Canadian Manufacturers & Exporters (CME) last week signed an agreement with the Hong Kong Trade Development Council (HKTDC) to promote business opportunities between Hong Kong and Canadian companies. Canada’s largest trade and industry association, CME’s mandate is to promote the competitiveness of Canadian manufacturers and enable the success of Canadian good and services exporters. Its Chairman, Dr David Fung, says now is the time for Hong Kong and Canadian business to capitalise on each other’s advantages. 

What does the Memorandum of Understanding (MOU) between CME and the HKTDC set out to do?
The MOU acts as a gate-opener to create partnership opportunities between Hong Kong and Canadian companies. Hong Kong companies are strong in marketing, distribution, logistics and their knowledge of the China market. Canadian companies are completely the opposite. The manufacturing sector is dominated by family-owned, multi-generational businesses, dedicated to one particular product. That’s why I see Hong Kong and Canada’s roles as complementary. 

How has the global economic downturn made initiatives like this more relevant?
CME has been encouraging our industries to explore new markets, but it has been challenging bringing home this message. We engineers have a saying, ‘If it’s not broken, don’t fix it.’ In 2004, 90 per cent of Canada’s exports of manufactured goods were to the US. They say, ‘Why worry? China? Who cares?’ 

If we had tried to do this two years ago, we would have been wasting our breath. But with the downturn, now is a strategic and tactical time to do it. Yet, some Canadian companies still want to wait out the current downturn. Expanding beyond North America is a foreign concept for these companies. 

Why has CME chosen Hong Kong?
Part of CME’s action plan is to help Canadian companies expand. And while we could have easily gone to Japan, we have learned that would not have been a win-win strategy. That is why we picked Hong Kong. 

Hong Kong is similar to the Netherlands, in that it’s an advanced economy with a neutral reputation compared to more nationalistic countries in the European Union and Asia. It’s one step removed, seen as neutral, but highly professional. We came to Hong Kong to look for opportunities to create marketing and sourcing networks. 

This is an opportunity for Hong Kong to be the integrator, a consolidator. With its understanding of the Asian market, Hong Kong companies can add value to Canadian technology. 

What does Canadian investment offer Hong Kong that other foreign ventures can’t?
Major economies such as Germany and France that have the technology know-how are organised and have been selling and packaging themselves to go straight into the Chinese mainland market. Hong Kong’s role as an integrator and consolidator for them is limited.

While Canada’s strength is in its technology, it hasn’t been successful marketing its know-how abroad. With Hong Kong's strength in providing solutions, we want Hong Kong to look at Canada as a preferred country to build the technology and have that global reach. In the process, Canada will benefit, but Hong Kong even more. The deficiency of Canada’s infrastructure is Hong Kong’s strength.

How has Canada been affected by the global downturn?
Canada fared best among the G7 countries. In this global financial crisis, the country’s conservative approach won out. There have been no bailouts, no housing downturn, no loss of consumer confidence.

But Canadian SMEs, which rely on the US market, have been badly hurt. About half a million people lost their jobs, which for Canada, is significant. We don’t want to repeat that, which is why we’re here. While the US will remain Canada’s largest market, there will be a shift towards Asia. Ninety per cent of Canada’s exports used to go to the US. That’s now down to 70 per cent, and we hope the trend will continue, because Asia is growing so fast. But natural growth is not enough.

While the US will continue to be our dominant market, we also see Canada as part of the Asia Pacific. Despite the significant number of Asians in Canada, their representation in the Canadian industrial infrastructure has been lacking, so we’re missing that Asian supply chain, which consequently has not received the same degree of importance in Canada. CME is here to make that transformation. It’s not going to be easy. By picking Hong Kong, we are looking to activate the Hong Kong-Canadian diaspora, to build that relationship to help change the priorities and direction of Canadian industries.

Now that the MOU has been signed, what’s the next step?
We’re looking to enlist Canadian expatriates living in Hong Kong to join the effort. But we don’t know enough about Hong Kong, and that’s where we would look to the HKTDC to find potential partners. The next step, we hope, is to identify specific sectors to target, such as the auto-parts industry, which is a huge economic sector worldwide. The North Asia assembly line alone is projected to produce 25 million cars each year.

The forestry industry is another. Canada is blessed with the best fibres in the world, but has an antiquated industrial structure that needs reinventing. We need agile Hong Kong companies that will have access to these resources to come out with better products the world wants.