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Canada doomed to be branch plant for global tech giants unless Ottawa updates thinking, Balsillie warns | Financial Post
James McLeod
November 16, 2018
7:27 PM EST

Canadian governments need to radically rethink their approach to the knowledge economy if the country is to be anything more than a branch plant for global technology giants,.......“I think they confuse a cheap jobs strategy … (and) foreign branch plant pennies with innovation billions,” .........Balsillie has argued that the “intangible” economy of data, software and intellectual property is fundamentally different from the classical industrial economy built on the trade of goods and services, and that because Canadian policymakers fail to understand that difference, they keep being taken for rubes.......Balsillie was particularly critical of the federal government’s policy when it comes to “branch plant” investments in Canada in the technology sector.

He said that in the traditional economy of goods and services, foreign direct investment (FDI) is a good thing, because there’s a multiplier effect — $100 million for a new manufacturing plant or an oil upgrader might create $300 million in spinoff economic activity.

But if you’re just hiring programmers to write software, the picture is different, he said. It’s a much smaller number of jobs with fewer economic benefits, and, more importantly, the value created through intellectual property flows out of the country.

“Our FDI approaches have been the same for the intangibles, where, when you bring these companies in, they put a half a dozen people in a lab, they poach the best talent and they poach the IP, and then you lose all the wealth effects,”....“Don’t get me wrong. I believe in open economies. They’re going to come here anyway; I just don’t know why we give them the best talent, give them our IP, give them tax credits for the research, give them the red carpet for government relations, don’t allow them to pay taxes, and then have all the wealth flow out of the country.”...if small countries such as Canada make a point of prioritizing the intangible economy, there are huge opportunities. He pointed to Israel, Finland and Singapore as examples of how smart policies and specialization can reap big rewards.

“I could literally see enormously powerful positions for Canada if we choose the right places. I mean, there are some obvious ones: value added in the food business, and precision data and IP in agriculture; certainly in energy extraction and mining, which are data and technology businesses,” he said.

“We actually have enormous opportunities to build the resilience and opportunity,” he said. ”And how can you threaten a country with a picture of a Chevy and 25 per cent tariffs when you’ve built these kinds of very powerful innovation infrastructures that you can’t stop with a tariff because they move with the click of a mouse?”
agriculture  branch_plants  Canada  data  digital_economy  energy  FDI  Finland  food  GoC  industrial_economy  IP_retention  intangibles  intellectual_property  Israel  Jim_Balsillie  mining  policymakers  property_rights  protocols  Singapore  talent  technology  wealth_effects 
november 2018 by jerryking
CIBC’s Victor Dodig warns about global debt levels; urges Canada to prepare

Who/Where/Occasion: CIBC's CEO Victor Dodig, in a speech to the Empire Club

* alarm over rising global debt levels, warning that Canada needs to start preparing now for the next economic shock.
* some of the most acute threats to the global economy are beyond this country’s control, but cautioned Canadians not to get too comfortable while times are good.
* developing problems could ripple through interwoven financial markets around the world.
* “It sounds counterintuitive, but that same debt that helped the world recover is actually infusing risk into the global financial system today," ...“I think there’s a real serious global challenge of this low-interest-rate party developing a big hangover."

* clarify rules around foreign direct investment, which is falling in Canada. The main culprit is the uncertainty plaguing large business deals that require approval from Ottawa under opaque foreign-investment rules – and he cites the turmoil surrounding the Trans Mountain pipeline expansion as an example.
* more immigration to Canada, asking the government – which has already set higher immigration targets for the coming years – to open its arms even wider.
* governments and employers to work more closely with universities and colleges to match the skills graduates have to employers' needs, promoting what are known as the STEM disciplines – science, technology, engineering and math – as well as skilled trades.
* remove interprovincial trade barriers.
* allow companies to expense capital investments within one year to be more competitive with U.S. rules.

My Takeaways:
CEOs  CIBC  debt  FDI  global_economy  interconnections  interest_rates  opacity  pipelines  resilience  speeches  uncertainty  Victor_Dodig  war_for_talent  threats  beyond_one's_control  complacency  preparation  financial_system  readiness 
september 2018 by jerryking
The AI arms race: the tech fear behind Donald Trump’s trade war with China | Financial Times
Shawn Donnan in Washington YESTERDAY

While the headlines about the Trump administration’s trade war with Beijing often focus on raw materials such as steel, aluminium and soyabeans, the underlying motivation of the new protectionist mood is American anxiety about China’s rapidly growing technological prowess.......
At a time when the US is engaged in a battle for technological pre-eminence with China, the ZGC project is exactly the sort of state-backed Chinese investment that American politicians across the political spectrum view with scepticism.

