China beats out Britain as Canada’s No. 2 trade partner

China has surpassed Britain as Canada's No. 2 export destination, a milestone in the inevitable shift from the stagnant Old World to faster-growing emerging markets.

Canadian goods exports to China surged 15 per cent last year to $19.3-billion, paced by a near-doubling of canola seed and canola oil shipments, according to newly tabulated government trade figures.

It's a case of "China meets Saskatchewan," Dan Ciuriak, former deputy chief economist at the Department of Foreign Affairs and International Trade, said of the numbers showing China topping Britain for the first time. Exports to Britain fell nearly 1 per cent to $18.6-billion.

"In a big-picture sense, it's just an inevitable reality that as China becomes larger, it would overtake the Old World," said Mr. Ciuriak, now a consultant. "It was just a question of time."

Canada isn't alone in being touched by China, which surpassed the United States as the world's largest goods trading nation in 2012. The U.S. still does more overall trade if services are included.

Canada's exports to China have nearly doubled between 2008 and 2012, a period in which the country's overall exports fell nearly 1 per cent. Canadian exports to China of bulk commodities such as coal and iron ore were also up sharply last year.

China's economy has been growing at 10 per cent a year for most of the past decade and is hungry for the resources that Canada has in abundance. Europe, on the other hand, has been stagnant for the past four years, with some countries in a deep recession.

ClevrU Corp., a Waterloo, Ont., company that sells educational software for mobile devices, has shifted its focus almost entirely to China, said chief executive officer Dana Fox.

The potential for Canadian companies exporting to China is "enormous," Mr. Fox said. "It is an opportunity that Canada can't turn down."

China is particularly attractive for firms that sell high-technology products and services, he added, because the country is going through a massive shift from a rural-based economy to an urban one.

China looks favourably on Canada as a supplier, Mr. Fox said, because of its reputation for innovative and creative technology, the multicultural nature of its work force, its lack of political "baggage," and – still – the fact that Dr. Norman Bethune was Canadian.

But getting a foothold in the Chinese market takes time and patience. "It is all about trust and relationships," said Mr. Fox, who has been to China 22 times in the past two years. Once that trust is established, a company can move "incredibly fast."

Eager to encourage a move up the export value chain from commodities, Canadian Trade Minister Ed Fast announced Wednesday that he'll lead an information technology trade mission to China in early April, including stops in the key tech centres of Shanghai and Hangzhou.

"Improving access to high-growth markets in the Asia-Pacific region is a key part of our government's job-creating, pro-trade plan," Mr. Fast said in a statement.

Canada has a large tech sector, with exports of nearly $30-billion a year worth of information technology, but relatively little of it goes to China.

Executives of BlackBerry maker Research In Motion Ltd. will be on the trip, along with officials of numerous smaller Canadian tech companies, according to federal officials. Mr. Fast is also due to make stops in Japan and Hong Kong during the April 7-12 visit.

Even the food and beverage business is now opening doors in China. Pillitteri Estates, a small family-owned winery in Niagara-on-the-Lake, Ont., is ramping up its sales there, said Richard Slingerland, manager of business development.

Pillitteri exports about 35 per cent of its products, and of that, 70 per cent goes to China, mainly pricey ice wine, but also some red wine.

There is a huge market for luxury goods in China, and even small Canadian companies can do well if they focus on "super premium" products, Mr. Slingerland said. Indeed, Pillitteri went to China after it noticed that Chinese customers were the biggest buyers of premium products at its Canadian retail outlets.

There are still many hurdles in China, Mr. Slingerland pointed out, including counterfeit products – something his company had to deal with. It is also crucial to do thorough due diligence about customers when they are half way around the world, he said.

Canada's trade with China is destined to increase both because the country is growing so fast and because the countries' main products complement each other, Mr. Ciuriak said. "We're very natural trading partners."