Hungry for deals and an audience with Prime Minister Justin Trudeau, a group of Chinese tycoons is preparing for its first trip to Canada, only weeks after a pair of high-profile visits between leaders of the two countries.
The China Entrepreneur Club has been called the world’s most exclusive, its 50 members including billionaires who oversee companies that together amass nearly $600-billion (Canadian) in annual revenue.
On Saturday, the club will launch an eight-day tour that will bring several of its members into rooms with Canada’s political and business elite.
The visit comes as China seeks a new “golden” era with Canada, while its businesses conduct a global hunt for companies and assets.
Last year, Chinese firms invested $118-billion (U.S.) abroad, a tally that is expected to rise rapidly in coming years, amid a quest to procure global innovation that will create new questions about the degree to which countries like Canada are prepared to see high-tech assets fall into foreign hands.
“We want to lubricate the business environment,” said Maggie Cheng, the club’s secretary-general.
Previous visits have taken the club to the United States, Britain, Germany, Australia and elsewhere with a similar strategy: to arrange a series of face-to-face meetings, in hopes of easing suspicions and smoothing the way for future deals.
“Building trust means lowering the costs of trade,” Ms. Cheng said.
Canada is the eighth-largest destination for Chinese overseas spending, but Chinese businesses are eager for more, and the club will visit Montreal, Toronto, Ottawa and Vancouver.
The federal government, which has promised a doubling in trade with China by 2025, has been eager to work with the billionaires. Mr. Trudeau met with the club in Beijing in late August, and is expected to spend 90 minutes with it in Ottawa next Tuesday.
Some of the club’s most recognizable faces, including Alibaba founder Jack Ma, will not be there. The delegation will instead include leaders of companies involved in real estate, digital technology, tourism, railways, private equity and fashion.
They have scheduled time with Ontario Premier Kathleen Wynne and cabinet ministers in several provinces. They will also meet a raft of corporate leaders, including bank chieftains, tech entrepreneurs and Canada’s own reclusive rich, such as Ron Mannix and Jimmy Pattison.
Conspicuously absent from the agenda, however, are oil executives – or Alberta, once the destination for most of China’s billions. The CNOOC Ltd. takeover of Nexen still stands as one of the largest Chinese acquisitions of a foreign company.
The omission reflects how Chinese companies today are chasing new quarry, pursuing ideas and technology that they can use at home, rather than merely resources and property.
The changing priorities reflect a shift in China itself, where the central government is struggling to move away from rusting industry toward a more creative economy with a lighter environmental footprint.
“Chinese companies are in the midst of major transformation,” said Xu Jinghong, chairman of Tsinghua Holdings, the investment arm of Tsinghua University.
Mr. Xu, who is among those planning to visit Canada, said they “have a growing wish to enter the world, and their pace is growing faster.”
And, he added, “Canada is a good choice to co-operate with.”
But that shift also creates a set of potential problems for Canada, which, after struggling with the sale of oil assets to state-owned companies, will now increasingly have to determine whether it wants its brightest innovations to fall into Chinese hands.
Conservative foreign affairs critic Peter Kent called it a case of caveat venditor, urging the government to exercise caution. He recalled former prime minister Stephen Harper saying, “When we say that Canada is open for business, we do not mean that Canada is for sale to foreign governments.”
One example of the new wave of investments is Tsinghua Holdings, a Chinese technology investor with nearly $7-billion (Canadian) in assets that has already established a beachhead in Canada and is moving to rapidly expand. Last year, Tsinghua-backed firms partnered with Simon Fraser University for a new China Canada Clean Tech Innovation Centre, whose goals include investing Chinese money in Canadian startups.
The centre has already picked up stakes in companies developing electric car charging technology, advanced materials, new kinds of batteries, wind turbines and advances in medical imaging and radiation scanning. It has made other investments in cultural industries, including the musical adaptation of a Chinese play.
Centre president William Li says it acts as a “golden bridge,” bringing Chinese money into the Vancouver tech scene, while also providing Canadian entrepreneurs with new paths into China’s vast market.
Mr. Li hopes to persuade Chinese investors to buy more than Canadian real estate. “If they have the opportunity to invest in a unicorn like Uber, they will be more happy than if they buy a house,” he said.
But in its ambition, the centre is already setting up clashes. It is looking to create a $100-million investment fund by the end of this year, 60 per cent of which it hopes will come from China. For the remainder, it is looking to Ottawa and Victoria, with the idea that governments can commit money that will help pry open wallets in China.
In British Columbia, however, local investors say none of the money from a planned provincial venture capital fund should go to Chinese interests. “That would be the wrong way to go,” said Wal van Lierop, president of Vancouver venture capital firm Chrysalix, citing fears that B.C. money would be put toward investments outside the province. “Venture capital from the B.C. government should not leak away to China,” he said.
Mr. van Lierop said Canada should “really embrace what China can offer” in money and market access. But he said, “Do you have to be careful in dealing with China? Yeah, you should.”
Fears of intellectual-property theft remain.
“We in the Official Opposition would urge prudence and caution in these upcoming talks with major Chinese investors,” Mr. Kent said.
“Prime Minister Trudeau must do due diligence on the investment history of the visiting billionaires … and ensure they are not fronts for Chinese state-owned enterprises. Also, there must be a deep background check on the human rights history of these gentlemen’s businesses.”
China also has a history of using foreign technology to buttress its authoritarian rule, including hardware used to censor the Internet and curb free speech.
Mr. Xu himself has publicly supported government management of the Internet. But asked whether Canadian companies should be wary of exporting savvy to China on human-rights grounds, he demurred. “That’s not something I can talk about,” he said. “I can only promise that any collaboration with Tsinghua Holdings will certainly be used in the marketplace.”
Who’s who in the entrepreneur club
Chief executive officer of Far East Holding Group Co. Ltd., which built an empire on electrical cables, becoming China’s top manufacturer for 18 straight years. It has expanded into pharmaceuticals, the Internet of Things and smart cities. On the Hurun list of China’s richest, ranked No. 358 last year, worth $1.4-billion (U.S.).
President and CEO of China Merchants Bank from 1999 to 2013, a time when it expanded from a single location to 900, growing to 50,000 employees in China and listing it on the Shanghai and Hong Kong stock exchanges. China Merchants Bank is today among the world’s top 100, and Mr. Ma has been called one of China’s “most innovative bankers.”
Founding chairman and CEO of ChinaEquity Group Inc., a venture capital and private equity firm that has invested in Chinese success stories like Baidu, Sohu and Huayi Brothers, as well as international brands like Aston Martin. Its equity value exceeds $3-billion, and last year, Mr. Wang reached No. 793 on the Hurun China rich list, worth $750-million.
Chairman of Tentimes Group. Co. Ltd., a property development firm that has been a leader in branding and green housing. No. 947 on last year’s Hurun China list, worth $630-million. A villa he owns has been named one of China’s top-10 luxury homes. In recent years, he has become an outspoken Christian executive. “I am merely a housekeeper of Jesus, assisting him in taking care of the company,” he told the BBC.
Chairman of aigo Digital Technology Co Ltd. He got his start selling computer keyboards at a tiny profit, and built his company into a major manufacturer of digital cameras, USB flash drives and music players. Corporate revenues of nearly $400-million a year.
BEIJING — The Globe and Mail
Published Wednesday, Oct. 12, 2016 9:06PM EDT
Last updated Thursday, Oct. 13, 2016 8:42AM EDT