2014-15 Canada-China Business Forum Magazine

TECHNOLOGY TECHNOLOGY second foray in North America after Silicon Valley. However, this funding is a tiny sliver of the total C$1.5 billion ZDG hopes to invest internationally in search of startups geared towards the China market. At the heart of this relationship is a shift away from natural resources. From 2004-2013, Canadian exports to China tripled from C$6.7 billion to over C$20 billion. Some predict that China could surpass the U.S. as Canada’s top export market by 2035. Despite these impressive statistics and predictions, one cannot hide the fact that natural resources drove the growth of Canadian exports to China. The challenge facing decision-makers in Canada is finding a delicate balance between the desire to attract international capital and the desire to keep the jobs that accompany innovation and invention at home. Although ZDG’s investment is not premised on tech or job transfers to China, implicit in such deals is the likelihood that businesses will seek to move closer to their long-term customers. Moving forward, Canadian firms must look for ways to satisfy China’s growing demand for innovative services and technologies. The country’s burgeoning middle class is demanding products and services related to education, the environment, healthcare and other products and services to improve quality of life. This demand fits neatly with Canadian expertise and the strength of the Canadian brand. However, this fear is misplaced. Interviews conducted by the Centre for Digital Entrepreneurship and Economic Performance (DEEP Centre) with entrepreneurs at the ZDG-Invest Ottawa incubation centre noted that the success of the Sino-Canadian innovation relationship would be based on ability to leverage the Canadian brand, especially in terms of quality and safety. “Build here, sell there.” This innovation-based relationship is already taking shape. In late 2012, Zhongguancun Development Group (ZDG), a venture capital fund owned by the Beijing Municipal Government, partnered with Invest Ottawa to create an Ottawa-based international incubation centre to help Canadian high-tech firms enter the Chinese market. ZDG contributed C$10 million towards the project and the centre now houses four companies specializing in life sciences. ZDG’s Ottawa operation is its Moreover, as these firms use foreign capital as springboards into new markets, the experience and expertise they develop will lend itself to an international orientation necessary to continue the company’s growth. Fear surrounding intellectual property (IP) rights will remain for many Canadian companies. Negotiation will be necessary to ensure the reciprocal IP protection in both jurisdictions. A good Chinese partner can help reduce transaction costs and risks. The ZDG-Invest Ottawa example highlights a potential path for the expansion of the Sino-Canadian innovation relationship. We should not limit our scope to just a one-way relationship. As President Xi Jinping noted in a March 2013 speech, “boosting innovation-powered development [is essential] to make China an economic heavyweight.” Doing so has largely focused on upgrading the country’s indigenous innovation program known as zizhu chuangxin. This program sees billions invested in a range of strategic industries, including next“The Canadian generation information technology, government needs biotech, renewable energy, materials to do more to ensure and advanced manufacturing. 一家领先的国际投资机构 • 长远投资规划 • 多元，主动的资产组合 • 投资泛亚太的公开市场，私募和房地产项目 • Long investment horizon • Diverse, actively-managed portfolio • Public, private and real estate investments across Asia • First international office opened in 2008 in Hong Kong OVER 226 Toronto BILLION INVESTMENT PORTFOLIO AS OF JUNE 2014 Hong Kong OVER 33 $ BILLION COMMITTED TO ASIA PACIFIC AS OF JUNE 2014 London 于2014年6月全球投资余额 New York 至2014年6月对亚太区的投资承诺积极管理 QFII额度逾2260亿加元 ACTIVELY MANAGING 逾330亿加元 6亿美元 QFII PROGRAM São Paulo CANADA CHINA FORUM BUSINESS 51 CPPIB_CCBC_booklet_ad_140904.indd 1 • 首家国际分部于2008年在香港开幕 600 MILLION $ Exposure to and engagement with these ideas and the Chinese entities behind them are key to moving Canadian firms forward. While linguistic and investment barriers remain, the Canadian government needs to do more to ensure a soft landing for Canadian companies, especially small and medium-sized enterprises. Reciprocity on investment and industrial partnerships must be a priority for federal trade negotiators. a soft landing for Canadian companies.” A leading global investment organization $ These investments are part of China’s increasing prominence across a series of innovation-related metrics. For example, the number of engineering PhDs in China has tripled since 2000, and the number of scientific researchers has grown by an average 12 per cent per year. Chinese research in peer-reviewed journals has similarly grown by 16 per cent per year since 1995, with the Chinese share of published articles now reaching 9 per cent. China’s share of high-value triadic patents has experienced similar growth, increasing more than sevenfold between 2000 and 2007. And while the quality and consistency of this work remains a work in progress, it is clear that China is an increasing source of invention and innovation. 9/5/14 12:39 PM 2014-2015 ccbc.com CPPIB_CCBC_booklet_ad_CH_140905.indd 1 多伦多香港伦敦纽约圣保罗 52 9/5/14 12:39 PM

2014-15 Canada-China Business Forum Magazine | Page 52