Although the United States remains Canada's dominant trading partner, and is likely to be for many years to come, Canadian companies are slowly embracing a more global trade mindset. According to this quarter's C-Suite Survey, Canadian executives are interested in extending trade relationships with China.
Significantly, 59 per cent of companies see China as a somewhat or very important market for their business over the next five years. Recent mutual visits between Canadian and Chinese leadership resulted in an unprecedented level of warmth, but surprisingly just less than half of companies believe that Prime Minister Justin Trudeau's visit to China was somewhat or very positive. But a full 81 per cent believe he is equally or better positioned than his predecessor to expand trade relations with China.
This isn't to suggest that Canadian businesses are jumping in with two feet. While the vast majority of executives either strongly or somewhat strongly support the idea of Canada negotiating a free-trade agreement with China over the next five years, 70 per cent agree that the Canadian government should continue to place limits on the ability of Chinese state-owned enterprises to invest in strategic Canadian industries, such as the oil sands. In essence, they are highly supportive, but with a "go-slow" pragmatism.
The impetus to nurture international trade relationships outside of China and the United States also remains somewhat lacking. Notably, more than 60 per cent of executives say India and Britain are not important markets for their businesses over the next five years. The consensus is that the political environment for business will worsen over the next five years – in both the United States and Europe.
Economic concerns may account for this outlook. Similarly, many businesses are worried about the potential contagion effect of Brexit. With the rise of U.S. protectionism, the lengthy Keystone process and the NAFTA bashing we are seeing in some U.S. circles, is it not time to revisit Canada's strategy of putting all our eggs in the North American basket?
Perhaps these concerns are impelling Canadian businesses to slowly but inexorably turn to Asian markets. On the plus side, 57 per cent of executives think relations with China over the past three years have been about as good as could be expected for a country like Canada. Having said that, the warmth we have seen between the Prime Minister and Chinese leaders has been unprecedented and will be a strong foundation for the future. However, there is still room for progress. In fact, 45 per cent of executives think Canadian companies are more poorly positioned than their European and U.S. counterparts to do business in China.
While there is no consensus on how to close this gap, one thing is clear: For Canadian businesses to combat ongoing political and economic volatility, they must further diversify trade and distribute risk by utilizing and monetizing the country's many assets – in precious metals, base metals, oil and gas, water, softwood lumber and more – on the global stage.
Willy Kruh is global chair of consumer markets at KPMG