BCBusiness

16 BCBusiness JUNE 2015 government doesn't keep sta- tistics on how many dollars go to each province, B.C.'s share of Chinese investment is thought to have risen similarly. While investments by individual Chinese immigrants account for 80 per cent of the transactions—from headline- grabbing purchases of west side Vancouver houses to invest- ments in mom-and-pop busi- nesses by immigrants in the provincial nominee program— they count for less than a third of the total …ow of money. The bulk of investments, in dollars, are made by state-owned or -con- nected enterprises interested in resources. And those invest- ments are, for the most part, in B.C.'s hinterlands: in proposed mines, in pulp mills—and,€as in Terrace, in land zoned for indus- trial development. In the 1980s a trickle of container ships began carry- ing B.C. coal, logs and pulp to China's nascent ports. Then, in the 2000s, trade between the two jurisdictions began to boom. In that decade the value of B.C.'s exports to China grew at an aver- age of 24 per cent year over year. China is now the destination for just under one-¢fth of this prov- ince's exports. And with that trade has come investment. As the Chinese economy has grown, state-owned enter- prises have sought to develop global supply chains in order to service domestic demand, according to Michael Grant, a senior researcher at the Confer- ence Board of Canada. "A key priority of Chinese foreign direct investment is to develop global supply chains in order to service domestic demand for resources," he says. In B.C. that has trans- lated into investments in copper and steel-making coal mines, gas wells and pulp mills. In the last ¢ve years alone, the deals have piled on. In 2009 the China Investment Corpora- tion, the country's sovereign E xpedia changed the way we book …ights; Airbnb, accommodations. Few industries have gone unscathed in the Internet age, as startup after startup has struck fear into decades-old institutions by allowing people to share cars, trade with strangers and rent out rooms without the middlemen. One industry that's remained relatively una¦ected, however— at least in Canada—is banking. A Vancouver company, Grouplend, wants to change that. Launched last fall by 31-year-old former investment banking analyst Kevin Sandhu, Grouplend is modelling itself after U.S. com- panies such as Lending Club and Proper Marketplace: online peer- to-peer ( P2P) lenders that connect investors with borrowers directly. Those two organizations have been in operation since 2006 and 2005 respectively, and between them last year facilitated $6 bil- lion in loans—over double what they did in 2013. "You look at a map of the G20 countries, virtu- ally every country has a handful if not more doing this sort of thing," Sandhu says. "But no one's been o¦ering this kind of product to Canadian consumers." For borrowers, Grouplend's pitch is simple: borrow up to $30,000 at a moderate interest rate (between six and 20 per cent, depending on your credit history) to pay down high-interest credit card debt. Plus, rates are personalized, Sandhu says, whereas with credit cards, you're essentially subsidizing high-risk borrowers. Between January and March of this year, his 10-person Between You and Me Vancouver startup Grouplend brings peer-to-peer lending to canada, finally by Trevor Melanson F i n a n c e wealth fund, took up a 17.2 per cent stake in Teck Resources for $1.5 billion. Three years later, Petro China took a $1.5-billion stake in Shell's shale gas project in the Peace River region. Chinese state-owned enterprises have also made numerous smaller investments in B.C.-based miners: Selwyn Resources sold its shares in a zinc and lead mine to two Chi- nese companies for a combined $150 million in 2013, while that same year State Grid Corporation, China's main electrical utility, made a $1.5-billion investment in Vancouver-based miner Quadra Mining Ltd. Then there's a whole raft of yet-to-be-built projects, including the controversial HD Mining project in Tumbler Ridge (which infamously tried to bring in temporary foreign workers). Outside of mining and oil and gas, investment by Chinese com- panies has been more modest. In the case of lumber, B.C.'s second most valuable export to China, the opportunities for inves- tors tend to be "very limited," explains Kevin Mason, senior analyst at ERA Forest Products Research. Mason says that many in the industry expected that more Chinese pulp and lumber buyers would take up stakes in B.C. companies, but that hasn't materialized. Back in Terrace, the land for the future industrial park has been clear-cut but still sits empty. The city has been paid in full for the property, and over the past six months it has installed electrical towers and transformers, water pipes and roads. For an industry town without a major industry, the city is desperate for a new tax base, explains Pernarowski. "It was a surprise for a logging community to see a manufactur- ing plant come out of this deal," says Pernarowski, who welcomes the plant as a chance to mitigate forestry's boom-and-bust cycles. "We're a logging community, but 10 years have gone by and there hasn't been a lot of logging." BIG OIL China's big three oil companies each have stakes in projects in B.C.'s nascent LNG sector. Here's a rundown*: 1. PETRO- CHINA Estimated size of investment $25 to $40 billion Other foreign partners royal dutch shell, Mitsubishi corp. and Korea Gas corp. 2. SINOPEC Estimated size of investment $17 to $20 billion Other foreign partners petronas, Japan petroleum Explora- tion company Ltd. and petroleum Brunei 3. NEXEN/ CNOOC Estimated size of investment Us$20 billion Other foreign partners Japan's JGc corp. and iNpEX corp. 20% stake in LNG Canada 60% stake in Aurora LNG 15% stake in PaciŒc Northwest LNG *to date, none of the companies listed has made a final investment decision

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