There has been much wringing of hands and gnashing of teeth of late over the federal government’s lack of a coherent strategy for engaging China. It took more than a year in office before the normally decisive Stephen Harper dispatched two of his top cabinet ministers to the People’s Republic this month. They went to reassure the Chinese that despite the prime minister’s vow not sacrifice human rights on the alter of the ‘almighty dollar,’ Canada still wants to sell the Chinese lots of stuff. But if we are to heap blame for Canada’s lame track record in China, let’s dole it fairly and to all who deserve it.
There’s no question that Harper, while arguably principled, has been clumsy in his delivery and slow off the mark. But the Liberals before him have not fared much better. As one trade official recently pointed out to me, there were about a dozen Canadian official visits to China in the last year of Paul Martin’s term alone. His predecessor, Jean Chretien, made six trips to the Middle Kingdom, including two at the helm of Team Canada trade missions.
The Chinese, notes John Gruetzner, a Beijing-based consultant, were deluged with bloated flag-waving junkets, which he likened to "a high school reunion that kept coming back." And to what end?
The proof is in the pudding, as they say, and judging from the meagre results to date, all that firepower amounted to a lot of hot air. While the rest of the world has poured some US$356-billion in foreign direct investment into China since 2001, Canada’s contribution to the latest global gold rush is a dismal $1-billion. As for the commodity starved Chinese, their sights seem to be set on investing in such paragons of economic stability and rule of law as Russia and Zimbabwe. Nor has Canada, despite years of negotiations, secured either a foreign investment protection agreement with China or the much sought after ‘Approved Destination Status,’ which would open the floodgates to Chinese tourists.
In contrast, Australian Prime Minister John Howard has been to China 9 times in the last decade. But he’s got something to show for it. Australia was the first Western country to be awarded Approved Destination Status by the Chinese government and the Chinese are now going Down Under in droves.
Australian universities are kicking Canadian butt when it comes to attracting Chinese students and the two countries are exploring a free trade agreement. Australian exports to China surged by 40 per cent in 2005, compared to negative growth for Canada. To top it off, while Canada’s proposed Gateway Project, which would deliver petroleum from Alberta’s oil sands to the BC coast, has been delayed until at least 2012 due to a dearth of Chinese buyers, Australia in 2006 inaugurated the largest single export agreement in its history – an A$25-billion deal to supply natural gas to the Chinese for the next quarter century.
So how does Canada finally get serious about China? Well, aside from the obvious trade deals and the like, it’s about thinking outside the box and being strategic - skills in short supply. Various government departments, from trade and immigration to tourism and education continue to work in their separate silos when they should be coordinating their approach to the Chinese market. Diplomatic postings, particularly ambassadorships, also need to be taken more seriously, with an eye to market positioning rather than patronage and political correctness. How exactly does a Canadian ambassador to China, who may be a long standing civil servant with flawless French but not a speck of Mandarin, serve Canada’s cause?
It’s pretty hard for the Chinese to take Canadians seriously when they can’t even be bothered to have a Chinese-based chamber of commerce. The only thing that comes close is the government sponsored Canada China Business Council, which is headquartered in Canada, if you can believe it. More of a vehicle for organizing social events and the de facto platform for Chretien’s Team Canada missions, the council doesn’t try to formulate business-friendly policy like American business groups, who have the ear of the Chinese government. And with only representative offices in China instead of being an officially recognized chamber, the Council isn’t taken as seriously by the status-conscious Chinese.
These oversights are symptoms of arguably Canada’s greatest strategic blind spot – networking. Canadians are happy hanging out with people they know, which is why even Canadian business chambers in foreign countries often tend to be glorified country clubs rather than networking opportunities. Richard Liu, a Chinese Canadian living in Beijing, is so convinced of the importance of networking, he’s launched his own vehicle, the Canadian Alumni Network, CAN, which aims to draw together the thousands of Chinese who graduate from Canadian universities every year and return, often to influential jobs, in China.
"They are a bridge we can tap into. And this is the time to do it," says Liu. "A lot of overseas Chinese are returning to China to work and do business here. And we’ll start losing them if we don’t develop a stronger network. We want them to stay connected to Canada." Eight years on CAN boasts more than 8,000 members, but no government support.
Liu, a diehard Canadian if ever there was one, is not surprised. A former employee at the Canadian Embassy in Beijing, Liu went on to run the Canada China Business Council’s Beijing chapter. Discouraged by the lack of commitment, he quit and now works for the Swiss chamber. In 2005, when the Embassy marked the 35th anniversary of Canada’s diplomatic relations with the People’s Republic with nothing but a small private cocktail, Liu went ahead and organized a party of his own. The CAN network even published a commemorative booklet featuring a cover picture of Pierre Trudeau shaking hands with Chinese Premier Zhou Enlai.
