DOING BUSINESS IN CANADA:
An Introduction for businesspersons from China
* C.H. William Cheung, B.S.Sc., M.Phil, LL.B., FRI, CITP
Partner, Shtabsky & Tussman LLP,
1400 10025 - 102A Avenue , Edmonton, Alberta, Canada T5J 2Z2
Tel: 780-429-4671 Fax: 780-424-3580 e-mail: bcheung@stlaw.com
Presented at Conference on West China Meets Western Canada: A Trade and
Investment Conference (October, 2001) Edmonton, Alberta, Canada

DOING BUSINESS IN CANADA:
An Introduction for businesspersons from China

1 INTRODUCTION

As China is likely to be part of the WORLD TRADE ORGANIZATION (WTO) in the very near future, one can envisage that trade between China and Canada will dramatically increase in the years to come, particularly in light of the bilateral agreement on WTO signed between Canada and China in November 1999. The purpose of this presentation is to introduce the subject matter to our friends in China. It is believed that a mutual understanding on topics of this nature would facilitate doing business between China and Canada.

The presentation will compare some values fundamental to the Canadian society as reflected in Canada's laws and business practice with that observed in China through the writer’s regular business visits to China. The following areas will be discussed:
a. The role of Government in business
b. The role of the legal profession in business
The advantage of utilizing Canadian corporations for the North American Market
The contractual process and dispute resolutions
The Rule of Law and how it affects business
f. Other business practice points

2 THE ROLE OF GOVERNMENT IN BUSINESS

2.1 In this section we shall examine the role of government and business in Canada with emphasis on the Province of Alberta. An explanation about the concept of exclusive jurisdiction is also offered.
2.2 Our friends from China would quickly note the difference in the role of government in business between the two countries. In China, state-owned enterprises have played a major role in the economy. Private enterprises only began to establish themselves in the 1990’s. It will take some time before they will take the place of government as business operators, if this will happen at all. One may therefore say that in China, the Government is an ‘operator’ of business. China’s entry into the WTO may allow itself to open its market in such businesses as air transportation, railways, banking and insurance, telecommunication networks, TV and radio broadcasting. These businesses have, up to this date, been operated by the government.

2.3 The government in China is also a ‘regulator’ of business. An example is that the Bureau of Industry and Commerce at the Central, Provincial and Municipal levels are involved in issuing licences and permits to business enterprises that operate at the relevant levels. Other government authorities such as health authorities and the Bureau of Tourism are also involved in licensing businesses in the hospitality industry.

2.4 In Canada, the government is not an ‘operator’. Few businesses are owned or operated by it. Most businesses are left with the private sector. A few exceptions exist, such as: the Canada Mortgage and Housing Corporation operated as an agency of the Federal Government; and the Alberta Treasury Branches operated as an agency of the Government of Alberta. These operations were set up by the government as no private enterprise at that time was willing to become involved in the businesses in question. (241)

2.5 The government in Canada can be described as a ‘facilitator’ and a ‘regulator’ of business. The following examples highlight some of the facilitator’s functions:

2.5.1 At the Federal Government level, Industry Canada has set up International Trade Centres in major cities across Canada to assist private enterprises to understand the overseas market for export purposes. The Prime Minister of Canada also led several trade delegations to the Pacific Rim countries in the recent past to promote Canadian businesses.

2.5.2 At the Provincial Government level, the Government of Alberta for example, has set up Alberta Government Offices in Tokyo, Beijing, Hong Kong, Harbin and Taipei to facilitate Alberta private enterprises to do business in Japan, People’s Republic of China, Hong Kong and Taiwan. The Premier of Alberta has also led delegations to visit Pacific Rim countries to promote businesses from Alberta.

2.5.3 At the Municipal Government level, the Mayor of the City of Edmonton, for example, has led delegations to Japan, China and Hong Kong for the purpose of promoting businesses that are located in Edmonton.

2.6 The ‘regulator’s function of the government can be demonstrated by the following:
2.6.1 At the Federal Government level, the Competitions Act of Canada has been enacted by the Federal Government to encourage competition and to discourage monopoly and the Bank Act to regulate activities of private banks. There are other examples.

