China-Nexen deal could open up the skies and tourism for Calgary
August 1, 2012
This week’s announcement by Nexen that its board of directors has approved its purchase by the Chinese National Offshore Oil Company (CNOOC) has led to a strong debate about the purchase of a Canadian company by foreign investment.
There are lots of concerns about potential job losses, lost profits and in this case, the human rights record of the Chinese government. However, assuming the federal government ensures the transaction is in the net interest of Canada and that CNOOC will live up to its commitment to keep Nexen jobs, then we may see some tremendous benefits as a result of this transaction.
First, it represents a business opportunity that Canada has been seeking for quite some time — large foreign direct investment in Canada’s energy sector. Granted that perhaps the Prime Minister didn’t quite mean for foreign investment to come in and buy a Canadian company whole hog, but it’s a clear indication that China is interested in Canada as a strategic investment location: so much so they are willing to pay a 60 per cent premium to back that up. Canada now has growing business connections with China, which is important in a sector that has been working hard to diversify its client and market base. CNOOC could be in a real position to help make opportunities happen for Canada in the Asian energy markets. There is no doubting the importance of this and how supportive CNOOC will likely be in ensuring product gets to their market.
Second, it represents another justification for Calgary getting direct air access to China. With a prominent business holding in Calgary, hopefully governments on both sides will be more inclined to grant the much coveted direct air access to China from Calgary. Not only will this facilitate business travel for CNOOC and their employees, but it could open more opportunity for other energy companies wishing to do deals and transactions in China. This also creates direct business linkages for companies outside of the energy sector as well. But it creates a particularly lucrative opportunity for Calgary and Alberta — the Chinese tourism market.
Creating direct air access will enable the estimated 100 million Chinese outbound tourists expected by 2015 to pick Calgary and Alberta as their destination. Recent studies have shown that Canada is in the top three of favoured or preferred destinations for Chinese tourists. Imagine a direct flight right to our doorstep. We could have a booming leisure and business travel opportunity in Calgary given that size of market. This would benefit everything from airlines, hotels, restaurants, retail and tourism operators. The economic impact of this could be tremendous.
Finally, given all the concerns about how Chinese companies have operated in other countries, could Canada play a leadership role in working with Chinese officials and CNOOC executives to demonstrate how a Chinese national company can operate successfully, vibrantly and as a strong and positive corporate citizen? Could there in fact be a welcome wagon of sorts that is created to welcome a new foreign owner to our city? Only our imagination holds us back on that one.
We historically have feared the loss of Canadian ownership in our companies. But there are other Canadian owned energy companies here. And by addressing the real concerns through due process, I am sure that we can create a win-win situation. We should look at the other possibilities that this purchase creates that may result in new business and job opportunities and new trade relationships, that would not have happened without the magnitude of this deal.