“China has targeted America’s industries of the future, and President Donald Trump understands better than anyone that if China successfully captures these emerging industries, America will have no economic future,” .....US tariffs on $34bn in imports from China that are due to take effect on Friday as part of a squeeze intended to end what the US says has been years of state-endorsed Chinese intellectual property theft. But it is also part of a broader battle against what the White House has labelled China’s “economic aggression”......Viewed from America, President Xi Jinping’s Made in China 2025 industrial strategy is a state-led effort to establish Chinese leadership in the technologies of the next generation of commerce and military equipment — notably AI, robotics and gene editing.

Many US officials are now questioning one of the basic assumptions about how the American economy operates: its openness to foreign investment....While some technology executives extol the potential for co-operation in areas such as AI, the Washington establishment increasingly sees them as central to a growing geopolitical competition....Many Chinese investors are looking for US companies that they can help move into China. .....Even though Mr Trump’s focus on Chinese technology has strong bipartisan support in Washington, its tactics have been heavily criticised. The biggest blunder, many critics argue, has been the Trump administration’s willingness to wage concurrent trade wars. The IP-driven tariffs push against China has been accompanied by one that has hit allies such as Canada and the EU that might have joined a fight against Beijing.

........“We’re treating the Chinese better than we are treating our friends,” says Derek Scissors, a China expert at the conservative American Enterprise Institute, who sees the tariffs Mr Trump is threatening against European car imports as a similar bit of malpractice.
arms_race  artificial_intelligence  China  CFIUS  Donald_Trump  economic_warfare  economic_aggression  FDI  geopolitics  international_trade  investors  investing  intellectual_property  industrial_policies  protectionism  politicians  robotics  One_Belt_One_Road  security_&_intelligence  Silicon_Valley  SOEs  start_ups  theft  U.S.  venture_capital  Washington_D.C. 
july 2018 by jerryking
NAFTA is dead and Canada should move on
June 2, 2018 | The Globe and Mail | by PETER DONOLO.

So what is our Plan B?

It obviously means seriously and aggressively pursuing markets and investment beyond the U.S. For example, new markets for Canadian resources are now more important than ever. That’s why the government’s decision this week to effectively nationalize the Trans Mountain Pipeline in order to finally get it built and deliver oil to Asia-bound tankers was such an important step. This decision in itself was a significant response to an unreliable American partner, and a signal that we must look farther abroad for greater economic opportunity.

The same goes for the myriad of trade agreements on which our country has embarked – most prominently the Canada-EU trade agreement and the Trans-Pacific Partnership. The GATT and WTO breakthroughs of the 1990s also work in Canada’s favour, providing us with tariffs much lower than existed before NAFTA and the original Canada-U.S. free-trade agreement. If NAFTA were to cease tomorrow, our trade with the U.S. would still operate under the WTO’s rules.

Finally, we need to redouble efforts to attract direct foreign investment into Canada. The government recently launched a new agency, Invest in Canada, to do just that. But there are obstacles. The Business Council of Canada cites the regulatory burden as the biggest challenge. In a globalized economy, tax competitiveness is always an issue. And governments need to walk the walk when it comes to opening up to investors from countries such as China, even when there is domestic political blowback.

The only negotiating stance that works against Donald Trump is the ability and willingness to walk away. Mr. Trump sniffs out weakness or desperation – in a friend or a foe – and he pounces without mercy. A defensive crouch is the wrong position. “Sauve qui peut” is the wrong rallying cry. Negotiating with strength, from strength, is the only approach.
beyondtheU.S.  automotive_industry  crossborder  Donald_Trump  FDI  global_economy  Nafta  negotiations  Plan_B  oil_industry  pipelines  protectionism  tariffs  TPP  Trans_Mountain_Pipeline  walking_away 
june 2018 by jerryking
‘Beneficial opportunities’ are all in China’s favour
25 February 2017 | FT | Sir Christopher Ruane

This is disingenuous. Africa provides dozens of examples of lopsided investment that bolsters China politically and provides little or negative local economic benefit, from its dangerous copper mines in Zambia to the decimation of Nigerian textile manufacturing by Chinese imports. A similar pattern emerges globally.
China’s outward investment has been politically charged, socially disruptive and environmentally damaging in many ways.
disingenuous  China  Africa  textiles  letters_to_the_editor  FT  exploitation  deindustrialization  asymmetrical  dangers  predatory_practices  Zambia  Nigeria  neocolonialism  imperialism  FDI  environment  lopsided 
march 2017 by jerryking
Dick Clark Productions to Be Sold to Chinese Company for $1 Billion
NOV. 4, 2016 | The New York Times | By AMIE TSANG.

