Chinese investors choose U.S. over Canada

By Staff | November 4, 2013 | Last updated on November 4, 2013
2 min read

Canada ranked low on the lists of Chinese business investors in 2012, finds the Asia Pacific Foundation of Canada.

Its recent survey reveals only 6% of Chinese firms choose to invest in Canada, while 35% support the U.S. and 16% turn to Germany. Hong Kong and Japan also rank high on the list.

Since 2006, Canada has witnessed rapid growth of Chinese outward investment, adds the survey, but other global players have shown much more interest.

Read: Canadian equity stronger than it appears

Case in point: Chinese overseas foreign direct investment (OFDI) in Canada was CDN$12 billion in 2012. That represented only a small fraction (2%) of total foreign investment in Canada during that period. We received CDN$326 billion, or 51.5% from the U.S.

The money that does flow from China goes primarily into energy and resource projects.

But the tide is turning, says Yuen Pau Woo, president and CEO of the Asia Pacific Foundation of Canada. “The scale of Chinese outward investment in the coming decade will be massive. Canada [does] has to compete for its share, [so] this will require concerted effort from different levels of government as well as from the business community.”

“The two biggest sectors of Chinese investment overseas are manufacturing and trade,” adds Dr. Zhang Wei, vice-chairman of CCPIT. “In Canada, however, Chinese investors are showing expanding interest in Canada’s energy, agriculture, infrastructure and other sectors. Once the bilateral investment treaty is approved, it will add further momentum.”

Read: Strengthen exports to developing economies, says BoC

Some key findings of the study include:

  • Most Chinese companies invest overseas to boost their own brand in internationally and to take advantage of foreign policy incentives;
  • Although Chinese OFDI is growing, about 39% of businesses indicated their offshore investments were less than 5% of their total corporate investments in 2012; and
  • East and Southeast Asia are considered to be the most important regions for companies to invest in, followed by the EU and North America.

Read the full study.

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The staff of have been covering news for financial advisors since 1998.