2.6.2 At the Provincial Government level, the Fair Trading Act of Alberta, for example, has been enacted to regulate business conduct affecting the rights of consumers and the conduct of credit reporting agencies, loan brokers, persons involved in direct sales etc. (261) The Real Estate Act of Alberta regulates the marketing of real estate and the conduct of Real Estate Agents. (262) Again there are other examples.

2.6.3 At the Municipal Government level, the City of Edmonton, for example, regulates by way of passing bylaws relating to land use, issuance of business licences and permits.

2.7 It is also necessary for our Chinese friends to appreciate the element of ‘exclusive jurisdiction’ embedded in our Canadian constitution. In China, the Central Government and the other levels of government, such as the provincial, city, town, and village, are in a hierarchy. Officers of the lower level of government account to officers of the next superior level of government.

2.8 Our friends should note that, in Canada, the Federal Government and the Provincial Government are vested with exclusive jurisdiction in many areas. Section 91 of the Constitution Act of Canada gives exclusive powers to the Federal Government to legislate in areas that will, by their nature, extend beyond provincial boundaries such as banking, air transportation, telecommunication, etc. Section 92 of the same Act gives exclusive jurisdiction to Provinces to legislate in areas that will, by their nature, operate within provincial boundaries such as education, health care, civil rights, rights in land and land-use. It should be noted that the exclusive powers have been jealously guarded by the respective levels of government, resulting in numerous court cases. (281)

2.9 However, both levels of government have shared jurisdiction in some areas such as environment, incorporation, insurance, etc., which by their nature may operate within a provincial boundary but may extend beyond.

2.10 The businessperson in China may have the tendency to approach one level of government thinking that it may influence the other level. Such approach may need to be modified for Canada in light of the question of exclusive jurisdiction as it would be inappropriate to approach the level of government that does not have jurisdiction in the matter. It is necessary to understand which government deals with the area in question before making the approach.

2.11 Another issue to note is the devolution of government functions which was a significant development of the last decade in both China and Canada. Throughout the last decade, China has seen the demise of numerous State-owned enterprises and the proliferation of private enterprises. In Canada, the government at both Federal and Provincial levels has also reduced many functions by way of privatization. In Alberta, for example, the Government currently plays a minimum role in dealing with the incorporation of business corporations as most functions are performed by law firms and search houses. The issuance of driver’s licences is now hardly a government function as private instructors act as examiners and the registry agencies issue the licences.

2.12 Technology and budget-constraints have also caused the disappearance of many jobs at all levels of government in Canada. A significant example is that most of the government telephones are no longer answered by human persons but by answering machines operated by computers. Our friends from China might find it very challenging to make telephone enquiries. Even local Canadians sometimes find it challenging. To make enquiries over the phone requires the language skills to understand the options given by the answering machine, the ability to make quick responses to the options, the patience to listen to many options before making a selection, and perhaps having to make repeated calls to hear the options again.

3 THE ROLE OF THE LEGAL PROFESSION AND OTHER PROFESSIONS IN A BUSINESSPERSON’S ACTIVITIES

3.1 In this section we shall examine how lawyers and other professionals in Canada render help to the businessperson in his business activities.

3.2 According to the writer’s experience, a Canadian businessperson would use the help of a lawyer and other professions in a business transaction, while the Chinese businessperson doing a transaction in China would approach their friends or government bureaucrats for help instead.

3.3 Let us take an actual case in Edmonton where a businessperson whose corporation processes agricultural products is buying real estate and having to import machinery to set up the operations as an example. The entire transaction involves the following components:
? land transfer,
? borrowing money from a bank,
? ordering machinery from abroad, and
? obtaining the necessary permits and licences.

3.31 The land transaction involves the following:
examination of title documents and all documents that concern 3rd party interests affecting title,
examination of documents filed with government affecting the seller’s ability to sell land, and any debts owed by the seller,
reviewing the zoning of the property with a view to determine if the intended usage by the buyer would be allowed,
arranging for insurance coverage and setting up of utilities accounts,
engaging an environmental consultant to determine possible contamination of the building and the land,
engaging a surveyor to do a report on the building dimensions and to seek confirmation from the municipality government regarding compliance with bylaws,
arranging money for the payment for the transaction and property taxes, and
signing transfer documents and registering title in the name of the buyer.

