An uncomfortable truth: Canada’s wary ambivalence to Chinese corporate takeovers
| Published date | 01 September 2018 |
| Author | Gregory T. Chin |
| DOI | 10.1177/0020702018792917 |
| Date | 01 September 2018 |
| Subject Matter | Scholarly Essays |
Scholarly Essay
An uncomfortable truth:
Canada’s wary
ambivalence to Chinese
corporate takeovers
Gregory T. Chin
Political Science, York University, Toronto, Ontario, Canada
Abstract
This article examines the behavioural patterns of successive Canadian governments in
responding to three takeover attempts of iconic high-value Canadian corporates by
large state companies from China. The first is China Minmetals Corporation’s attempt
to acquire Noranda in 2004–2005 during the Liberal government of Paul Martin, the
second is China National Offshore Oil Corporation’s acquisition of Nexen in 2012
during the Conservative government of Stephen Harper, and the third is China
Communications Construction Corporation International’s bid for Aecon Group in
2017–2018. This analysis highlights some important similarities in the behavioural
response of the Canadian governments across the three cases: ambivalence and wari-
ness. Policy lessons are addressed in the conclusion.
Keywords
Canada, China, foreign investment, foreign corporate takeover, finance, mining, energy,
natural resources, Investment Canada Act, national security review
International Journal
2018, Vol. 73(3) 399–428
!The Author(s) 2018
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DOI: 10.1177/0020702018792917
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I thank Kim Richard Nossal and Jeremy Paltiel for supporting the presentation of an earlier version of
this article at the International Studies Association (ISA) conference in Hong Kong, June 2017, with
their SSHRC Grant, and for their suggestions. I thank Andrew F. Cooper for his insightful comments
as ISA panel discussant, and Mark Beeson, Paul Bowles, Shaun Narine, and Richard Stubbs for their
questions. Special thanks to Daniel Koldyk and Jeffrey Mahon for sharing their expertise, and to
ambassador Joseph Caron, senator Jack Austin, Bruce Jutzi, Andrew Smith, and Yvonne Chin for
sharing their experiences, as well as Paul Evans and B. Michael Frolic for their suggestions. I thank the
journal editor Brian Bow, and the two anonymous peer reviewers for their comments. The author drew
on his experience as a senior analyst and trade commissioner in the China Division of Canada’s
Department of Foreign Affairs and International Trade from 2000–2001, senior development officer
(China Program) in the Canadian International Development Agency from 2001-03, and first secretary
(Development) in the Canadian Embassy in Beijing from 2003–2006, and he alone is responsible for any
errors of interpretation.
Corresponding author:
Gregory T. Chin, York University, Political Science, 4700 Keele Street, Toronto, Ontario, M3J 1P3, Canada.
Email: gtchin@yorku.ca
Canadian economic nationalists have long decried the foreign takeover of Canadian
resources and industries, and warned of foreign domination of the Canadian econ-
omy. The societal anger and the government’s concerns in the 1960s and 1970s were
mainly about US companies.
1
But now the anxiety and suspicion is directed at
takeovers from China.
The discomfort with the Chinese takeovers is somewhat remarkable when one
considers that after four decades of North American free trade, and global opening
and integration, few sectors of the Canadian economy have remained untouched by
foreign takeovers. The plethora of US and European corporate takeovers of iconic
and high-value Canadian companies over the last couple of decades suggests that
foreign takeovers had become the new norm in Canada. Examples include Tim
Hortons’ sale to Wendy’s International (1995), Eaton’s to Sears (1999), CCM to
Nike (2004), Ottawa’s Corel Corp. to Vector Capital (2003), Molson Brewery to
Coors (2005), Noranda/Falconbridge to Swiss Xstrata (2006), Stelco to US Steel
(2007), Alcan to UK Rio Tinto (2007), Hudson’s Bay to NRDC Equity Partners
(2008), and Electro-Motive to Caterpillar Inc. (2010). On large takeover bids, the
Canadian government conducted an investment review under the Investment
Canada Act (ICA), to assess ‘‘net benefit’’ for Canadian interests, and, more
recently, potential injury to national security. The review process was expanded
or contracted, depending on the perceived needs of the specific case and of the
regulators. In most cases, the process unfolded according to established proced-
ures, measures, and standards, according to a specified timeline; and rarely did the
Canadian government block the bid.
2
However, as the three case studies of Chinese takeover attempts that are detailed
below show, some foreign takeover bids clearly still draw the ire of some
Canadians. Whereas in the past, Canadian anger was directed at the USA, today
it is at companies from China. One can trace an identifiable and predictable pattern
of Canadian responses in reaction to the Chinese takeover attempts: criticism from
vocal interest groups intensifies; opposing politicians ratchet up the rhetoric of
national risks and threats; a few voices in favour step forward; and Canadian
authorities become tentative and highly security-conscious. A review of the
media coverage on the China Communications Construction Corporation
International (CCCI)/Aecon bid will reveal this pattern in the most recent case.
But how exactly did past Canadian governments respond in other cases of large-
scale Chinese takeover attempts of venerable Canadian corporations? Has the
1. Japanese companies also faced Canadian societal opposition to their takeover attempts in the 1970s
and 1980s. I thank Joseph Caron for highlighting this observation.
2. The exceptions include the Canadian government de facto blocking the $40-billion BHP Billiton
(Australian) takeover attempt of the Potash Corporation of Saskatchewan in November 2010, when
the industry minister made an interim decision that the deal was not likely to be of net benefit to
Canada, and then BHP withdrew their offer; and the blocked sale of the Canadian space and
satellite technology company that developed the robot arm for the space station, MacDonald,
Dettwiler and Associates Ltd., to Alliant Techsystems of Minnesota for $1.3 billion, after the
Canadian government ruled it was a strategic asset for Canada.
400 International Journal 73(3)
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