Of course, all this talk of sharpening Canada’s trade smarts is pure puffery unless business picks up the gauntlet and starts taking China seriously in the first place. Liu recalls how during Chretien’s 1998 trip to China, he inaugurated a Canadian fast food kiosk at a Beijing bus stand. A picture of the PM flipping burgers appeared in leading national publications back home. "It looked like one of those hot dog shacks you see at the fun fair," says Liu. "I thought, ‘this is embarrassing – they had the PM at the opening of a food vendor? Is this what Canada is all about?’" Needless to say, the venture lasted a few months before closing up shop.
As one veteran trade official notes with unconcealed exasperation, there just aren’t very many aggressive, outward-looking Canadian companies interested in going to China. "So you can preach all you want," he says, "but they just aren’t going to listen."
Thursday, March 1, 2007
Mr Dion’s Wheat Board Woes
Less than three weeks after winning the Liberal Party leadership Stéphane Dion hopped a plane to Winnipeg to pledge his support for the Canadian Wheat Board. It was the prime ministerial pretender’s first bid to cut a swath between himself and Stephen Harper, whose government has pledged to dismantle the state-sponsored grain marketer, on things non-environmental.
Unfortunately, Dion’s debut in the less familiar terrain of economic policy also marked his first big mistake.
To be sure, it was a politically savvy move for the native Quebecker whose support for the Kyoto Protocol and turgid English will make winning the West an uphill battle. Already, the Harper government is softening its Wheat Board stance in the wake of a wave of indignation rolling across the country like a prairie squall through a wheat field. But while Mr Dion commiserated with the beleaguered Board’s ex-president, given the proverbial boot by Agriculture Minister Chuck Strahl just the day before, I wonder whether he had time to take in the sites of one of Canada’s more easily forgettable provincial backwaters.
Visiting Winnipeg these days, it’s hard to imagine its turn of the 20th century moniker as the "Chicago of the North." The modest Prairie town is more distinguished by what it’s lacking than any claim to fame. For one thing, despite the endless farmers’ fields that seem to sprout from the city ’s periphery, Winnipeg has not spawned a single multinational grain-handling company or internationally relevant grain trader along the lines of Europe’s Louis Dreyfus or South America’s Bunge. There are no world-class Canadian grain processors and despite a reputation for high quality cereal, no homegrown pasta companies or malting operations of global girth.
Surprisingly, Winnipeg still has a commodity exchange. Though, reduced as it is, to a humble fourth floor enclosure in one of the city’s handful of squat mid-rises, Mr Dion probably missed it. I don’t blame him - the exchange can barely muster interest from the city’s few scattered grain traders and stockbrokers. In 2001 it gave up selling its once coveted bourse seats, which in the 1930s, before the creation of the Wheat Board, sold for $30,000 a pop. By contrast, a seat on the Chicago Board Options Exchange, the only commodity market larger than Winnipeg’s a century ago, auctioned for a record $US1.5-million last year.
So what does Winnipeg have, exactly? Well, while Minneapolis, Minnesota has Cargill, the global grain marketer and processor, which boasts 149,000 employees in 63 countries and St. Louis, Missouri is home to seed giant, Monsanto, Winnipeg’s got the Wheat Board and its 460 civil servants. The agency is also the world’s largest wheat seller thanks to its legislated power forcing farmers to hand over their crops whether they want to or not.
I just wonder whether Mr Dion, while walking the city’s wide avenues, made to feel all the more empty by the lack of discernible development, questioned how the Board contributes to a dynamic Canadian grain, and by extension, agri-food industry.
The Board’s big selling point is that it garners a higher price for farmers ’ wheat and barley then they would otherwise earn peddling their commodity crops individually (a point anti-Board farmers strenuously deny). Of course, it’s constantly ensnared in trade disputes over its marketing monopoly with the United States, resulting in the periodic blocked sale of Canadian grain south of the border. But it’s worth it - Canada may not have much in the way of a value-added, globally competitive domestic grain industry, but farmers earn $20 more per tonne of durum wheat.
In its defence, the state agency argues that if it weren’t for its collective muscle, poor Canadian farmers would be at the mercy of cutthroat American conglomerates like Archer Daniels Midland and Cargill and the Canadian Prairies would be more overrun with foreign multinationals than it already is. Unless farmers band together, it claims, the country’s very sovereignty is at stake. By hitching its wagon to the national cause and fear mongering, it has earned the steadfast support of many farmers - as witnessed by a plebiscite in January 2007 in which a majority of Manitoba farmers defended the grain marketer. The sad irony, of course, is that if anyone has jeopardized Canadian sovereignty and handcuffed farmers, it is the Canadian Wheat Board.
A case in point: the Prairie Pasta Producers, a group of 200 farmers from the three Prairie provinces has battled the Board for nearly a decade for the right to establish a pasta-milling company using their own wheat. They were hoping to follow in the footsteps of their brethren across the border in North Dakota, who back in the 1990s established a farmers’ cooperative that is today the third largest pasta producer in the US. The Board blocked the venture so they proposed selling their wheat to the North Dakotans in return for becoming partners in the multi-million dollar business. By the time the Board sold them back their own wheat at the higher collective price, however, it was too expensive to resell to the Americans and the venture died on the vine.