3.3.2 Borrowing money from the bank involves the following:
engaging an inspector to conduct inspection on the building structure,
engaging an appraiser to valuate the property so as to advise the bank,
signing of the following documents by the corporate borrower to give security to the bank: mortgage on the real property, assignment of rent, promissory note, line of credit agreement, security agreement on all equipment, direction to pay creditors, directors resolution on the borrowing, corporation officer’s certificate re signatures and resolutions, etc.,
signing of documents by the shareholders: guarantee documents, and postponement agreements, and,
issuance of an opinion letter by the borrower’s lawyer to the bank regarding the validity of the loan documents.

3.3.3 The purchase of machinery involves the following:
ordering of the equipment and arranging a Letter of Credit issued by the bank on behalf of the buyer guaranteeing payment of the balance of the purchase price,
signing of Trade Financing Agreement by the corporate borrower to give security to the bank,
arranging shipping and insurance of the equipment, and
engaging a customs broker to handle customs clearing.

3.3.4 Application for permits and licences involve the following:
application for a development permit to operate a food processing business,
? application for a building permit to do renovation, and
? application for a business licence.

3.4 The transaction described above is a typical one. The typical businessperson is one who knows how to operate the food processing business very well because it is his daily activity. However, he is usually not familiar with the process of doing a purchase of real estate, borrowing money from the bank, buying new machinery from overseas, and making application for permits. It is therefore natural for him to seek help from professionals like lawyers who, at times, also engage the help of other professionals on behalf of the businessperson.

3.5 Hence, businesspersons often seek help from lawyers to assist in many areas of business activities. To name a few examples:
a developer making application for the approval of a development project which involves dealing with the Development Appeal Board of the municipal government,
a creditor wishing to enforce a right to money,
an insured wishing to make a claim after a fire which destroys his building,
a corporation seeking to restructure itself as a result of one shareholder buying out another;
a corporation seeking to have its shares traded publicly in the stock market,
a corporation seeking a franchise right from a franchiser,
a corporation wishing to enter into an agreement with a potential employee who must handle information sensitive to the corporation,
intellectual property matters: patents, trademarks, licences, etc.,
? landlord and tenants matters, and
? taxation disputes with the taxing authorities, etc.

3.6 There are advantages to seeking help from a lawyer. First, to the ordinary business person the law affects everything and it is often too complicated for him to comprehend. Secondly, the legal profession is one of the oldest, well-established, and has credibility in society (361). For centuries, clients have engaged lawyers to render assistance for their matters. Thirdly, every lawyer in Canada has liability insurance coverage such that the client who has suffered damages resulting from the negligence of lawyers has recourse for compensation. In Alberta, for example, each lawyer has a coverage of CAD$1 million per claim provided through the Law Society of Alberta. Firms needing extra coverage can also arrange with insurance companies. It is not unusual to find some firms whose coverage is in excess of CAD$10 million per claim. Finally, laws of evidence in Canada protect communications between a lawyer and his client called ‘privileged-communications’. This means that the confidentiality of the client’s affairs can be assured (362 ). No other profession has such privilege.

3.7 Businesspersons or corporations from China engaging the service of a Canadian lawyer can also enjoy solicitor-client privilege and the insurance coverage carried by their lawyer.

4 USING CANADIAN CORPORATIONS TO MARKET TO THE NORTH AMERICAN MARKET

4.1 In this section we shall examine the use of corporations in Canada to tackle the North American Market, especially in light of China’s entry into the WTO.

4.2 The businesspersons from China will soon discover that setting up a corporation in Canada is relatively easy as compared to China. In China setting up a corporation is not a right but a privilege. The scope of business is pre-determined and is set out on the business registration licence. The principal who is often described as the ‘legal representative’ (Fa Ren Dei Biao) of the corporation has personal liability when the corporation is being sued (421). There is also a requirement for capital investment. The deposit of capital into the corporation account must be verified (often by an accounting firm). The amount required varies from one nature of corporation to another.

4.3 In Canada, one has the choice of setting up a corporation under the Canada Business Corporation Act or under the corporation law of any province. Take Alberta for instance, the law allows anyone who complies with the legal requirements to establish a corporation as of right. The scope of business is not limited (the corporation can therefore do any business it legally can do). The principal of the corporation is not personally exposed to liabilities as a shareholder unless he enters into a contract to be personally bound. He may, however, become liable as a director in a few circumstances. There is no requirement for him to invest any amount as capital and consequently many corporations may only have a nominal capital (431) .

