Relations with China have been more difficult for Quebec business people in recent years. But usually not for the reasons we think, they say. And only temporarily, we hope.
According to the latest news, China was still Quebec’s second largest export market, with more than 3.5 billion Quebec goods purchased in 2022, far behind the United States (85.5 billion), but well ahead of Mexico. (2.2 billion), reports the Statistical Institute of Quebec. This performance was comparable to the best years that Quebec exporters had experienced in China until 2019, but marked a second consecutive decline compared to 2020 (4.8 billion) and 2021 (4.2 billion).
Conversely, imports of Chinese products into Quebec continued to increase, rising from $12.6 billion in 2020 to $15.6 billion last year, compared to $43 billion of goods from the United States and $6 billion from the Mexico.
Like many other economies, Quebec mainly imports electrical and electronic products from China, but also batteries, furniture and toys, among other things. In exchange, he sells him iron ore, agri-food products and part of the production of his aerospace industry.
Not what we believe
The general trends on the front of Quebec exports to China are very similar to what happened in the sector of choice of Martin Lavoie, the CEO of the Groupe Export agroalimentaire Québec-Canada, the largest association of exporters. in the field with more than 500 members. Here too, we quickly went from record sales of 1.2 billion in China in 2020 to a more usual level of 455 billion last year.
We remember that in the wake of the arrest in Canada of the daughter of the founder of the Chinese telecom giant Huawei, Meng Wanzhou, and of two Canadians in China, Michael Spavor and Michael Kovrig, the Chinese authorities had suddenly found all kinds of health reasons to block pork, canola or soybeans from Canada at the border.
But that was in 2018 and 2019, recalls Martin Lavoie. Then there was the African swine fever, which decimated the Chinese herd and caused an explosion in demand for Quebec pork for a year or two. On the other hand, there has also been the COVID-19 pandemic, of course, and its attendant health rules that have prevented business people from meeting, not to mention the supply chain problems that have increases the cost of transporting goods.
“There is nothing in business that beats direct and personal contact,” explains Martin Lavoie. The pandemic has come to widen the distance between us. We are happy, on both sides, to be able to start meeting today. »
We have the same story with the Bureau de promotion des produits du bois du Québec. It is true, says one of its directors, Sven Gustavsson, that Canadian lumber exporters have ceded significant market share to their Russian competitors in China. But this decline has been ongoing since 2015 and is mainly due to factors that have nothing to do with geopolitical issues, such as the end of forced logging and the massive export of timber in British Columbia due to a disease that struck the trees, or the closer proximity of the Chinese market for the Russians and the American market for the Canadians.
There too, it is said to have suffered from a lack of direct contact for several years. It was the fault of the fears raised by the affair of Meng Wanzhou and the two Michaels, but above all of the pandemic. We have just begun to reconnect on the occasion, for example, of the famous Montreal Wood Convention last April. “There were slightly fewer Chinese visitors than usual, but the conversation was quickly the same, says Sven Gustavsson. When business people meet, barriers fall quickly, and they talk about what’s important to them. And it’s not politics. »
Too important to ignore
The Chinese domestic market has become too large and Chinese companies have become too important in certain sectors for business people, in Quebec as elsewhere, to want to do without, we repeat.
This is also the opinion of Carl Breau, who has a foot in every world. Owner of an electronics factory in China (Saimen) and another of LED billboards in Quebec (Nummax), the Quebec businessman married a Chinese woman and lives with his family in Shanghai.
According to him, the economic relations between his two homelands are unnecessarily paying the price of the war of influence in which the American and Chinese giants are currently engaged, because Canada is often lumped together with its neighbor. The tendency of some media to escalate tensions with Beijing does not help either. “In China, I think business people have learned to take all these stories with a grain of salt. On the ground, I don’t sense the supposed hostility of the Chinese towards Canada. Zero. In Shanghai alone, there must be, for example, maybe 80 Tim Hortons restaurants, with their big maple leaf and crossed hockey sticks. We can’t do more Canada than that. »
Which is not to say that doing business in China is easy. Of course, there are more delicate economic sectors, such as defence, computer security and telecommunications infrastructure, where foreign companies on either side are generally not welcome. And then there’s the geographic and cultural distance that has widened with the pandemic and political tensions, especially for SMEs, which rely heavily on government-organized trade missions to forge ties so far from home.
“The Chinese economy has become much more sophisticated and competition is generally much stronger there than in Quebec, to the point, sometimes, of being cutthroat. Like everywhere else, you have to be careful and do your homework. »
But once the first barriers have been crossed, Quebecers often find business partners to whom they feel closer than they would have thought, closer even than their usual American partners, says Carl Breau. “Like us, the Chinese value win-win business relationships over dominance. »