Dalian Wanda Group said on Friday that it would buy Dick Clark Productions for about $1 billion, giving it the broadcasting rights to the Golden Globe Awards, the Academy of Country Music Awards and the New Year countdown celebrations in New York. Dalian Wanda has been on a multibillion-dollar spending spree in the entertainment industry. It is the world’s biggest owner of movie theaters, with complexes across the United States, Europe and Australia.....Wanda had bought and strengthened struggling companies like AMC Theaters and Legendary...This is Wanda's first step into television production. The company noted in a news release that it would be “occupying the highest-end TV program resources from the start,” adding that these television rights would be “complementary” to its focus on film, tourism and sports.
FDI  mergers_&_acquisitions  China  television  entertainment  entertainment_industry  Dalian_Wanda 
november 2016 by jerryking
China Investment Corp. revamps Canadian office - The Globe and Mail
China Investment Corp. revamps Canadian office Add to ...
Subscribers Only

The Globe and Mail

Published Wednesday, Dec. 18 2013
Boyd_Erman  China  China_rising  Bay_Street  money_management  institutional_investors  Felix_Chee  Canada  FDI  sovereign_wealth_funds  CIC 
december 2013 by jerryking
India opens the door to international retailers - The Globe and Mail

NEW DELHI — The Globe and Mail (includes correction)

Last updated Friday, Dec. 28 2012,
India  Stephanie_Nolen  retailers  FDI  Tesco  Wal-Mart  Carrefour  IKEA 
december 2012 by jerryking
Canada’s hazy takeover rules hurt everyone
Oct. 28 2012 | The Globe and Mail |Barrie McKenna.

Following an upsurge of national angst triggered by the buyouts of Canadian resource giants Inco, Falconbridge Ltd. and Rio Tinto Alcan in 2006, Ottawa ordered up the exhaustive “Compete to Win” report. The result was the 2008 federal Competition Policy Review Panel headed by former BCE Inc. chairman Lynton (Red) Wilson, which urged the government to turn the investment review process on its head.

The Wilson panel anticipated the growing clout of state-owned investors as well as the commodities super cycle.

Mr. Wilson’s prescription was to scrap the “net benefit to Canada” test and replace it with a “national interest” benchmark used by countries such as Australia. He urged Ottawa to reverse the burden of proof on takeovers, making it the responsibility of the government to demonstrate why a deal is bad for the country, not the other way around. And the panel said the government should publicly explain the rationale for blocking or approving transactions, scrapping a regime that “does not meet contemporary standards for transparency.”...The absence of investment reciprocity or evidence that state-owned actors won’t behave like other companies both would qualify as possible reasons for saying no.
barriers_to_entry  Barrie_McKenna  FDI  SOEs  mergers_&_acquisitions  M&A  rules_of_the_game  commodities_supercycle  national_interests  competition_policy  transparency  say_"no" 
november 2012 by jerryking
Nexen deal called dangerous precedent - The Globe and Mail

OTTAWA — The Globe and Mail

Published Wednesday, Sep. 26 2012,
CNOOC  Nexen  oil_industry  M&A  FDI 
october 2012 by jerryking
What if Nexen coveted CNOOC? - The Globe and Mail

The Globe and Mail

Published Saturday, Sep. 29 2012
Nexen  China  CNOC  mergers_&_acquisitions  FDI  reciprocity 
september 2012 by jerryking
Si Cuba
July 2004 | Robb Report Worth | Philips Peters
Cuba  opportunities  ADM  Cargill  Fidel_Castro  FDI  sanctions 
august 2012 by jerryking
Emerging Investors in Africa: Africans -
Emerging Investors in Africa: Africans
As U.S. and Europe Scale Back Amid Global Crisis, Intra-Continent Investments Are on the Rise.

Even as overall foreign investment into Africa has contracted, a cohort of homegrown companies has mounted an unprecedented expansion drive. Investment between African countries has almost doubled in the past five years, to 13% of new projects started on the continent last year, according to a report on foreign direct investment released Thursday by the United Nations Conference on Trade and Development.

African companies are heading into the rest of Africa in an unprecedented investment drive that has cushioned a pullback from the West and signaled the emergence of homegrown multinationals.

