While China is known as the factory to the world, a majority of Canadian businesses in China are targeting the country’s burgeoning domestic market.
A study published by the Asia Pacific Foundation found 67% of Canadian businesses in China are in the service sector, attracted by the country’s impressive domestic growth and its huge market.
Selling into the Chinese market, building relationships with Chinese firms and attracting investment to Canada were the top three priorities for Canadian firms operating in one of the largest emerging markets in the world.
While Canadian firms were widely distributed across the country, the largest concentrations were in strategic Chinese markets. More than two-thirds were in Beijing and Shanghai, with large concentrations in Guangdong (26%), Jiangsu (26%), Tianjin (23%), Sichuan (19%) and Chongqing (18%).
The size of Canadian firms in China varied widely, however, more than half were small businesses with 37% of respondents reporting global revenues of under $10 million in 2009, and 15% with revenue between $11 million and $50 million. About 23% had global revenue of more than $100 million.
Perhaps surprisingly, two-thirds of respondents said their operations in China were profitable despite the significant challenges they face.
About two-thirds of respondents said inconsistent interpretations of regulations continues to make business highly difficult. Red tape and pollution are also other concerns Canadian firms expressed as challenges.