Why Canada Needs to be Less ‘Nice’ in Canada-China Trade Talks

canada-china-flag-imageCanada continues to build its momentum in shaping a new relationship with China, given the visit by the Premier of China, Li Keqiang — the first China visit to Canada since 2010. These talks, along with Prime Minister Trudeau’s visit to China just a few weeks ago, is stimulating many questions and some confusion as to the direction that Trudeau is taking — what is his long term plan with China?

There is criticism that the Liberal government does not appear to share anything like a united vision[1] – however, I believe this lack of clarity is acceptable and possibly a good thing. In fact, I am somewhat relieved that the specific details are not entirely clear yet at this early stage. A renewed partnership with China is a complicated endeavour for many reasons, and it behooves the Canadian government to take some time to go through the ‘figuring out the details’ process. The debates and objections along the way are healthy for the country.

The ‘big picture’ good news is that Canada recognizes the importance of building strong trade ties with China for the economic growth. The caution and concern should be around the how the deals are structured and worded — what’s really in it for Canada and will China really play fair?

China does not have the most stellar track record when it comes to partnerships and playing by win-win rules. China is not talking to Canada only because our new Prime Minister is playing nice, nor only because of our very desirable natural resources, nor only because they want to tap into our innovation expertise…China has fewer and fewer allies like the USA and EU who have been burned before and are taking a more protectionist stance with China. As noted in the recent Forbes article: The China Factor: The One Thing Hillary And Trump Have In Common we see that the damage in the USA-China trade relationship is so deep, that this issue is the one binding point of agreement between the two presidential rivals – their adamant protectionist beliefs when it comes to American businesses and bringing it back home. Jean Charest, former Quebec premier and staunch free-trade advocate says, “Whoever is elected in the United States, it’s safe to say the relationship with China is going to be tougher. China sees Canada as a counterpoint to the United States, both in trade and the broader relationship.”

The need to trade with China, the world’s fastest growing economic power, is indisputable. However, this needs to be approached with much caution, due diligence and upfront protectionism at the beginning stages of the discussions in order to avoid an outcome similar to that our other Western neighbours.

For example, with the signing the Memorandum of Understanding between the Department of Innovation, Science and Economic Development of Canada and China, are we ensuring that our innovation advantage is protected? Are we taking measures to ensure that Canadians become stronger at commercializing innovation versus allowing our stronger Chinese partners to take the lead in an area where they excel, potentially leaving Canadians behind?

Canada should be ‘nice-enough’ but not the usual Canada-nice in order for its people to truly thrive as a result of these agreement. Eyes wide open, details thoroughly reviewed and tempered enthusiasm are the keys to a fruitful, long term Canada-China strategy.

 

For more on this topic and how the West can better compete and win in the new global economy, read  The China Factor: Leveraging Emerging Business Strategies to Compete, Grow and Win in the New Global Economy

 

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Can the USA Follow Canada’s Example in China Trade Relations? Geopolitics and Business

This week Prime Minister Justin Trudeau and his Ministers of Foreign Affairs, International Trade and Finance, are visiting China to discuss Canada–China relations.

There was much anticipation prior to his visit on the line that Canada would take with China – would he focus on human rights issues or trade? It was such a debate among Canadians that polls were taken as to what the focus of his message would be.

The PM said that he hopes to “reset” the relationship between the two countries. Thus, I am relieved and pleased that Canada chose to focus primarily on economic priorities and trade opportunities. Not because I don’t believe in the importance of human rights, but I believe that this route will have a greater impact on his goal, and on building a long-term relationship that will generate other future possibilities in different areas.

Also, Canada’s economy needs this focus on trade. Statistics Canada recently said that the Canadian economy shriveled in the second quarter to its worst performance in seven years.

Canada demonstrated that they prioritized the success of its people and its economy. Canada also recognized the shrewd skill in creating true partnerships with a different nation with different value sets. And Canada focused efforts on where its impact would be the most constructive and the most fruitful.

What Canada understood in its approach to the talks this week was the power of understanding and respecting another culture and understanding how to manage that relationship in a public setting. The provocative questioning on human rights by a Canadian journalist to China’s foreign minister Wang Yi in June, ‘made a public point’ but did it affect change in China’s human rights behavior? Did it bring Canada-China relations closer? Or did it just insult and anger the Chinese, and force the Canadian government to do a political stance-dance?

Westerners need to do a better job at finessing their political wield and polishing their culture IQ. We pride ourselves in freedom of speech but perhaps using it more strategically with intention of a positive outcome would be more productive in building partnerships – and ultimately influencing the change that we seek. And perhaps influencing a positive impact on human rights issues will naturally manifest itself once a solid trade partnership is in place, where trust and respect are paramount.  Maybe the answer is focusing on business partnerships that improve the economy and quality of life of both East and West, and as China’s economy continues to improve and its citizens become even more embedded into the global economy, they will create internal pressure that far outweighs external pressure. This is a long-term strategy.

cropped-karam_3d-jpg1.jpgPolitics and business are hard to separate in the global arena, nor should they be separated. That’s why I incorporated Politics as the 5th key component in formulating a successful global business strategy, as outlined in The China Factor: Leveraging Emerging Business Strategies to Compete, Grow and Win in the New Global Economy.

Partnerships involve respecting each party’s differences and looking for common ground and common benefit. And this goes both ways. China would also do well to flex for its Western counterparts and to seek more balanced and mutual benefit.

