Businesses in B.C. often talk about the difficulty of entering high-growth foreign markets in Asia, but it’s just as daunting for companies from those countries to set up shop in B.C. – partly due to the same kinds of corporate cultural gaps that prove challenging when Canadians go abroad.
That’s the observation of several industry officials who are trying to bring more international business – especially from China, which in recent years has been aggressively looking at overseas markets in which to invest – to Vancouver.
“I would say now is the period with the biggest risk for [Chinese] companies to come to Canada, but it’s also the period with the biggest opportunity,” said Vancouver-based Jerry Xie, executive vice-president of China Gold International Resources Corp. Ltd. “It depends on how you view it coming in, and, often, people view the Canadian market either too optimistically or too pessimistically. The key is to judge it from a balanced perspective, as a business market.”
There are few business leaders with deeper insights on the challenges of Chinese firms coming to Canada than Xie. A 25-year veteran of the energy and mining sectors, he is a graduate of the University of Calgary and is something of a rarity among executives of Chinese subsidiaries in Canada in that he speaks fluent English and is heavily involved in local charities such as the Canadian Cancer Society and the Canadian Red Cross.
In speaking with other Chinese businesses looking to set up shop in Vancouver, Xie found there remains a corporate cultural gap – from employee expectations and community involvement to the empowerment of local staff to make decisions for the local market – that is limiting the number of such companies here despite a sizable population of Chinese-Canadians in the Lower Mainland.
“At China Gold, we are very lucky; the corporate leadership feels confident enough to let us operate freely, to assess the Canadian market and do what we as people on the ground see fit,” he said. “But the issue with many companies from Asia is that the corporate leadership views staying here as an assignment. The decision-making is centralized in China and the staff rotates in and out between here and other operations globally. So it’s often that, once a staff develops familiarity to B.C., they leave, and the new staff starts over.”
Greg D’Avignon, president and CEO of the Business Council of British Columbia, also heads HQ Vancouver, a joint federal-provincial initiative to draw more overseas companies to set up regional headquarters in B.C. He said the difficulty isn’t isolated to the Chinese, noting that firms from other Asian markets also struggle to set down roots in the Lower Mainland. While Vancouver is the destination of many new immigrants who, after a short period of stay, want to bring their businesses to the city, the reality is that most do not enter the city with a business in mind and therefore may not be ready to jump in.
“We have a lot of people in the East and South Asian communities here in Vancouver, but much of the population here had moved with their families and aren’t investing capital or expanding businesses into the marketplace,” D’Avignon said. “There’s lots of untapped opportunity to put B.C. and Vancouver onto people’s lists of where to do business.… We are proud of ourselves as Vancouverites, but other people know very little about us – and that’s an important context.”
Kenny Zhang, HQ Vancouver’s executive director of business development, said common points of contention include the role of government in business deals, which can be drastically different in Canada compared with government involvement in markets in Asia. The scope of the differences in doing business goes beyond laws and regulations and into cultural expectations of what government officials can and cannot facilitate in promoting trade, what international companies see as red tape.
But by far the most common complaint, Zhang said, is with labour practices such as overtime.
“Working overtime in Asia is very common, in various markets like mainland China, Japan, Taiwan, etc.,” he said. “The expectation is that an employee must finish the work, even if it means working beyond normal office hours. But here, there’s a very specific system of labour laws that determines compensation and practice, and employees may not accept overtime. It’s something that many Asian companies have to learn here.”
Zhang added that some of the barriers might be manifest in the difference between Canada’s collective attitude toward foreigners and its attitude toward foreign capital.
“Canada is known to be welcoming to new immigrants, and we should be equally as welcoming for foreign businesses and investments,” Zhang said. “It’s worrisome to me that we open our arms to people, but not to capital investments, and so the challenges may come from the Canadian side – and we need to overcome that mentality.”
D’Avignon noted HQ Vancouver’s founding was a direct response to those concerns, saying that by providing a single point of contact for foreign businesses wanting to get established in Vancouver, it reduces confusion and helps streamline their entry.
“I have yet to meet any business leaders, whether from East Asia, Southeast Asia or South Asia, who don’t want their investments here to succeed,” he said. “It’s about helping them and giving them as many opportunities as possible to be successful, because the value with these companies is often not in the initial investment, but the second or third investment they make after they’ve established themselves here.”
Xie said companies need to take some of the responsibility. The mining executive was a key organizer of July 2016’s CAChinese Night, in which Chinese-Canadian businesses in Vancouver generated $160,000 in donations to support victims of the Fort McMurray fires last year.
More participation in events like CAChinese Night will play a key role in determining whether overseas businesses can get public support and thrive in Vancouver, Xie said.
“Social responsibility as a corporation is crucial,” he said. “In almost every aspect of Canadian society, whether you are a big company, a small enterprise or an individual, there is – and has always been – an emphasis on giving back to the community with things like donations to charitable causes.… It is definitely our responsibility to get our message across to the community, that we are part of the community here, and that we are for the general good for Canadian society.” •