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Maple syrup and the auto industry, economic symbols threatened by the Canada-China crisis

Maple syrup and the auto industry, economic symbols threatened by the Canada-China crisis

Louis Blouin – Radio Canada, February 4

Canadian business people are anxious about the deterioration of diplomatic relations between Canada and China. If the crisis stretches, small and big players fear to suffer the repercussions. For some, the effects are already being felt. The Trudeau government encourages them to diversify their markets.

As the sugar season approaches, the Citadelle cooperative’s warehouses in Plessisville will soon be filled to the maximum with barrels of maple syrup.

It is not only the inventory that occupies the thoughts of the head of sales Stéphane Vachon these days, but also the international political tensions. “We are on the lookout for everything that has been said in recent weeks. Like many Canadian companies exporting to China or Asia, we are concerned, “says the contractor. He is closely following developments in the Huawei case.

This dispute between Canada, China and the United States could force it to reconsider its expansion plans. “If there are problems, we will have to slow down or change our strategy,” says Vachon.

In five years, its goal is to multiply by five its maple syrup exports to China. Citadelle, one of the largest distributors and exporters of syrup in Quebec, also sells honey and cranberries to the Chinese.

For now, his affairs are not affected, but he fears the consequences if the conflict is to stretch.

It’s a question of time. If it goes on for a few weeks or a few months, we will surely begin to feel it.
Stéphane Vachon, Senior Sales Manager, Citadelle Cooperative.

As usual, the cooperative must be present at a major food fair in Shanghai next May. This year the circumstances are different. Mr. Vachon’s team will conduct additional audits to ensure his team’s participation will be safe.

A sign of the climate of uncertainty in the Canadian business community.

Automotive: a major investment in the night

Some industries can already measure the impacts of the Canada-China dispute.

An association representing Canadian auto parts manufacturers says an expansion project by Chinese automakers in Canada is pending because of the dispute. The fate of an investment of more than $ 1.5 billion in Canadian facilities is uncertain, according to Flavio Volpe, president of the Automotive Parts Manufacturers Association (APMA).

Chinese builders have reported that the project could be delayed for “months, even years,” he explains.

[Chinese builders] take the whole ecosystem and the political environment very seriously and they are not ready to move forward.
Flavio Volpe, President of the Automotive Parts Manufacturers Association (APMA)

Like the separation of Church and State, Mr. Volpe says the separation between trade and politics must be maintained in the relationship with China.

The Sino-US tariff war does not help the Canadian auto industry either. “We depend on a stable relationship between China and the United States. This is not good for business, “says Volpe.

The automotive industry, the largest export sector in Canada, generates some $ 80 billion annually in economic activity.

Canadian brand affected?

Canada is perceived as a “stable”, “safe” and “welcoming” country by Chinese tourists and investors, according to the president of the Board of Trade of Metropolitan Montreal (CCMM). Michel Leblanc fears that this very positive image is tainted by the current crisis if it were to last.

“It would be bad for our economy, and then it would be bad for the quality of our trade with China,” says Leblanc.

In his opinion, the Government of Canada must continue to explain to the Chinese authorities the functioning of the Canadian judicial system. Beijing has reacted strongly to the arrest by the Canadian authorities of the financial director of the Chinese firm Huawei in Vancouver, after a request for extradition of the Americans.

According to the CCMM president, Ottawa must remind the Chinese government of “the American responsibility” in this extradition case.

Is market diversification the solution?

Called to react to the nervousness, the federal Minister of Infrastructure and former Minister of International Trade, François-Philippe Champagne, wants to put things in perspective.

Trade relations, we have to look at this for decades.
François-Philippe Champagne, Minister of Infrastructure and Communities.

“We have an important issue, very serious because Canada today defends the rule of law,” said the minister.

In the face of uncertainty, he is encouraging Canadian companies to turn to new markets.

Champagne encourages entrepreneurs to take advantage of Canada’s recent trade treaties, such as the free trade agreement with Europe or the Trans-Pacific Partnership Agreement.

“We managed to diversify, especially to give small and medium-sized businesses the opportunity to diversify their market,” says Champagne.

Yet not so long ago, Champagne invited Canadian exporters to turn to China to reduce their reliance on the US market.

François-Philippe Champagne also invites entrepreneurs to contact Canadian trade commissioners if they need assistance.

Canada-China trade relationship (2017) in $
Canadian exports: $ 23.6 billion
Imports from China: 70, 9 billion
Three types of Canadian products most exported to China:
1 Vegetable products
2 Paper products
3 Mineral products
* Source: Government of Canada.

Click here for original article (in French).

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