By Keith Norbury

Canadians should be careful not to hold Chinese companies wishing to invest in this country to higher standards than Canadian firms, says a former Canadian diplomat whose postings included Beijing and Hong Kong.

Hugh L. Stephens, who is now Executive in residence with the Asia Pacific Foundation of Canada, raised that issue in a recent commentary posted on the foundation’s website.

Chinese companies, he wrote, “are finding themselves subjected to unprecedented level of scrutiny over issues like their ownership, governance, management and personnel practices.”

Mr. Stephens cited three high-profile cases involving Chinese companies: China National Overseas Oil Corporation’s $15 billion takeover of Calgary’s Nexen Inc.; HD Mining International’s proposal to hire temporary Chinese workers for its coal mine at Tumbler Ridge, B.C.; and the Canadian subsidiary of Sinopec Shanghai Engineering being fined $1.5 million in the 2007 deaths of two workers in Alberta. “It was the largest penalty ever imposed by a judge in the province on workplace safety charges,” Mr. Stephens wrote.

Since that essay was first published in The Diplomat in February, Mr. Stephens has learned that Tim Hortons, for example, has brought thousands of foreign workers into Canada with hardly any notice.

“We’ve got to be careful,” Mr. Stephens said. “I’m not accusing anybody of racism or Sinophobia or anything like that. But B.C. has a long history of it, and I think we have to be careful not to slip into that mode.” On the other hand, he said the federal government’s hesitation in approving CNOOC’s purchase of Nexen “was a fairly clever decision” that also signaled the government is “not likely to approve the next one.” Dr. David Fung, Chairman and CEO of ACDEG Group of companies, said the approval of the Nexen takeover is significant and “has maintained the momentum of trade and investment between the two countries.”

Mr. Stephens, who speaks Mandarin, and has about 35 years of business and government experience in Asia, said it’s also clear that Chinese companies need to abide by North American standards. “Some of them, frankly, may not be that used to it,” said Mr. Stephens, who was also Time Warner Inc.’s Senior Vice-President for Asia-Pacific in Hong Kong from 2000 to 2009, and is now the principal of Trans-Pacific Connections Consulting in Victoria, B.C. “The standards have been pretty lax in some parts of the world where the Chinese have been operating, in Africa in particular.” Chinese companies do carry some baggage because of that, he admitted. For that reason, he expects them to be careful. CNOOC was meticulous in following the rules in its pursuit of Nexen whereas HD Mining could probably have handled its situation better, he said.

“On the other hand, they did play by the rules,” Mr. Stephens said. “And if you made the rules and people played by the rules and then you don’t like the results, you have to look to the mirror a little bit as well.”

The International Union of Operating Engineers and the B.C. Building Trades Council have taken HD Mining to court for a judicial review that is scheduled to be heard in April. The union is arguing that bringing in Chinese workers would take jobs away from qualified Canadians, a point that Mr. Stephens said has generated a lot of public sympathy. As he noted in his essay, this has made HD a “lightning rod” for discontent that unionized workers have with the temporary foreign worker program. The United Steel Workers issued a report alleging that HD Mining is owned indirectly by the Chinese government. Mr. Stephens said that’s certainly a possibility and wouldn’t be surprising. But the allegation implies that the Chinese government is a monolithic entity when in fact China has many levels of government, as does Canada, he said. “Everything was state-owned 20 years ago (in China) and they’re gradually divesting and diversifying,” he said. There’s also a big difference between a mining company capitalized by a Chinese government and allegations recently raised in news reports that implicate the Chinese government and military in computer hacking of major corporations like the New York Times and Washington Post. “But let’s just for a moment say, OK, maybe it’s true that the Chinese government is engaged in some kind of cyber surveillance of the West,” Mr. Stephens said. “If anybody doesn’t think that the United States isn’t engaged in the same thing, then I don’t think they’re actually living in the real world.” Dr. Fung, a former senior fellow of the Asia Pacific Foundation, added that such finger-pointing is irrelevant to discussions about international trade. “I would expect that all my competition would want to know my secrets,” Dr. Fung said.

University of Ottawa law professor Debra Steger said it is also important to realize that Canada isn’t the only country looking to forge trade relationships with China.

“So, for China, Canada is probably not the first country that it thinks of when it determines what its international economic policy is going to be,” said Ms. Steger, who is also a senior fellow with the Centre for International Governance Innovation, an economics think tank. “We probably pay more attention to that relationship than China does.” Canada also needs to beware of China’s relationships with the U.S. and Europe and how they might affect Canada’s future. “We may find ourselves becoming smaller and smaller as the world becomes more multi-polar,” Ms. Steger said.