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Bryan Davis: State owned enterprises: Chinese fdi in Canada via the lenses of perceptual, political,
economic and social considerations

Jeff Gray describes the aftermath leading to trial as being “delayed repeatedly, with

Sinopec Shanghai Engineering arguing that it has no presence in Canada and was not served

properly with the charges. It argued that a summons for Sinopec Shanghai, given to the manager

in charge of SSEC Canada, was invalid. SSEC refused to be served saying it is not a Canadian

firm and therefore unaccountable to Canadian courts.”

However, years later SSEC was brought to court and pled guilty to three charges of

workplace safety violations. The Crown plans to pursue a $1.5 million penalty. This is a

positive development as we have argued throughout this paper that Chinese SOEs are rational

economic actors who will learn from this event. The onus now falls on Canada’s legal system to

reconsider where the maximum penalty ought to fall. If there is even a shard of doubt that

foreign firms do not place an adequate value on workplace safety it would be prudent to

introduce the threat of greater legal/economic consequences that will help Canada ensure that all

firms behave in a socially desirable manner.

Recommendations: Narrowing the Gap

We view perception as being crucial to forging a successful trade partnership with China

that allows for capital to flow more freely. Perception is not an idle term; it will undoubtedly

serve as a lagging indicator to enhanced compromise and collaboration.

The two key elements are the perception of trust and that of net benefit. We see these two

variables coming together much like a production possibility frontier. They are unified by a

concave frontier, which we see being the minimum threshold to attain, maintain and nurture a

social licence to invest. This is a modification of the standard business concept of social licence to

operate. Our assessment of where “China, Inc.” sits currently is not meeting social licence criteria.

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