News Releases

Patience pays off in China: BMO Nesbitt Burns CEO Bourdeau

Doing business with China is about building relationships in China, according to Yvan Bourdeau, the newly appointed Chief Executive Officer, BMO Nesbitt Burns and Head, Investment Banking Group.

In his speech today to the Canadian Club of Montreal, Mr. Bourdeau, who has been doing business in Asia for more than 25 years, underlined that local knowledge is a distinct advantage in doing business in a country where “history is measured in millennia, where institutional memory is profound, and where the cultural character of the nation is unique.”

“Companies can and do spend decades cultivating business relationships, joint ventures and partnerships. The investment of time, human resources and money is a significant pre-condition to success in China. But for those willing to make such investments, the rewards can be significant,” he said.

“I've been to China three times in the last four months. And I'm going back again this month. Believe me, it's not for the sight-seeing!” said Mr. Bourdeau.

Based on his experience, Mr. Bourdeau noted five rules for achieving business success in China:

Invest the time to nurture relationships.
Learn the culture and customs of the country.
Have your own people on the ground.
Have advisers who understand local frameworks and the rights and obligations of partnerships.
Seek the expertise of the Canadian and Quebec governments who can open doors for you.

To establish a successful business in China, you need to know the local rules and to have people on the ground who know the terrain. “Nowhere more than China does the saying, ‘think globally, act locally' apply,” said Mr. Bourdeau.

He emphasized that it helps to have advisers, including financial advisers, who are established in the market. The advisors must understand local legal frameworks, due diligence, and the rights and obligations of partners in joint ventures. Many foreign investors and operating companies still have concerns about transparency, the rule of law, as well as proprietary concerns for intellectual property.

“The (former) Canadian government, and the Canadian Embassy in Beijing, have done an excellent job, at the most senior levels, of introducing and assisting Canadian companies in China,” said Mr. Bourdeau. “And Premier Charest's Quebec trade mission to China last fall was also an unqualified success,” he added. “I hope that David Emerson, our new Minister of International Trade, will build on his predecessor Jim Peterson's success.”

Advantage, Canada

Mr. Bourdeau pointed out a number of Canada's relative advantages in doing business with China:

Canada was among the first western countries to develop commercial and diplomatic links with the People's Republic of China (PRC);
The strong cultural and entrepreneurial presence of Chinese communities in Canada, which grows by up to 40,000 immigrants from China annually;
Canada's expertise in manufacturing and services, including international financial services;
Canada's experience in governance, communications and transportation across a vast territory.

And finally, there's China's hunger for energy and natural resources, which Canada owns in abundance.

“The recent good fortune of Ottawa and Alberta, and their spiking tax receipts and royalties from record oil prices, is due in no small measure to Chinese demand,” said Mr. Bourdeau.

China will also buy as much coal as we can ship by rail to the British Columbia coast and by sea across the Pacific. That's a huge business opportunity for Montreal-based CN and for the CPR, in a way that no one ever foresaw when the Pacific railway was built in the 1880s, he added.

“It's quite clear that the Chinese are also interested in being owners of foreign energy. Given their cash holdings, they're in a strong position to do so. It is only a matter of time before China takes a stake in our oil patch,” he said.

China Rising

China has changed a lot since his first visit 25 years ago, when men wore only Mao suits in three colours; now there are as many fashion choices in China as in New York, said Mr. Bourdeau.

“Shanghai is the new Hong Kong in terms of the clothing industry. It's also the new New York in terms of the construction industry. There are more 30-storey buildings in Shanghai today than in New York, most of them built within the last 12 years,” he said.

BMO Nesbitt Burns is a leading full-service investment firm offering corporate, institutional and government clients access to a broad range of products and services including investment and corporate banking, treasury services, market risk management, institutional investing and research. BMO Nesbitt Burns is a member of BMO Financial Group (TSX, NYSE: BMO). For more information, please visit www.bmonb.com.

*All figures are in Canadian dollars unless otherwise noted.

A copy of the full speech will be available at bmo.com.

BMO in China Background

Bank of Montreal undertook its first foreign exchange transaction in support of trade with China in 1818.
Canada first sold wheat to China in 1961; Bank of Montreal became one of the first western banks to establish direct business ties with the Bank of China (BOC).
1996, BMO became the first Canadian bank licensed for a full-service branch in Beijing,
In 2001 Bank of Montreal commenced negotiations to obtain an equity interest in Fullgoal Fund Management Co., a Chinese mutual fund company, obtaining approval in 2003 to become a 16.7 per cent owner. In 2004 the Bank's equity was increased to 28 per cent.
In November 2004, BMO became the first Canadian bank to be granted a license by the China Banking Regulatory Commission (CBRC) to sell derivative instruments in China.
In March 2005, BMO was the only Canadian bank selected to work alongside the Bank of China, the CITIC Industrial Bank, the Industrial & Commercial Bank of China and six other international banks as a market maker for foreign exchange trading in China.
In July 2005, BMO became the first Canadian bank to be granted a license to provide RMB local currency service such as deposits and loans to both foreign and local companies in China, providing greater access to financial services in the country.
In 2005 BMO was number one among all banks in China trading the Yuan, the country's local currency.

- 30 -

Yvan Bourdeau, Chief Executive Officer, BMO Nesbitt Burns and Head, Investment Banking Group, today told an audience of the Canadian Club of Montreal that doing business with China is about building relationships in China. (CNW Group/BMO Nesbitt Burns)