4.4 The businesspersons from China will also be pleased to note that anyone from China is welcome to establish a corporation in Alberta or other provinces of Canada. Given that there is no need for capital investment at the time of incorporation, the only requirement that one needs to satisfy is to have the minimum number of persons who are residents of Canada to serve as directors. The Province of Alberta requires only half of the directors to be residents of Canada and no one needs to be a resident of Alberta (441). Other provinces such as the Province of B.C. and the Province of Ontario, require that a corporation established over there has the majority (which is more than half) of directors being residents of Canada (442).

4.5 As the Board of Directors of a corporation can be as few as one or two persons, it follows that an individual or a corporation in China may establish a corporation in the Province of Alberta (by having one Canadian resident as director) to carry out business. The individual in China can serve as the other director and the corporation can function (451).

4.6 When China becomes a member of the WTO, it will be advantageous for businesspersons from China to use a either a Canadian corporation or an Alberta corporation to market to North America which is a huge market. The WTO applies the principle of non-discrimination amongst members and it also promotes free trade and the reduction or elimination of custom duties and import restrictions on goods(461). The Alberta corporation with its principal in China will have a local presence in North America and a natural access to both the North American and the Chinese markets. It will be in an advantaged position to do trade between Canada and China.

5 THE CONTRACTUAL PROCESS AND DISPUTE RESOLUTIONS

5.1 In this section we shall examine the way contracts are handled in Canada. Dispute resolutions are also recommended as part of the contractual process.

5.2 Our friends from China are likely to be familiar with the Contract Act of China which came into effect in Oct. 1999. The Act governs various aspects of contracts including: contract formation, amendments, performance, and breach etc.

5.3 There are major differences between how certain aspects of the contracting process are dealt with in China and Canada. These differences are summarized in the chart that follows (531) :

Area	Canadian Contract Law	Contract Act of China
Invitation to Treat	An invitation to treat is not an offer and is not capable of being accepted to make a binding contract.	Same as Canadian Law.
Amendment to Offer	Any change made to an offer by the offeree amounts to a counter-offer and becomes a contract only when it is accepted by the other party.	The offeree may make changes of a non-substantial nature and it amounts to good acceptance. The changed version is the contract and the offeror is bound. (s.31)
Revocation of Offer	An offer may be revoked by the offeror at any time prior to acceptance	An offer may not be revoked where the offeree has reasons to believe that it is irrevocable and has made preparation for its performance. (s.19)
Minimum Content of a Contract	A contract exists when the following minimum requirements are ascertained: who the parties are, what product or property is being transacted, and the price (532).	Sections 12 and 61 imply that the following are minimum requirements: who the parties are, what the subject matter is, and the quantity. Price is not an essential element and may be implied by applying the market conditions of the location where the contract was made. (s.62)
Conditions precedent	The party who has the benefit of a condition precedent has the obligation to use its best effort to have the condition satisfied. The other party has no right to examine the manner in which the condition is fulfilled	If the party who has the benefit of a condition precedent causes the satisfaction of the condition in an inappropriate manner, the condition precedent is deemed to be not satisfied. If the party who has the benefit of a condition precedent causes the failure to have the condition precedent satisfied through inappropriate means, the condition precedent is deemed to have been satisfied. Section 45 may imply that one party has the right to examine the manner in which the other party has the condition fulfilled. (s.45)
Performance	A contract binds the corporate body regardless of a change of officers.	The Act prohibits the use of a change of officer as an excuse for non-performance. (s.76)
Fraudulent Misrepresenta-tion	Innocent party may rescind contract and may claim for damages suffered.	Innocent party may declare that the contract is invalid if state interest has been adversely affected. (s.52)
Pre-determined compensation	The Court is not likely to interfere with pre-determined liquidated damages.	The Court may increase or decrease the damages to match the actual loss. (s.114)
Choice of law	The parties may choose any country’s law to be applied to the contract.	The parties may choose any country’s laws for application to the contract. However, laws of China shall be the laws where the contract is concerned with the operation of a joint-venture enterprise, a co-operative enterprise, or the exploration of natural resources in China. (s.126)

5.4 The writer had the occasion to test some of the differences while speaking at a workshop held at Hebei Administrative Cadre College of Political Science and Law, Shijiazhuang of China attended by about 120 legal professionals in the Spring of year 2000. The writer gave the audience the following scenario which happened in Alberta, Canada, for their reaction:

5.4.1 “Offeror (a pig-farmer, the buyer in this case) made an offer to buy some parcels of land from the landowner for X amount of dollars with the clear intention that the land purchased would be used for developing a pig-farm.

