06 July 2017

What China’s growth and infrastructure strategies mean for Canadian companies

Ongoing reforms are making it easier than ever for Canadian companies to do business in China and seize Belt and Road Initiative (BRI) opportunities

The Belt and Road Initiative is a massive infrastructure project that, when finished, will link China to the Middle East and Europe through overland and marine trade routes, boosting cross-border capital and trade flows. The initiative is expected to generate more than USD 2.5 trillion in trade a year over the next decade.

Dan Leslie, Senior Vice President & Deputy Head of Commercial Banking, HSBC Bank Canada, highlights the opportunities presented by BRI and China's Five-Year Plan, and asks an important question: Can Canadian companies benefit from China's bold strategies?

How does BRI fit into China's Five-Year Plan?

China's key initiatives that are driven by its Five-Year Plan focus on urbanization, consumption, healthcare spending and infrastructure. Infrastructure represents the biggest initiative, in particular with BRI calling for the building of roadways, railways and ports in China and more than 65 other countries.

Can Canadian companies benefit from BRI?

The answer is `yes.' BRI is a relatively recent initiative  - currently only one in five Canadian businesses is aware of it  - but it presents great opportunities for companies looking to increase trade. Recent and continued reforms are making it easier for foreign companies to invest in China. Today, foreign companies will find it easier to access funding in China, and they are now subject to the same licensing rules that apply to local companies. For Canadian companies, these reforms have made it easier than ever to establish and grow their business in China.

What sort of BRI projects could Canadian companies aim for?

There are engineering and architectural services opportunities that are directly tied into China's infrastructure spending, including all the rail, roadways and marine ways that are being built as part of BRI. Canadian companies should also be looking at any ancillary opportunities around infrastructure projects, whether that's supplying heavy machinery, building materials, or transportation equipment. One of the important things to remember with BRI is that it spans more than 65 countries, so opportunities exist not just in China but with all these other countries in Asia, the Middle East and Europe.

Beyond BRI, are there other opportunities for Canadian companies within China's Five-Year Plan?

As outlined in its Five-Year Plan, China wants to accelerate its transition from manufacturing to a more consumer-driven economy, and with the rise of the middle class the country is seeing an increased demand for services and consumer goods such as food products and automobiles. At the same time China also wants to build strength in advanced manufacturing technology. Canadian companies that are innovating in consumer goods and advanced manufacturing can impart their expertise and gain ground in China. Like Canada, China also has an aging population, so there are opportunities for Canadian companies with unique healthcare products or services.

From your vantage point at HSBC, are you seeing many Canadian companies taking advantage of BRI and Five-Year Plan opportunities?

There are many Canadian companies that are pursuing these opportunities or that are already actively engaged in some the infrastructure projects. But what's striking to me is the number of Canadian companies that are not aware of the Belt and Road Initiative and the greater opportunities in the Five-Year Plan. There is definitely an imperative here for Canadian companies that want to be more globally minded to assess how they may take advantage of these new opportunities in China. Research we've done over the years continually shows evidence that companies that trade do very well, and this goes beyond China.

What sort of BRI projects could Canadian companies aim for?

There are engineering and architectural services opportunities that are directly tied into China's infrastructure spending, including all the rail, roadways and marine ways that are being built as part of BRI. Canadian companies should also be looking at any ancillary opportunities around infrastructure projects, whether that's supplying heavy machinery, building materials, or transportation equipment. One of the important things to remember with BRI is that it spans more than 65 countries, so opportunities exist not just in China but with all these other countries in Asia, the Middle East and Europe.

Beyond BRI, are there other opportunities for Canadian companies within China's Five-Year Plan?

As outlined in its Five-Year Plan, China wants to accelerate its transition from manufacturing to a more consumer-driven economy, and with the rise of the middle class the country is seeing an increased demand for services and consumer goods such as food products and automobiles. At the same time China also wants to build strength in advanced manufacturing technology. Canadian companies that are innovating in consumer goods and advanced manufacturing can impart their expertise and gain ground in China. Like Canada, China also has an aging population, so there are opportunities for Canadian companies with unique healthcare products or services.

From your vantage point at HSBC, are you seeing many Canadian companies taking advantage of BRI and Five-Year Plan opportunities?

There are many Canadian companies that are pursuing these opportunities or that are already actively engaged in some the infrastructure projects. But what's striking to me is the number of Canadian companies that are not aware of the Belt and Road Initiative and the greater opportunities in the Five-Year Plan. There is definitely an imperative here for Canadian companies that want to be more globally minded to assess how they may take advantage of these new opportunities in China. Research we've done over the years continually shows evidence that companies that trade do very well, and this goes beyond China.

How can HSBC support Canadian companies looking to kick-start or expand operations in China to take advantage of BRI and the Five-Year Plan?

Through a highly connected network we can deliver the bank locally to Canadian customers. With a network of over 170 branches in more than 50 cities in China, we cover the widest geography among any foreign bank in mainland China. We have bankers who can help Canadian companies attune themselves to the business environment in China, as well as make introductions to local contacts or referrals. To succeed in China, you've got to look for great partners who can really help you access the local market. Through our international business program, HSBC has been active in China for many years. We are that great partner.

Talk to one of our Relationship Managers today. 

To learn about the latest opportunities and how your business can benefit from this China-Canada trade corridor, click here to find out more insights.

Visit www.rmb.hsbc.com to get more information about the Belt and Road Initiative.

The information presented is not meant to be comprehensive and does not constitute financial, legal, tax or other professional advice. You should not act upon the information contained in this document without first obtaining specific professional advice. While reasonable care has been taken in preparing this document, HSBC does not make any guarantee, representation or warranty (express or implied) as to its accuracy or completeness. The information presented in this document is subject to change without notice.

Certain of the products and services offered by HSBC and its subsidiaries and affiliates are subject to credit adjudication and approval. This document does not constitute an offer to provide the services and products described and the provision of such services and products remains subject to contract.

Issued by HSBC Bank Canada.
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