Cultural differences are core issues for investment in Canada(2)

In the mining sector, aboriginal rights have been a growing topic of discussion. Mining and exploration can bring these groups opportunities for economic development and employment, but it also brings environmental degradation. Jerome Beaugrand-Champagne, the China representative for a Canadian law firm Heenan Blaikie, said Chinese investors need to address these cultural issues head on, and not just deal with the Canadian companies alone.

"This needs to be addressed on a personal level," he said. "Different tribes have different leaders who have different opinions, so (they) really, really need to go and meet with them even before investing in a project, you need to sit with them, you need to show your respect to the leaders, to the elders and see how you can work with them so you have a win-win cooperation."

OPERATIONAL CONTROL

Another area of concern is the role Chinese investors have in the company after the initial investment. Some want operational control, but often end up as a passive investor. Industry experts said there is often a mismatch in expectations. To avoid these issues, both sides need to have a clear structure of investment drawn out right from the start.

Stephen Wortley, chair of China Practice Group of McMillan, said a strategic plan is needed, so that on the Chinese side they're not writing big cheques right away, but instead are investing incrementally.

"We say if you come in at a 20 or 25 percent level, and then couple that with agreements that give you board representation, and again going back to my earlier comment, a joint venture on the property, you may have the say you want without writing a cheque to buy the entire company," he said.

Harry Tian, senior manager of a Chinese company Boasteel Resources Int. Co. Ltd, believe it's important for investors to balance the risks, even if the deal looks good on the outside.

"If the condition isn't met, if you think it's tough to get a management team to Canada, my personal view is, even though the deal seems nice and decent, forget about it," he said. "Don't take too much risk."

CHINESE AND CANADIANS MEETING HALFWAY

The overall consensus was that Chinese investors need to understand the Canadian market and business practices. But on the other side, Canadian companies also need to meet the Chinese halfway, and try to understand and learn about Chinese values and culture as well.

It's a slow process, but Guo said he has seen some improvement in recent years.

"Before, the Canadian companies just consider Chinese companies as a deep pocket investor, so what they're looking for is just money," he said. "In recent years, more Canadian companies they understand what the Chinese investors want, what they're looking for."

"I believe nowadays, more Canadian companies they're trying to reach a win-win situation," he added.

Both sides have been continuing this conversation, networking and exchanging business ideas during PDAC meeting.