Locals pursue Hong Kong opportunities despite uncertainty

Export challenges, overseas protests present hurdles but shouldn’t halt all trade: analysts

North America Investment Association president Amy Huang (left) with Tang Hanliang, the Dongguan Economic Development Corp.’s head representative in Vancouver, and corporation representative Alex Li at a July 12 signing ceremony in Richmond | Chuck Chiang

Political uncertainty surrounding B.C. trade with Hong Kong and mainland China is not deterring some B.C.-based companies from pursuing business opportunities in those markets.

But with Hong Kong in the thralls of protests and police crackdowns related to a planned extradition agreement with Beijing, and Canada’s frozen relationship with China over the Meng Wanzhou affair, the only small and medium-sized enterprises (SMEs) still interested in pursuing opportunities in those markets appear to be Chinese-Canadian firms with well-established links and relationships.

Officials from Richmond’s North America Investment Association (NAIA), who returned from the association’s annual participation in the Hong Kong Belt and Road International Food Expo in June, said that of the 15 Canadian exhibitors they brought to the show this year, only one was from a “mainstream” SME without Chinese cultural ties (i.e., having at least one proprietor who is of Chinese origin).

“We landed on the same day [June 9] as one of the biggest protests were taking place – there were a lot of difficulties this year,” said NAIA president Amy Huang at a July 12 news conference. “The difficulties started before we even put together the delegation. We spoke to a number of Caucasian businesses … and they didn’t want to go. But I still think there’s business opportunity amidst this economic crisis.”

Protests have rocked Hong Kong since late March, when Chief Executive Carrie Lam sought to pass a bill that would allow the Chinese Special Administrative Region – currently run, in theory, like a western democracy – to send Hong Kong residents wanted in mainland China back to Beijing’s jurisdiction.

Opponents have voiced concerns over China’s lack of an independent judiciary and due process. They fear that Beijing is prematurely eroding the 50 years of autonomy Hong Kong had been promised after Great Britain handed it over to Chinese control in 1997.

(Lam has since announced that the bill is “dead” due to public opposition, but protests and counter-protests continue unabated as of mid-July.)

In addition, Beijing remains at odds with Ottawa over the December arrest of Meng in Vancouver at the request of the U.S. Department of Justice. If extradited to the U.S., the Huawei Technologies Co. Ltd. executive could face money laundering and trade-sanction circumvention charges.

A hearing is underway to determine whether American prosecutors have a strong enough case to justify extraditing Meng.

Since her arrest, China has arrested two Canadians on charges of espionage and banned imports of three major Canadian commodities: canola, pork and beef. Neither side has an ambassador stationed in the other country, and analysts speculate the China-Canada relationship will deteriorate as the Meng case drags on.

Chinese-Canadian community members are not surprised that Canadian SMEs without Chinese ties are giving Hong Kong and Chinese markets the cold shoulder. They have pointed to a fracture even within the Chinese-Canadian community over whether business should continue as usual, given the seriousness of events in Hong Kong and within mainland China.

Ken Tung, former chairman of immigrant services non-profit SUCCESS and currently a public affairs commentator on Fairchild Radio’s “News-Talk” program, said Canadian business owners are likely just coming to grips with the realities of doing business in a single-party state without a judiciary independent of the ruling Communist Party of China (CCP).

He added that Hong Kong’s extradition debate could deter mainstream SMEs from considering entering these markets.

“People understand now that China wants only to keep the outward economic window for China in Hong Kong,” said Tung, whose family is from the city and ran businesses there before moving to Canada 40 years ago. “Already, we’ve heard from people returning to Canada that the opportunities for Hong Kong people right now are limited, and the reason is – for many Hong Kong-owned businesses – foreign investment and shares have been bought up by [Chinese] state-owned investment, and the job market openings are shifting to people who speak Mandarin and are fluent in simplified Chinese.

“If I’m a businessman wanting to invest in Hong Kong, that means I can only do business with those pro-China and state-owned businesses.”

Former Vancouver city councillor and ex-SUCCESS CEO Tung Chan, however, noted that Canadian mainstream businesses had a preference for trade with the United States over China long before Hong Kong protests and the Meng affair. Chan said that standard western business practices, like lines of credit, are sometimes not common practice in the Chinese market, and language and cultural barriers add to the distrust, with cases of B.C. businesses avoiding the market dating back to the mid-1980s.

Chan added that, in spite of strained China-Canada relations, Canadians should maintain lines of communication open with China’s private sector to keep people on both sides talking while government links are tested.

Cultivating private-sector relations is what the NAIA tried to accomplish with its June visit to Hong Kong, which included a trip to the mainland Chinese city of Dongguan, said association secretary Noah Huang.

He noted that NAIA signed memorandums of understanding during the Hong Kong portion of the visit with one Chinese company, one Chinese municipal government and the African Chamber of Commerce in Hong Kong.

During the delegation’s visit to Dongguan, NAIA reached an agreement with the Dongguan Economic Development Corp. – an organization created by the CCP and Dongguan municipal government to “bridge relations with the private sector,” according to the corporation’s chief representative in Vancouver, Tang Hanliang.

The agreement calls for the establishment of a “Canadian Food Greater Bay Area Marketing Centre,” which would act as a hub for Canadian SME agri-food exports into the Hong Kong-Dongguan region. Additionally, Huang said the NAIA will return to another city in the region – Guangzhou – later this year for another food industry expo.

When asked if NAIA has received any assurances from Chinese government officials that exports at the centre would not suffer the same fate as Canadian pork, beef and canola, Huang said he could not provide a definitive answer, but he is optimistic.

Chan noted that, regardless of what happens in Canada’s relationship with China, the country’s role in the global economic and geopolitical spheres is “a reality that cannot be ignored.”

“That market of 1.3 billion people cannot be ignored, because it’s going to be there,” he said, referencing journalist Jonathan Manthorpe’s book Claws of the Panda in outlining the challenge of how to deal with a rising China. “Former Canadian national security adviser Richard Fadden said we should not avoid dealing with them or engaging them, but go in with an open eye and be fully aware of some of the pitfalls. If we go in with that attitude and prepare for some of the things that may or may not happen, then we continue to engage, because that is the reality … and we have to find a way to move forward. Doing otherwise is not an option.”

But Tung cautioned that Canadian businesses must maintain their core values, because many observers have expressed concern that an increasingly powerful Beijing is now leveraging its economic clout to insert its political views and values into foreign markets.

Seeing what has been happening in Hong Kong should give Canadian businesses pause, he emphasized.

“We have to make sure we represent different Canadians – Canadians of different cultures – but not the voice of other countries,” Tung said.