5.4.2 Offeree (the landowner, the seller in this case) accepted all the terms of the offer, but made the change that the buyer (Offeror) would have to let the Offeree have all the manure of the pigs free of charge for as long as the buyer owns the land and raises pigs,”

5.4.3 The writer asked the audience if there was a contract formed and whether the Offeror was bound.

5.4.4 The majority of the audience responded by indicating that in the above scenario, a contract was formed, according to the Contract Act of China. To them, the change made by the Offeree would not amount to ‘substantial alteration’ (as defined in Section 30 of the Act) to the offer. A contract was therefore formed, and the contract would include the change made by the Offeree.

5.4.5 This scenario would not be interpreted the same way in Canada. A change made to the offer would amount to a rejection of the original offer and the making of a new offer by the Offeree who now becomes the new Offeror, and no contract is formed until the change is accepted by the other party.

5.5 Another major area of difference is pre-determined damage. Canadian laws recognize the freedom for business people to make their own rules about contract enforcement (subject to, of course, that the rules do not violate any laws). The courts in Canada will interfere with the provisions regarding pre-determined damages only if they amount to oppression by one party against the other. This view is also shared by courts in the Commonwealth countries (551). It is evident that s.114 of the Contract Act of China allows the court to determine the amount of damage notwithstanding the agreement already arrived at by the parties.

5.6 It is recommended that the Chinese businessperson doing business in Canada be familiar with the differences for the simple reason that the parties may choose to use Canadian contract law as the governing law for the contract.

5.7 Another practice common amongst Chinese businesspersons also deserves special attention. The contractual process involves the following stages:
Invitation to treat,
Offer, counter-offers, and acceptance (negotiations happen at this stage), and
Performance (negotiation of terms is not the practice).
5.7.1 The writer has observed a number of occasions in which the Chinese businesspersons tried to negotiate terms at the performance stage, a practice which Canadian businesspersons do not find acceptable.

5.8 Our next issue is dispute resolution. In Canada, there are generally two favoured alternatives if the parties cannot resolve a dispute by themselves. One alternative is to bring the matter to the courts. The other alternative is to refer it to arbitration. It is recommended that the contract should contain a clause about dispute resolution so that the appropriate methods can be used when necessary.

5.9 A question about enforcement of court judgments must also be considered. Currently there is no reciprocal arrangement between Canada and China to enforce each other’s court judgments. The businessperson from China may wish to consider this challenge when contracting.

5.10 Arbitration is different. Both Canada and China are member states of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (generally known as the “New York Convention”) (591). The New York Convention has been endorsed by Provinces such as Alberta and British Columbia. This means that an arbitration award given in Canada can be enforced in China, and vice-versa. A number of arbitration centres in China have foreign arbitrators and some are from Canada (592). The British Columbia International Commercial Arbitration Centre of Canada (593) also has panel members who have experience with arbitration in China. It is therefore recommended that a Chinese businessperson, when contracting with a Canadian partner, consider having an arbitration clause in the contract to resolve disputes.

6 THE RULE OF LAW AND HOW IT AFFECTS BUSINESS CONDUCT

6.1 In this section we shall examine the concept of the Rule of Law and how it affects business conduct.

6.2 The Rule of Law is the most important value in Canadian society (621). In fact, it is also the most important value in most democratic societies many of which are trading partners of China. Rule of Law means ‘law governs’. It means that everyone, including a businessperson, a corporation, or the government, is equal under the law and no one is above the law.

6.3 The Rule of Law also means that the government, or a corporation set up by the government, does not enjoy more rights than private citizens, and they are treated equally under the law. For example, the Supreme Court of Canada has decided in a case that a city was liable for negligence and had to compensate a citizen (631). The Alberta Court of Appeal has also decided that, where a government agency uses the general laws of the Province to conduct business, (in this case, lending business), it is also subject to the restrictions imposed by the general laws of the Province. It does not have any advantage over other lending institutions in recovering payments from the borrower (632) .

