Canadian Companies Bullish on Asian Investment with Focus on Growing Asian Markets Says Annual Investment Intentions Survey from Asia Pacific Foundation of Canada



    VANCOUVER, March 27 /CNW/ - Canadian companies continue to buck the trend
seen in the United States to shift production of goods and services destined
for the domestic market to low-cost economies in Asia. The latest Asian
Investment Intentions Survey, undertaken by the Asia Pacific Foundation of
Canada, found that the target market of the majority of Canadian companies
that are planning additional investment in Asia is the region itself. Only
10 per cent are considering further investment in Asia to maintain their
competitiveness in North America, unchanged from the level in last year's
survey.
    The focus on growing Asian markets, rather than on outsourcing, is
confirmed by the 63 per cent of companies that reported their current
activities in Asia are aimed at supplying Asian customers. Only 15 per cent
are operating in Asia to supply the Canadian market, up only slightly from
last year's level.
    Commenting on the survey results, APF Canada President and Co-CEO Yuen
Pau Woo said, "Overall, companies are very bullish on Asian investment. The 85
per cent of respondents expecting to boost their Asian holdings substantially
or moderately in the next five years is the highest in the eight years the
Foundation has undertaken the survey. Most of these, 69 per cent, expect to
add to their investment during the next 12 months, the same level as last
year. Not one of the companies surveyed expected that they would reduce their
Asian activities over the next five years."
    The results of the 2007 Asian Investment Intentions Survey are considered
especially reliable as companies participating in the survey already have a
physical presence - factories or sales offices - in at least one Asian country
and are well-informed on economic prospects in the region.
    The importance of China to Canadian companies operating in Asia shows up
in the responses to several questions. Just under 21 per cent of all the
operations of companies surveyed are in China (31 per cent if Hong Kong is
included), and 20 per cent of additional investments are likely to be in that
country (27 per cent if Hong Kong is included). All these figures are down a
little from last year's results, but are far ahead of those for any other
market or region. India, Pakistan and Sri Lanka as a region are next most
favoured as geographic targets for new investment with 11 per cent, unchanged
from the level in the 2006 survey.
    One interesting finding is that 58 per cent of the Asia-focused companies
surveyed reported that they had a formal strategy for increasing business with
China. This is well above the 42 per cent of companies based in Canada, but
doing business with China, that reported having a formal China strategy in a
survey carried out last year jointly by APF Canada and Canadian Manufacturers
& Exporters.
    The largest proportion of likely new investment will go into facilities,
either new plant and equipment or expansion of existing facilities. However,
the likely takeover of - or merger with - other companies is on the rise
again, with 33 per cent of respondents favouring this path to growth,
reversing a declining trend that set in after a spurt in Canadian mergers and
acquisitions in Asia around the turn of the millennium.
    The 2007 Investment Intentions Survey is based on the Foundation's unique
database of Canadian corporations - Canadian Companies Doing Business in Asia
- that have a physical presence in Asia Pacific. It was carried out in January
and February this year with a response rate of 18 per cent from the 524
companies that received the survey. The comparison is with a similar survey
carried out a little over a year earlier.
    This year's survey was carried out before last week's Federal budget
which announced the elimination of the tax deductibility of interest on
borrowings for overseas investments which could affect the offshore investment
plans of some Canadian companies.

    The report is available at:
www.asiapacific.ca/analysis/pubs/pdfs/invest_survey/invest_intentions2007.pdf

    About APF Canada

    The Asia Pacific Foundation is Canada's leading independent resource on
contemporary Asia and Canada-Asia relations. As a national non-profit
organization established by an Act of the Federal Parliament in 1984, the
Foundation brings together people and knowledge to provide the most current
and comprehensive research, analysis and information on Asia and on Canada's
transpacific relations. It promotes dialogue on economic, security, political
and social issues, helping to influence public policy and foster informed
decision-making in the Canadian public, private and non-governmental sectors.
The Foundation is funded principally through an endowment from the Government
of Canada and a grant from the Province of British Columbia.

    www.asiapacific.ca





For further information:

For further information: M. Nevin, Director of Communications, Asia
Pacific Foundation of Canada, Phone: (604) 630-1529, Fax: (604) 681-1370,
Email: margaret.nevin@asiapacific.ca

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ASIA PACIFIC FOUNDATION OF CANADA

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