From Alberta alfalfa farmers to industrial giants like Magna International, many Canadian companies have hitched their fortunes to China’s growth engine. But companies doing business in China have concentrated their efforts on traditional economic centres like Beijing and Shanghai, as this map detailing the findings of the Asia Pacific Foundation of Canada’s biannual survey of Canadian businesses operating in China shows:

“The easy entry points are really Beijing, Shanghai, and Hong Kong; this is where you have direct flights from Canada,” explains Professor Yves Tiberghien, director of the Insitute of Asian Research at the University of British Columbia. “Those cities have easy infrastructure to support business but they are probably not the best place today for investment.”

READ: Know the Rules of the Game in China »

The country’s new growth centres are located further inland, in provinces like Chongqing, and Guizhou, and cities like Chengdu. But Tiberghien notes that China is not a simple market to enter, unlike Canada’s favourite export target, the United States. Connections to government and support networks are vital to doing business in China, and they form an intimidating barrier for many companies. “It reflects the transaction costs and the risks of going where the growth is,” Tiberghien suggests. “Going to even Sichuan or Hunan if you are a mid-sized Canadian company in China is too difficult.”

Canada’s prosperity outlook is now firmly tied to China’s economic health, and the world’s second-largest economy has been slowing. Operating conditions have proved hostile for some large companies, with the Chinese government aiming to create “national champions” in high-margin and high-tech industries like pharmaceuticals and automobiles. While the federal Conservative government has indicated a desire for free trade talks with China, any agreement will require torturous negotiations and is unlikely to be reached any time soon.

READ: How to Keep on Top of Trade Deals »

But it’s not all doom and gloom for Canadian SMEs looking to China for growth. Chinese companies have indicated they’d be willing to offer a discount to partners that transact in renminbi, a cost saving that could prove significant. And governments are working to smooth the way for our businesses, with key provinces like Ontario and British Columbia making overtures and setting up partnerships.

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