6.4 In Canada, no one escapes legal consequences of breaking the law by being in high positions or related to people in high positions. In 1989, the son of the then Premier of the Province of Alberta was sentenced to jail for 18 months for drug trafficking. The government appealed the sentence and the Alberta Court of Appeal increased the sentence to 33 months (641). In 1991, the then Premier of the Province of British Columbia who sold his family assets to a businessman from Asia was found by the Conflict-of-Interest Commissioner (of B.C. Province) to be in conflict and had to resign. He was subsequently charged under the Criminal Code of Canada for having accepted some extra money in that transaction (642). In 1993, the Securities Commission of B.C. Province held hearings against a former Premier for being involved in insider trading of shares of a corporation in which he had an interest (643).

6.5 The writer has often been asked by businesspersons from China if he has a good relationship with the courthouse (meaning with some judges of the court) or with some government departments (such as immigration officers or visa officers). He had to advise that good relationship means only good reputation and credibility and not personal relationship. He has been advised by different individuals that in order to be successful in handling court cases in China, one has to have good personal relationships with judges.

6.6 In Canada, the Rule of Law is also strengthened by the independence of the judiciary. The court is not part of the administrative hierarchy of government. It is not subject to interference from government, the media, or any other group. One of the best examples was the incident involving a Minister of the Federal Government who tried to telephone a judge of the Quebec Superior Court to discuss a case. The judge refused to answer his telephone call but made reference to the call in court. The said Minister had to resign from the position of Minister for having attempted to interfere with a judicial proceeding (661) .

6.7 Other factors that strengthen the Rule of Law include the following:

6.7.1 The independence of the judiciary is enhanced by having the livelihood of judges protected. A judge of a superior court holds office until the age of 75. Even the surviving spouse of a judge who dies while holding office, is to receive 1/3 of the salary of the deceased judge, for life (671).

6.7.2 Courthouse proceedings are open to the public and all decisions are reportable by the media and publishers. Members of the public see how justice is done.

6.7.3 The superior court of a province has extremely wide jurisdiction and may handle issues of any kind (672) .

6.8 To a businessman or a corporation from China doing business in Canada, the Rule of Law means he may enjoy the same protection of the law as everyone else in Canada (681). He is also subject to the same restrictions imposed by law as everyone else in Canada.

7 OTHER BUSINESS PRACTICE POINTS

In this section, we shall examine a few business practice points:

7.1 The businessperson from China would note that ‘privacy’ is a different concept in Canada compared with that of China. The Canadian culture (and the Western culture as well) places greater importance on the privacy of the individual than the Chinese culture.

7.2 An obvious example is the way people greet each other in the two cultures. The usual way a Canadian greets each other is to say ‘How are you?’. The focus is on the well-being of the other person and the conversation can quickly turn to something not very personal like commenting on the weather. The usual way a Chinese greets each other is to say ‘Where are you heading? Or, ‘Are you heading for the street?’ Or, ‘Have you eaten?’ The focus is on what the other person is doing. By responding to the question the conversation is more likely to get into an area of a personal nature. In doing so, a person invites himself into a privacy area.

7.3 In Canada, privacy is a right which is defined as the right to be let alone (721). It is a right of an individual (and a corporation) to withhold himself and his property from public scrutiny, such that it will prevent an injury threatened by the invasion of others from motives of curiosity, gain or malice.

7.4 Section 15 of the Charter of Rights of Canada provides that individuals regardless of sex, age, marital status etc. are to benefit equally from the law. The Human Rights, Citizenship and Multiculturalism Act of Alberta also provide that one may not be discriminated against because of race, religious beliefs, colour, gender, physical disability, mental disability, ancestry, place of origin, marital status, source of income or family status (751) .

7.5 These laws have affected business conducts in many ways. One area is employment. Many employers including the Government of Alberta do not ask questions about the date of birth and marital status of the job-applicants in order to avoid being accused of discrimination on those grounds in the event that the applicant is not hired. They merely ask if the applicant falls within the age group of 18-65 to ensure that applicants are adults.