“Justin Trudeau wants to remake Canada into a bridge between China and the world, a bid to take back the role fashioned by his father more than four decades ago.[1]

This is an encompassing endeavour. Can the USA follow Canada’s lead and pivot from its current situation? Or is it too late for the USA? In the recent Forbes article: The China Factor: The One Thing Hillary And Trump Have In Common we see that trade relations have gone so far in the other direction that this is one of the few things that is bringing the two presidential rivals together – their adamant protectionist beliefs when it comes to American businesses and China. Perhaps the US should have better managed the partnership and trade imbalance earlier on…an opportunity that PM Trudeau now has for Canada, as he enters a new stage in fostering a positive collaborative future with China.

So, Canada did well to define their partnership intentions with China, stating that they wanted to open more doors for Canadian businesses in China, which includes joining the Asian Infrastructure Investment Bank to help pave the way for Canadian companies looking for new business opportunities.

What’s important for Canadian and American companies to recognize and identify is that the power of politics in business is not only at the high ministerial levels or with political officials. At the micro level, incorporating politics and government relations into any company’s global expansion strategy is essential to success abroad and even domestically.

The China Factor outlines specifics on how Western-based companies can incorporate politics into their business practices, down to a tactical level.  It also outlines the cautions and importance in fostering strong, lasting and mutually beneficial partnerships when doing business abroad.

  1. Take a longer-term view
  2. Develop a deeper culture IQ
  3. Foster partnerships with mutual benefit (this is a tricky balance to achieve)
  4. Don’t ignore the power of politics in achieving business goals

Watch this clip from the recent Google Author Talk on The China Factor for a glimpse into how politics and partnerships play in business.

 

Upcoming talks:

Sept 14th 730pm at The Canada China Friendship Society, 414 Sparks Street, Ottawa Canada

Oct 5th 4pm at The Silicon Dragon Event, Nasdaq Entrepreneurial Center, San Francisco, CA

Book promotion – Purchase a copy of The China Factor within the next 10 days and get a free Workbook for creating a winning global expansion strategy using the 5-Part Framework. (Valued at $89) Simply email me your proof of purchase and I will send you the free gift.

[1] http://www.theglobeandmail.com/news/politics/trudeau-calls-for-new-era-of-positive-collaboration-in-first-china-meetings/article31602377/

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How Trump and Hillary are the Same

The American political campaign has been nothing short of aHillary and Trumpmusing, astonishing and ‘educational’ to say the least. The platforms of republican and democratic parties, by definition and tradition, have been on a varying spectrum of polar opposites. And the recent campaign trail has proved to be one of extremes, if not only for the radical differences in the candidate personalities. Donald Trump and Hillary Clinton could not be more different in terms of their background, experiences and political platforms.
However, one area of solid commonality is their stance on the impact of China on the US economy – jobs, wages and trade imbalances – and their commitment to the American people to make significant changes in order to rebalance the inequity into America’s favor.

Mr Trump, in his campaign manifesto, pledges to “cut a better deal with China that helps American businesses and workers compete”.[1] “If you give American workers a level playing field, they will win. At its heart, this plan is a negotiating strategy to bring fairness to our trade with China. The results will be huge for American businesses and workers.”

And Hillary promised, that if elected, she will “stop dead in it’s tracks any trade deal that hurts America.” And in particular, Clinton emphasized her willingness to stop China’s “abuses” when it comes to trade. “China illegally dumps cheap products in our markets, steals our trade secrets, plays games with their currency, gives unfair advantages to state-owned enterprises and discriminates against American companies,” she said. “The next president has to understand the games Beijing plays and be prepared to stop them.”[2]

What is clear with both of their approaches to managing the China Challenge is using the power of politics to influence change in business outcomes for Americans.

But what can American businesses do in the meantime before the election in order to deal with the China Challenge at their own micro level?

  • How can they incorporate the power of politics and the US Government into their own business strategies to better combat the political wields of China?
  • How can American companies change their business strategy for global markets so that they have better success?
  • Why is product superiority NOT the key to winning business in emerging markets, as is often the case in established markets?
  • What is the key to not getting into the price war game with Chinese competitors?

The China Factor complements efforts and initiatives from ‘the government top’ and equips American businesses with a guide and a toolbox of sales strategies and tactics to better compete with the Chinese and to succeed more often on this new the playing field. Incorporating the use of politics into business practices is one key element in how the West can do business differently in order to better succeed in this unstable economic climate – and The China Factor shares practical, actionable suggestions on how to execute on this and other dimensions. A key part to a winning strategy is understanding how this formidable competitor plays and there is much detail in the book to prepare business readers as well as offer effective response strategies.

The China Factor also offers American businesses specific recommendations on how they can maintain and grow their Innovation Advantage by applying new and evolved innovation models – which include learning from the East.

Key to success in the new global economy is learning about formidable competitors from other countries and their cultures, and learning from them on how you can change your game to strategically win more often in this new playing field.

Go global. Be global. Good luck!

 

[1] Trump accuses China of ‘raping’ US with unfair trade policy,     2 May 2016
 From the section 
US Election 2016 http://www.bbc.com/news/election-us-2016-36185012

[2] http://www.cbsnews.com/news/hillary-attacks-sanders-china-in-speech-to-union/ Hillary attacks Sanders, China in speech to union

Amy Karam is an author, speaker, strategy consultant, and corporate instructor of Stanford University professional development courses, as well as her own workshops. As a global expansion and competitive strategy consultant, Amy equips startups and established corporations to succeed in international markets with actionable strategies by applying her diverse Silicon Valley and international experience with over 50 countries. She has worked with companies such as Cisco, Apple, Visa, Nationwide, Capital One, Kaiser Permanente, Bell Canada, AT&T, CMC, and institutions including the World Bank.

Author of The China Factor: Leveraging Emerging Business Strategies to Compete, Grow and Win in the New Global Economy 

http://www.KaramConsulting.com