Mary Ng is becoming a common sight in Asia. Canada’s Trade Minister has visited the region almost a dozen times in the past year, with stops everywhere from Indonesia to Japan.
Many of her trips were laying the groundwork for the government’s long-awaited Indo-Pacific strategy, launched in November. Ms. Ng’s first major mission since that unveiling came this week, opening the inaugural Canada-in-Asia Conference in Singapore, a gathering of business leaders and Canadian university alumni from across Asia, sponsored in part by Ottawa.
In an interview, Ms. Ng said both the conference and the government’s strategy were designed to send the message that “we’re committed, we’re here in the region.” From a trade perspective, “we already have really good market access and agreements,” she added. “We’re going to negotiate even more.”
Southeast Asia in particular is an increasingly attractive market for Canadian businesses. This is because of the region’s rapidly growing wealth and middle class, but also a growing desire to counterbalance or at least diversify away from China, traditionally the primary focus for Canadian companies expanding into Asia.
Just as Ottawa’s regional strategy sees Beijing as more adversary than friend, many Canadian businesses and universities have been second-guessing their exposure to the Chinese market in recent years.
Dozens of universities are facing increasing restrictions over research co-operation with particular Chinese entities. The federal government recently announced that it will no longer fund research with Chinese military and state-security institutions and is urging the provinces and universities to adopt similar national-security measures.
Businesses, meanwhile, have suffered from the diplomatic chill between Ottawa and Beijing, one that shows few signs of thawing amid renewed focus on Chinese interference in Canadian politics.
Jeff Nankivell, chief executive of the Asia Pacific Foundation of Canada, said that when his team began organizing the conference, it considered Hong Kong – home to one of the region’s largest Canadian expat populations and a key gateway to China – but a combination of factors, not least COVID-19 restrictions that were only lifted early this year, made Singapore more attractive.
“There was enthusiasm for doing it in Singapore, for doing it in Southeast Asia,” he said. For many companies, “it’s not necessarily a case of getting out of China, but maybe shifting the balance in the portfolio to have a little less weight on China.”
COVID-19, the war in Ukraine and the increasingly unpredictable Chinese political climate have highlighted the importance of diversifying supply chains. The risky nature of investing in China has been on stark display this month, with the disappearance of Bao Fan, a top banker to China’s tech sector.
The billionaire founder of investment bank China Renaissance has been unreachable for more than a week, his company said, and officials have not shed any light on his fate. According to the Financial Times, Mr. Bao had been seeking to relocate to Singapore – as many wealthy Chinese have done since the beginning of the pandemic, driven both by strict COVID-19 controls and regulatory pressure. This despite China recently lifting pandemic measures and making overtures toward business amid an economic downturn.
For Canadians, in particular, Mr. Bao’s disappearance raises the spectre of Xiao Jianhua, the Chinese-Canadian billionaire who was snatched from a Hong Kong hotel in 2017 and later charged with corruption in mainland China. Five years later, in August, Mr. Xiao was sentenced to 13 years in prison after a secret trial in Shanghai.
If political uncertainty around China is a negative factor, then the growing size of Southeast Asian markets is definitely a major pull for many Canadian businesses. Indonesia and Vietnam are projected to be among the fastest-growing economies in the world by 2030, along with India, already the region’s third-largest economy behind Japan and China. India is on track to overtake the latter as the world’s most populous country.
Mairead Lavery, CEO of Export Development Canada, said that in meeting partners in Southeast Asia, “the pre-eminent response has been ‘why haven’t you been here sooner?’ ”
Mr. Nankivell, a three-decade foreign-service officer who was most-recently Canada’s consul-general in Hong Kong, said that while Canada has always had a very strong brand across the region, “it would be very common to hear ‘you know, we love Canada, but you don’t seem to be really present here.’ ”
For Canadian companies that might have been dragging their feet on expanding into Southeast Asia, Ms. Lavery said the government’s new strategy has been a key driver of confidence, showing that Ottawa was poised to provide support and resources in a way it never has done before for this region.
As part of its Indo-Pacific strategy, Ottawa is investing $24-million to establish a new “trade gateway to Southeast Asia,” Ms. Ng said, headquartered in Singapore. Canada is also in the process of negotiating free trade deals with ASEAN, the regional political bloc, and bilaterally with India and Indonesia.
In addition, Malaysia, Singapore and Vietnam are all members, alongside Canada, of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the successor to the U.S.-led and Donald Trump-scuppered TPP.
“Asia is a huge place, it’s diverse, it’s complex,” said Hafimi Abdul Haadii, a Brunei businesswoman and former lawmaker. But she added that ASEAN was the “engine of growth, as we see it, within Asia.”
Even with government support, shifting focus to the region will not be easy. China, for all its myriad difficulties, is a single market, the biggest in the world. In previous decades, this made the country an obvious and straightforward focus for expansion, both for Canadian businesses and universities targeting students and research co-operation.
While often lumped together, Southeast Asian economies can be very different, and at vastly different stages of development.
“I think you always have to have an approach that recognizes the differences between countries and the differences in sectors,” Ms. Lavery said. “You can’t actually say one size fits all.”
Rick Christiaanse, CEO of Invest Alberta, said it would be a mistake to assume that just because countries are part of a bloc such as ASEAN that they are necessarily similar. “You’ve got to be localized and specialized in each of these markets,” he said.
And while the geopolitics around China may lead companies to want to diversify their Asia approach, the rest of the region is not without potential controversy. Political instability remains a major issue in many countries, and there are long-standing human-rights concerns regarding India and Vietnam, both key destinations for companies pursuing a so-called “China+1″ strategy. And New Delhi has shown itself to be as politically sensitive as Beijing at times, attempting recently to put pressure on Canada to restrict the activities of Sikh diaspora groups.
“Laws in Canada are changing that are forcing companies to think about human rights, transparency in supply chains,” Ms. Lavery said. “So the days in which companies could ignore what’s going on in different countries are long gone.”
Mr. Nankivell welcomed the bullishness Canadian companies have for Southeast Asia and the broader Indo-Pacific, but acknowledged “stakeholders need to be as clear-eyed” about other countries “as I think they’ve learned to become about China.”