Allan O'Dette
January 22, 2018

Last month, I joined Ontario Premier Kathleen Wynne's trade mission to mainland China, Hong Kong and Vietnam. Our 13-day tour produced more than $2.3 billion in deals, an impressive amount that would please any chief investment officer. But I also returned with a conviction that the agreements we signed are only a hint of the economic opportunities awaiting Ontario firms in China.

The potential to expand our commercial ties springs from two Ontario advantages: the growing demand from Asia's middle class for trustworthy Canadian goods and services, and the ever-increasing personal links between our jurisdictions.

The business dynamic in China has changed dramatically in the past few years. We're all aware that China's economy is now the world's second largest, just $7 trillion in GDP behind the United States. But while China's growth was once propelled by low production costs and exports to the West, the primary driver is now rising domestic consumption in China itself: China's National Bureau of Statistics reports that consumption's share economic growth went from 47 percent in 2013 to almost 65 percent in 2016.

That rise heralds an increase in demand for foreign goods, an opportunity we've barely begun to exploit. China is Ontario's fourth largest export market but its percentage share is low: just 1.4 percent of our $205 billion in exports went to China in 2016. By comparison, 80 percent of our exports still head south to the U.S. We need to open new markets.

The prospect of formal negotiations toward a Canada-China trade agreement offers one path to doing so but getting there will be an uphill struggle. A trade deal with China raises national security issues, questions about how to deal with China's state-owned enterprises, and is made even more fraught by the darkening clouds over the U.S.-China relationship.

Yet those obstacles merely underscore the need for Ontario firms to proactively develop partnerships and customers in China. The Premier's mission revealed the enormous potential for Ontario companies to do so without a trade agreement. Much more is needed.

During our time in Hong Kong, I had the pleasure of meeting Dr. Patrick Shui-Chung Wang, Chairman and CEO of Johnson Electric, a global producer of automotive parts. The company is investing $351 million in Ontario in its Ancaster subsidiary Stackpole International to build transmissions for electric vehicles. Dr. Wang told me he made the decision to boost his investment here because of the ease in attracting, retaining and retraining workers in Ontario.

Trust. It's a description I heard applied to Canadian workers and products throughout the trip. Chinese companies want workers who perform at a high level. And they want to import brands that carry a guarantee of integrity and quality. That's why Feihe International signed a deal in Beijing to build its first baby formula production facility outside of China. The $225 million investment will tap local goat and cow milk suppliers in the Kingston area to meet rising demand for safe milk products as China.

Ontario's other advantage is our growing number person-to-person contacts with China. A majority of the 1.4 million people of Chinese origin in Canada call Ontario home, and the connections are expanding all the time. Tourism from China is up: almost a quarter of a million visitors came to Ontario in 2015, a number that can only grow with the federal government's pledge to open seven new visa centres in China and direct flights from Canada to China now reach 11 cities directly. China is already Canada's largest source of foreign students.

These links forge the foundations for lifelong relationships built on family, friends, business and pleasure. Those ties characterized our relations with the British, Americans and other Europeans throughout the 20th century. It can be the case with Asia in the 21st.

Business missions like the one just concluded by Premier Wynne make news because of the eye-popping size of the deals signed while abroad. The real impact is deeper and longer lasting. I came home energized by the enormous potential that awaits Ontario in Asia, and with the certainty that I'll be facing jet lag again and again as I go back.

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