7.6 Another area of privacy is personal income. While it is fairly common to talk about personal income in China, a Canadian businessperson prefers not to be asked about it.

7.7 The Chinese businessperson may also find that his business partner of Canadian background prefers (in general) not to be contacted at his residence to discuss business unless his residence phone number is printed on his business-card, or in case of emergency, or it has been agreed that the parties would discuss business at their residences.

7.8 Smoking and drinking also deserve special attention. This past decade has seen many municipalities in Canada pass bylaws prohibiting cigarette smoking in offices, public places and even restaurants (791). Therefore, one should not expect to be allowed to smoke while negotiating business. In China, where the writer visits often, smoking is still allowed in most places. It is a common practice for a businessperson to offer cigarettes to one another and smoke while discussing business.

7.9 In the Canadian business circle, moderate consumption of alcoholic beverages is the norm. In China, good hospitality often means that the host treats his guests well by promoting drinking during lunches and dinners. “Ganbei” (meaning ‘bottoms up’) appears to be a necessary element in developing good relationship. The Canadian businesspersons that the writer has spoken to often find it difficult to handle the heavy drinking during business meals hosted by their Chinese business associates.

7.10 A word ought to be said about communication. The time difference between Canada and China means people can hardly work at the same time because the business hours of China begin after the business hours of Canada have ended. Communication by fax is a very effective way to do business as it can be used anytime. However, it appears that many firms in China would turn off the power after business hours and therefore the fax machine will not work during those hours. On the contrary, firms in Canada rarely turn off the power after business hours. It is therefore possible for the businessperson in China to send a fax (during his work hours) to a business fax machine in Canada after the latter’s work hours. The businessperson in China needs to consider keeping the fax machine on during his non-business hours to allow the receipt of faxes from Canada.

7.11 Finally, let us address the question of relationship and credibility. Relationship (guanxi) is said to be a very important factor in doing business in China (792). To the Canadian businessperson, relationship is also an important factor in doing business. However, the basis of such relationship is not based on personal relationship but credibility -- that a person is trustworthy. The Canadian culture values honesty and has low tolerance for misrepresentations (793) .

8 CONCLUSION

China’s great warrior (in history) Sun Zhi once said that one will always win if one knows about himself and the other side (794). This paper is offered to promote understanding. It is believed that the one who knows about himself and his business partner will be successful.

ABBREVIATIONS:
Alta. L.R. Alberta Law Reports (2nd Edition)
A.R. Alberta Reports
B.L.R. British Law Reports
C.A. Court of Appeal
E.R. English Reports (of United Kingdom)
Q.B. Court of Queen's Bench
R.S.A. Revised Statutes of Alberta
R.S.B.C. Revised Statutes of British Columbia
R.S.O. Revised Statutes of Ontario
S.C.C. Supreme Court of Canada
S.C.R. Supreme Court Report
W.W.R. Western Weekly Report

References:

241 Canada Mortgage and Housing Corporation (CMHC) was set up to encourage housing construction by providing insurance on mortgages. The Alberta Treasury Branches was set up to provide banking service to small communities where the banks were not willing to provide such service.

261 Fair Trading Act, Statute of Alberta, Ch. F-1.05, 1998. The Act came into effect on Sept. 1, 1999.

262 Real Estate Act, Statute of Alberta, Ch. R-4.5, 1995. The Act came into effect fully on July 1, 1996.
281 See Peter W. Hogg, Constitution Law of Canada, Carswell 1977, Part II Distribution of Powers.

361 The legal profession is so well-established that government does not even regulate its affairs. The profession is self-regulated in that licences to practise law are issued not by the government but by the law society of each province. In Alberta the Legal Profession’s Act establishes the Law Society of Alberta which then governs the conducts of lawyers.

362 “Privileged-communication” is defined as communications made by persons within a protected relationship which the law protects from forced disclosure on the witness stand at the option of the persons protected. See Greenough v. Gaskell (1833) 39 E.R. 618 at 620-621, Beer v. Ward (1821) 37 E.R. 779 at 782, Solosky v. Canada [1980] S.C.R. 821 at 839, Bell v. Smith [1968] S.C.R. 664 at 671, and Ott v. Fleishman [1985]5 W.W.R. 721.

421 The person who is to be the legal representative is named on the business registration licence issued by the Bureau of Industry and Commerce. Every person the writer spoke to was aware that the legal representative is to be sued when the corporation is being sued.