In its zeal to squeeze a few extra pennies from each bushel of wheat, the Board has ensured that Canadian aspirations begin – and end – with the production of a commodity, while leaving the field of value-added possibilities open for others to exploit. Even worse, farmers buy into the bluster and, suspended in an almost childlike state, are now convinced they don’t have the wherewithal or smarts to market and sell their own crops.
"They underestimate us," says one farmer of the Board. "And in turn, we underestimate ourselves." Here’s to hoping that Mr Dion isn’t willing to trade in farmers’ futures for the sake of making a little political hay.
Unfortunately, Dion’s debut in the less familiar terrain of economic policy also marked his first big mistake.
To be sure, it was a politically savvy move for the native Quebecker whose support for the Kyoto Protocol and turgid English will make winning the West an uphill battle. Already, the Harper government is softening its Wheat Board stance in the wake of a wave of indignation rolling across the country like a prairie squall through a wheat field. But while Mr Dion commiserated with the beleaguered Board’s ex-president, given the proverbial boot by Agriculture Minister Chuck Strahl just the day before, I wonder whether he had time to take in the sites of one of Canada’s more easily forgettable provincial backwaters.
Visiting Winnipeg these days, it’s hard to imagine its turn of the 20th century moniker as the "Chicago of the North." The modest Prairie town is more distinguished by what it’s lacking than any claim to fame. For one thing, despite the endless farmers’ fields that seem to sprout from the city ’s periphery, Winnipeg has not spawned a single multinational grain-handling company or internationally relevant grain trader along the lines of Europe’s Louis Dreyfus or South America’s Bunge. There are no world-class Canadian grain processors and despite a reputation for high quality cereal, no homegrown pasta companies or malting operations of global girth.
Surprisingly, Winnipeg still has a commodity exchange. Though, reduced as it is, to a humble fourth floor enclosure in one of the city’s handful of squat mid-rises, Mr Dion probably missed it. I don’t blame him - the exchange can barely muster interest from the city’s few scattered grain traders and stockbrokers. In 2001 it gave up selling its once coveted bourse seats, which in the 1930s, before the creation of the Wheat Board, sold for $30,000 a pop. By contrast, a seat on the Chicago Board Options Exchange, the only commodity market larger than Winnipeg’s a century ago, auctioned for a record $US1.5-million last year.
So what does Winnipeg have, exactly? Well, while Minneapolis, Minnesota has Cargill, the global grain marketer and processor, which boasts 149,000 employees in 63 countries and St. Louis, Missouri is home to seed giant, Monsanto, Winnipeg’s got the Wheat Board and its 460 civil servants. The agency is also the world’s largest wheat seller thanks to its legislated power forcing farmers to hand over their crops whether they want to or not.
I just wonder whether Mr Dion, while walking the city’s wide avenues, made to feel all the more empty by the lack of discernible development, questioned how the Board contributes to a dynamic Canadian grain, and by extension, agri-food industry.
The Board’s big selling point is that it garners a higher price for farmers ’ wheat and barley then they would otherwise earn peddling their commodity crops individually (a point anti-Board farmers strenuously deny). Of course, it’s constantly ensnared in trade disputes over its marketing monopoly with the United States, resulting in the periodic blocked sale of Canadian grain south of the border. But it’s worth it - Canada may not have much in the way of a value-added, globally competitive domestic grain industry, but farmers earn $20 more per tonne of durum wheat.
In its defence, the state agency argues that if it weren’t for its collective muscle, poor Canadian farmers would be at the mercy of cutthroat American conglomerates like Archer Daniels Midland and Cargill and the Canadian Prairies would be more overrun with foreign multinationals than it already is. Unless farmers band together, it claims, the country’s very sovereignty is at stake. By hitching its wagon to the national cause and fear mongering, it has earned the steadfast support of many farmers - as witnessed by a plebiscite in January 2007 in which a majority of Manitoba farmers defended the grain marketer. The sad irony, of course, is that if anyone has jeopardized Canadian sovereignty and handcuffed farmers, it is the Canadian Wheat Board.
A case in point: the Prairie Pasta Producers, a group of 200 farmers from the three Prairie provinces has battled the Board for nearly a decade for the right to establish a pasta-milling company using their own wheat. They were hoping to follow in the footsteps of their brethren across the border in North Dakota, who back in the 1990s established a farmers’ cooperative that is today the third largest pasta producer in the US. The Board blocked the venture so they proposed selling their wheat to the North Dakotans in return for becoming partners in the multi-million dollar business. By the time the Board sold them back their own wheat at the higher collective price, however, it was too expensive to resell to the Americans and the venture died on the vine.
In its zeal to squeeze a few extra pennies from each bushel of wheat, the Board has ensured that Canadian aspirations begin – and end – with the production of a commodity, while leaving the field of value-added possibilities open for others to exploit. Even worse, farmers buy into the bluster and, suspended in an almost childlike state, are now convinced they don’t have the wherewithal or smarts to market and sell their own crops.
"They underestimate us," says one farmer of the Board. "And in turn, we underestimate ourselves." Here’s to hoping that Mr Dion isn’t willing to trade in farmers’ futures for the sake of making a little political hay.
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