Ballard Power Systems’ latest Asian initiative illustrates some of the opportunities and challenges awaiting Canadian companies anxious to tap Far East business opportunities in the new age of U.S. trade protectionism.
As Business in Vancouver recently reported, New York-based Spruce Point Capital Management cast aspersions on an impressive 167% jump in Ballard’s stock price in 2017. Some of that gain can be attributed to the fuel-cell pioneer’s revenue, which in the year’s first nine months increased to US$81 million from US$54 million during the same period in 2016. But Spruce Point noted that a market perception of imminent fuel-cell commercialization was a contributing factor in the share price spike, even though commercialization in the transportation sector is far from reality, especially in China, where infrastructure to support any meaningful use of fuel cells is virtually non-existent.
Spruce Point also questioned the strength of Ballard’s most recent partnerships in China and pointed to a previous Chinese partnership with Azure Hydrogen that cost Ballard revenue and credibility.
Ballard has had many starts and stops during its three-decade flirtation with fuel cells and their value as a mainstream piece of the world’s clean-transportation puzzle. Its 1993 initial public offering raised $15 million, and Ballard’s stock price traded as high as $190 during 2000’s tech bubble. But the promise of a transportation energy technology whose only byproducts are power and water has continued to outrun marketplace realities.
Ballard’s Asian ambitions are laudable. Its willingness to enter a market that has huge potential demonstrates a bold entrepreneurism that too many Canadian companies lack. But any business eyeing Asia as a market alternative to Donald Trump’s America should also heed the warning signs included in the Spruce Point critique. The subtext of that analysis is that doing business in China is extremely complex.
The business of business in Asia is a gamble that demands preparation, pragmatism and informed perseverance for there to be any hope of a sustainable payoff.