431 Many corporations would have CAD$100.00 as capital and it can be less.

441 Business Corporation Act (of Alberta), R.S.A. 1981, Chapter B-15, s.100(3).

442 Company Act ( of B.C.), R.S.B.C. 1996, Chapter 62, s. 109, and Business Corporation Act (of Ontario), R.S.0. 1990, Chapter B.16, s.118(3).

451 As directors are exposed to personal liability, it would be necessary for the principal of the corporation to consider giving an indemnity to the director who is a resident.

See ‘10 Benefits of the WTO Trading System’ in About the WTO at http://www.wto.org

531 Extracted from “The Contract Act of The People’s Republic of China: A comparison with the law of contract of Canada”, by C.H.William Cheung and He, Guicai, Oct. 1999. The Chinese version of the article was published in Hebei Law Science, Vol. 19, May, 2001.

See for instance, Makowecki v. St. Martin (1990) 107 A.R. 346 (Q.B.), the remarks of Justice Fraser (now Chief Justice of Alberta, Canada) at p.357.

Elsley Estate v.J.G. Collins Insurance Agencies Ltd. [1978]2 S.C.R.916, and Philips Hong Kong Ltd.v. Attorney-General of Hong Kong, [1993]61 B.L.R.41 (Privy Council of UK).

591 The Convention was adopted by the United Nations Conference on International Commercial Arbitration in New York on June 10, 1958. Canada passed the United Nations Foreign Arbitral Awards Convention Act in 1985 and it became effective in Aug. 1986. Alberta also passed the International Commercial Arbitration Act to adopt the Convention, effective in Aug. 1986. China became a member state of the Convention in Apr. 1987.

592 Both the Arbitration Centres in Shijiazhuang, Hebei Province and Harbin, Heilonjiang Province have arbitrators from Canada.

593 The British Columbia International Commercial Arbitration Centre is located in Vancouver, B.C. Canada and is one of 2 such centres in Canada. The other one is in Quebec City.

621 See preamble of the Canadian Charter of Rights and Freedoms.

Nielsen v. City of Kamloops, [1984]2 S.C.R. 2 (S.C.C.).

Alta. Mtge. & Housing Corp. v. Ciereszko, (1987), 50 Alta. L.R. (2d) 289, (Alta. C.A).

Calgary Herald (of Canada), Nov. 10, 1989, front page re Dale Getty, son of Premier Don Getty. Seel also R. v. Getty ,(1990) 104 A.R. 180 (Alta. C.A.).

The Globe and Mail (of Canada), April 3, 1991, front page, re Premier William Vander Zalm. and The Globe and Mail (of Canada), Sept. 13, 1991, p. A7 re Premier William Vander Zalm.

643 The Globe and Mail (of Canada), Jan. 16, 1993, p.B2 re Premier William Bennett.

The Globe and Mail, Jan. 25, 1990, front page, re Mr. Jean Charest, M.P. (a member of Parliament) who was then (in Jan.1990) Minister of Fitness and Amateur Sport of Canada.

672 s.99, The Constitution Act and ss. 3,7, 8,44, & 55 Judges Act of Canada.

For instance, each judge of the Court of Queen's Bench of Alberta (which is the superior court of the Province of Alberta ) has jurisdiction throughout the province and in all matters and causes, pursuant to s.9 of the Judicature Act of Alberta.

681 Singh et al. v. Minister of Employment and Immigration, (1985) 58 N.R. 1 (S.C.C.) at p. 60.

721 Black's Law Dictionary, 5th Edition, West Publishing Co. (St. Paul, Minn., USA), 1979, p.1075.

751 Section 3 of Human Rights, Citizenship and Multiculturalism Act of Alberta.

For instance, Edmonton and Ottawa barred cigarette smoking in restaurants as of May 1, 2001 and Aug. 1, 2001 respectively. Smoking has been barred from office buildings in Edmonton since the late 1990’s.

792 "The New China", supplement to Canadian Business, Oct. 1993.

For instance: s.132 of The Criminal Code of Canada places penalty for perjury. The Immigration Act (s.94) and Citizenship Act (s.29) provide penalty for misrepresentations.

Chapter 3, Sun Zhi Book of War