China finds gems in Canadian tech as free trade talks stumble
While Chinese companies have been hunting for technology investments around the world, political tensions are increasingly prompting investors to look north to Canada from the United States
Free trade talks between Canada and China may have yet to achieve lift off, but tell that to the technology sector.
Major Chinese technology companies, including Tencent Holdings and Huawei Technologies, are boosting investment in Canadian companies with exposure to everything from electric vehicles to artificial intelligence (AI), attracted by the country’s swelling ranks of science and technology graduates, valuations that are cheaper than those in the United States, and government enticements.
“Over the last six months, I’ve probably been contacted by at least half a dozen new funds that have Chinese money,” said Janet Bannister, a partner at Toronto-based Real Ventures.
The venture capital firm said last week it raised C$180 million (US$142 million) in fresh funds for new Canadian start-ups, including an undisclosed amount from Tencent.
Based in the southern coastal Chinese city of Shenzhen, Tencent is the world’s largest video games company by revenue, as well as operator of the country’s biggest mobile messaging and social media platform, WeChat.
While China is Canada’s second-largest trading partner, Chinese investment in the country shrank to an annual average of C$1.21 billion in the 2013-2017 period, from C$8.16 billion in the previous five years, when the world’s second-largest economy was pouring money into the energy patch.