instances, companies reported having to forgo major opportunities, occasionally valued in the millions or even billions. These concerns, also reflected in our most recent business sentiment survey, have resulted in frustration among many business representatives of Canadian companies in China in recent years. Nonetheless, the business community sees the renewed focus of Prime Minister Carney’s government on economic and trade development as an important opportunity to re-establish more consistent commercial engagement.

Internal dynamics within firms have also evolved. Many companies have regionalized their Asia operations, relocating leadership teams to alternative hubs. Although often part of global restructuring, this shift has unintentionally distanced some decision-makers from day-to-day realities in China and reduced headquarters’ visibility into opportunities identified by local teams. Heightened geopolitical tensions and negative public sentiment in Canada in recent years have further complicated executive travel and engagement, creating openings for competitors. These factors have increased the complexity local teams must navigate.

While some companies have adjusted their local footprint in response to softer economic conditions, members emphasized that these moves reflect strategic realignment rather than any intention to withdraw from the market. Positive signals around renewed bilateral engagement have been welcomed by teams in China, and with the increase in flight capacity between Canada and China, these will lead to more executive visits in 2026. As competition intensifies both domestically and globally, Canadian firms will benefit from developments that help alleviate existing challenges. As one executive noted, “Risk is inherent in global business. Our role is not to avoid it, but to understand, manage, and integrate it into our strategies to remain competitive and continue to grow.”

Policy and Regulation

The policy and regulatory landscape in China continue to evolve rapidly. Recent adjustments, including changes to rare earth policies and new export controls, require careful navigation. Members noted that their local teams have responded with pragmatic, solutions-oriented strategies, balancing advocacy with the exploration of alternative operational pathways to ensure both compliance and business continuity. On the rare earth front, several members expressed satisfaction with the progress observed in their applications to date.

Refinements to China’s data regulation framework have also made compliance more manageable, though companies still seek greater clarity regarding evaluation criteria and implementation. Many firms have addressed remaining challenges by forming joint ventures with local partners, enabling them to access clients while reducing the regulatory burden associated with foreign-entity data requirements.

Looking ahead, outcomes from the Fourth Plenum signal important priorities likely to shape the operating environment for Canadian businesses over the next five years. These include a shift in China’s investment paradigm, from an infrastructure-driven model to one that places greater emphasis on human capital, opening new opportunities in the services sector. The focus on “new quality productive forces” is expected to support innovation-led growth, while policies aimed at increasing consumption’s share of GDP may drive notable regulatory changes in related sectors. Additionally, China’s intensified efforts to address overcapacity are expected to have a positive impact on trade flows and market stability.

CCBC will continue to monitor these developments closely and support members in assessing how these evolving priorities may influence their strategies in China.