Canada’s Business Environment: A Safe Haven for Foreign Capital
Given its stable political environment and receptivity for foreign direct investments, Canada has a reputation of being an ideal country for foreign direct investments. Its transparent banking and legal system assures the investors of their plans for internationalization.
The Canadian capital markets also have a strong emphasis on investor protection and fosters an open and welcoming atmosphere for foreign capital. Of course, there is very little if any concerns of government corruption. All these factors make Canada a very suitable place to invest.
Current Market: Chinese Enterprises Leading Global M&A
China has been a leading force in global M&A activities in the past decade. Migration of Chinese capital increased dramatically, with an investment benchmark reaching new heights at US$74.7 billion in 2011.
China’s annual foreign direct investment increased almost 30 times between 2002 and 2011, showing ever-strong interests in foreign investments. Even during the global financial crisis from 2008 to 2010, its foreign direct investment still rose by 32%.
China-Canada M&A Activities
The history of Canada-China mergers and acquisitions (M&A) transactions is rooted in billion dollar public company investments in the natural resources and energy sectors, often by Chinese State-Owned Enterprises. However, many BC private companies are now taking notice of the opportunity for foreign capital coming from the Greater China Region and are now preparing themselves for globalized partnerships.
Asia Pacific Foundation of Canada published a survey based on data compiled from 1,377 Chinese small and medium-sized firms which showed that as much as 56% of these companies intend to invest in Canada and with a view to set up their own distribution and sales channels here. 22% of the companies surveyed intend to create joint ventures with Canadian enterprises. Another 12% showed interest in merging with local companies and 10% looked at setting up their own manufacturing base in Canada.
At the same time, Canadian companies are interested in locating suitable Chinese equity or joint venture partners for many reasons, including facilitating market entry into China, international scaling, leveraging on the strength of the Canadian brand and technology advancements.