There are some guys at the Asia Pacific Foundation of Canada who must have pondered this question many times in the last two decades or so, invariably coming up with an answer that it must be very, very hard to grasp that Canada appears to be missing the boat on Asia’s economic boom.
Since founded in 1984, the Foundation has been harping on the same message over and over again — if Canadian companies want to become global players and grab a chunk of that huge pie, they have to find a way to integrate the influence of Asia’s economies into their own corporate strategies.
The Asia Pacific Foundation is not the only one that has realized the power emanating from the “Asian Tigers.” Financial and other press is plump with commentaries about how Asian emerging markets are reshaping our world. Everyone seems to be paying attention, except Canada, that is.
Apparently, the Asia Pacific Foundation did a little research, and found that:
“Canada is losing economic relevance in Asia. Canada’s share of the overall Asian market is less than one percent, down from 1.72% in 1995 and 2.51% in 1984.
Canadian direct investment in the Asia-Pacific region, at $30.4 billion in 2005 seems paltry compared with that of other countries, and much of it goes to established destinations, such as Australia and Japan.
The recent Canadian enthusiasm for China does not match the reality that only 0.2% of total Canadian outward investment is destined for China. Clearly, Canadian firms have generally not seen Asia as part of their investment strategies. Asia is booming and new markets are growing rapidly, while Canada remains fixed in a pattern of trading relationships that has changed little in decades.”
There is little doubt that China and other red-hot economies in Asia are changing the world. China has already taken German’s spot as the world’s third largest economy. By 2015, China’s economy should be equal to that of the U.S. and, by 2025, China is expected to surpass it.
So, why on earth is Canada dragging its feet when it comes to Asian emerging economies, and particularly China? Well, perhaps part of the reason lies with those rare few Canadian corporations that have actually ventured out in China and ended up badly burned.
Part of the reason might also be that Canadian businesses feel quite comfortable exporting raw materials, semi-finished and finished goods from the comfort of home, as opposed to going halfway across the world, building new plants, hiring new people, finding their way around the confusing and often treacherous regulatory landscapes, etc.
And while Canada, no more than any other country in the world, cannot prevent or delay the ever-changing global economic landscape, either by economic or political means, it still may make plenty of sense to practice a sort of an oxymoron — favor globalization by staying close to home!
In the next few decades, we will see the world of increasing wealth emerge before our eyes. It may or may not matter who is number one: China or the U.S. What will matter, however, is whether you are the first in your village or the last in the big city. Our “village” is North America, and right now, in my humble opinion, Canada is in a unique position to establish itself as a dominant player in North America, if for no other reason than it sure as heck beats going out of the gate on someone else’s turf.