Pitfalls Abound for Canadians Doing Business in China

China, the world’s largest e-commerce market, counts more than 400 million online shoppers even as half the country remains offline, but eager Canadian businesses face significant hurdles to gain market share.
Pitfalls Abound for Canadians Doing Business in China
Delivery workers sort parcels for their customers in Beijing, China, Nov. 11, 2016. AP Photo/Andy Wong
Rahul Vaidyanath
Updated:

NEWS ANALYSIS

China, the world’s largest e-commerce market, counts more than 400 million online shoppers even as half the country remains offline, but eager Canadian businesses face significant hurdles to gain market share.

Chinese e-commerce giants Alibaba and JD.com are making a big push in Canada trying to get more Canadian businesses to join their platforms and sell to the Chinese.

Alibaba’s billionaire chairman Jack Ma will be making his pitch to Canadian business—alongside Canadian Prime Minister Justin Trudeau—at an event in Toronto called “Gateway 17” on Sept. 25. 

The Toronto Region Board of Trade hosted JD.com in July for a business roundtable with more than 50 Canadian companies.

Canadian products have an excellent reputation in China. The growing Chinese middle class is leery of cheap Chinese goods and values the quality of Canada’s manufacturing and pristine environment for agro-food products.

More broadly, China is undergoing a lengthy transformation from an investment-oriented economy to a consumption-based one—away from heavy industry and toward the service sector. E-commerce has a vital role to play in the Chinese government’s strategy.

“E-commerce platforms are really helping to standardize market access in China to people of all income groups, which is an important priority in China,” said Jan De Silva, president and CEO of the Toronto Region Board of Trade, in a phone interview.

Reasons for Concern

E-commerce might simplify certain aspects of doing business in China, but pervasive challenges like lack of rule of law and intellectual property (IP) violations are but a couple of the difficulties foreign businesses face.

U.S. President Donald Trump initiated a probe into China’s IP theft, which is estimated to be responsible for between 50 and 80 percent of all IP violations that harm the U.S. economy, according to the IP Commission Report. The U.S. Chamber of Commerce estimates 86 percent of all counterfeit goods come from China and Hong Kong.

Bottles of wine from Clear Lake Wineries, an export operation of Ontario wines to China. (Courtesy Mary Whittle)
Bottles of wine from Clear Lake Wineries, an export operation of Ontario wines to China. Courtesy Mary Whittle
Rahul Vaidyanath
Rahul Vaidyanath
Journalist
Rahul Vaidyanath is a journalist with The Epoch Times in Ottawa. His areas of expertise include the economy, financial markets, China, and national defence and security. He has worked for the Bank of Canada, Canada Mortgage and Housing Corp., and investment banks in Toronto, New York, and Los Angeles.
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