The companies behind those investments are chasing high growth rates in fast-developing markets, many of them buoyed by resource exports. Oil in Angola and Nigeria, copper in Zambia and coal in Mozambique have each attracted tens of billions of dollars over the past decade. Over the period, the continent's supermarket chains, construction companies and banks have expanded rapidly.
Africa  FDI  South-South  commodities  South_Africa  Nigeria  investors  high-growth 
july 2012 by jerryking
CTV News | How to break into the Indian market
March 14, 2012 | The Globe and Mail |BRYAN BORZYKOWSKI.
market_entry  FDI  Indians 
april 2012 by jerryking
In China, a leap forward by Canada
Feb. 08, 2012| The Globe and Mail | Editorial on China and Canada committing to a foreign investment promotion and protection agreement with China....The two essential ingredients in a FIPA are that each country “shall accord to investors of the other [country] treatment no less favourable than that it accords ... to its own investors” and that there will be a dispute settlement mechanism.
investing  investors  investments  crossborder  China  FDI  editorials 
february 2012 by jerryking
South Africa Pauses on Mines -

South Africa Pauses on Mines
Ruling Party Backs Away From Nationalization Issue in Bid to Reassure Investors
mining  nationalizations  South_Africa  ANC  Julius_Malema  FDI 
february 2012 by jerryking
Scotiabank takes stake in Chinese bank -
Sep. 10, 2011 | The Globe and Mail | by grant robertson — BANKING REPORTER
ScotiaBank  China  FDI  M&A  mergers_&_acquisitions 
september 2011 by jerryking
WPP's Ogilvy & Mather to Launch China-Focused Division in U.S. -
APRIL 11, 2011 | WSJ | By LAURIE BURKITT. The new venture
places the agency amid a growing roster of law firms, investment banks
and consultancies that are building their staffs and creating new
services to cater to the government's initiative to build up Chinese
businesses abroad.
WPP  China  New_York_City  public_relations  advertising_agencies  FDI  China_rising  Ogilvy_&_Mather  product_launches 
april 2011 by jerryking
Felix Chee: Building an economic bridge to China - The Globe and Mail
TORONTO— From Saturday's Globe and Mail
Published Friday, Mar. 25, 2011.

Felix Chee nudged China’s sovereign wealth fund to its most successful
direct investment ever, when he convinced China Investment Corp. to bet
$1.5-billion (U.S.) in 2009 on embattled Teck Resources Ltd. TCK.B-T
That investment is now worth $5.4-billion. In January 2011 came “the
highlight” of Mr. Chee’s career, when CIC opened a Toronto office with
him at the helm as its chief representative. The world’s fifth-largest
sovereign wealth fund, with $332-billion of assets, snubbed larger
capital markets by opening its first non-Asian office here, putting Mr.
Chee in a unique position to help build the fragile economic bridge that
links Canada’s resource riches with the world’s fastest-growing major
China  Canada  FDI  Manulife  uToronto  profile  sovereign_wealth_funds  Felix_Chee  CIC  capital_markets 
march 2011 by jerryking
China Limits Property Purchases By Foreigners -
NOVEMBER 14, 2010 / Wall Street Journal / By ESTHER FUNG and JOY C. SHAW
real_estate  China  FDI  restrictions 
november 2010 by jerryking
Corporate India Finds Greener Pastures—in Africa -
November 4, 2010 | BusinessWeek | By Mehul Srivastava and
Subramaniam Sharma. To avoid stiff competition and red tape at home,
companies are looking across the Indian Ocean
Africa  India  FDI  Indians 
november 2010 by jerryking
China Defends Its Investments in Africa -
MAY 13, 2010 | Wall Street Journal | By J.R. WU. China Rejects
Criticism Of Investment in Africa. "China's presence in Africa is
becoming more and more market- driven, the actors operating there are
diverse, there are many models, and the areas they are in are broad,"
said Fu Ziying, the vice commerce minister, in an interview. "The
Chinese government is more and more aware that as the economic and trade
cooperation between China and Africa evolves, there need to be some
laws and protections in place."..Mr. Fu expressed frustration over
persistent criticisms against China by Western nations and multilateral
development agencies, which have cited Beijing's lack of transparency in
its dealings in Africa and that the financing it provides without
conditions on better governance or tackling corruption sets back the
local economy.
China  Africa  FDI 
may 2010 by jerryking / Comment / Analysis - A new Asian invasion
June 24 2005 | Financial Times | By Dan Roberts, Richard
McGregor and Stephanie Kirchgaessner. "China’s strategic desire for
control of natural resources, global brands and a short cut to
international markets, combined with unprecedented access to cheap money
from the country’s state-owned banks, therefore means its companies can
afford to are ready to outbid more traditional trade purchasers and
private equity groups."
FDI  China  U.S.  industrial_policies  mercantilism  SOEs  natural_resources  brands  mergers_&_acquisitions  Asian  shortcuts  commodities  commodities_supercycle 
april 2010 by jerryking
Now's the Time to Invest in Africa - HBR 2009
February 2009 HBR article by Paul Collier and Jean-Louis
Warnholz who argue data show that a number of sub-Saharan nations have
emerged from conflict in stable condition and that new macroeconomic
forces are poised to have a profound effect – despite the global
economic downturn.
Africa  opportunities  investing  HBR  FDI 
february 2009 by jerryking

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