Go to the Globe and Mail homepage

Jump to main navigationJump to main content


What does it take to succeed in China today? Add to ...

Years after former Canadian prime minister Pierre Trudeau went out on a limb and established diplomatic relations with Chinese Chairman Mao Tse-tung's regime, he got annoyed.

Ottawa had effectively built Canadian corporations a bridge into a wondrous world of opportunities. Mr. Trudeau didn't understand why more of them weren't crossing it.

He reached out to Paul Desmarais Sr., who was the chief executive officer of Montreal-based Power Corp. at the time.

"My father said 'You know what, you're right. You have led the way and we're going to follow behind you,'" Andre Desmarais, the current CEO of Power Corp., recounts. "That's what led him to set up his first mission there, and I was lucky enough to be his executive assistant, so I was on that trip and had the fun of preparing it with some other Power executives and others."

The year was 1978, and a who's who of Canadian business wound up making the trek, including Ian Sinclair, then the CEO of Canadian Pacific Ltd., David Culver, the head of Alcan, Robert Scrivener of Nortel, Cedric Ritchie, the CEO of Bank of Nova Scotia, and Petro-Canada CEO Wilbert Hopper.

The groundbreaking trade mission led to the creation of the Canada China Business Council, and promises to dramatically boost the amount of business that Canada did with China.

"That was a very fortuitous thing as it turned out, because it ended up being the first really senior trade delegation ever going there from any country," Mr. Desmarais says.

The relationships that Canada forged in the 1970s gave this country's corporations a head-start in what is now a full-on sprint to do business in China. But, as any company that has sought to enter the Chinese market can appreciate, the road was far from smooth.

Indeed, Power Corp.'s first real breakthrough didn't come until 1986. The company wanted to invest money in China, but it was nervous that another revolution might wipe out its investment. Thanks to the ties that it had worked at establishing, it was able to arrange a meeting with Deng Xiaoping, then the leader of the Communist Party of China, through CITIC, a state-owned investment firm.

"We suggested to them that what they should do is buy a plant in Canada - a pulp mill, a business that they need, a business that they knew," Mr. Desmarais says. "Then we would invest the same amount of money in China…

"The idea was that if there was a revolution in Canada, they could take our assets in China, and if there was a revolution in China, we could take their assets in Canada."

It's a tripartite lesson that many business people have learned: to succeed in China, relationships, patience and trust are paramount.

Following those talks, CITIC made its largest investment to date outside of China, buying a half-interest in a pulp mill in Castlegar, B.C., in a joint venture with Power Consolidated (China) Pulp.

The investment was a major breakthrough for Power Corp., and marked the beginning of a series of deals that each turned a profit, but the company learned lessons along the way.

"I went back so discouraged so many times you wouldn't believe it," Mr. Desmarais says.

In the early days, the company was offered the chance to buy a piece of land right next to the Forbidden City. Chinese officials were adamant that it had a bright future. "This was 1978, we said, 'It will be at least 50 years before that will ever happen.' Well, we couldn't have been more wrong," Mr. Desmarais says.

When Power Corp. had the chance to team up with CITIC and develop a plot of industrial real estate in Pudong, it took it.

Report Typo/Error
Single page

Follow us on Twitter: @GlobeBusiness

Next story




Most popular videos »

More from The Globe and Mail

Most popular