On October 31st, we embarked on our six-month research project in China. Our objectives were to understand China better, to develop a network of professionals with valuable insights we could tap into and, ultimately, to expand our investable universe of high-quality Chinese businesses. We felt that the best way to achieve these goals was to experience life as researchers and consumers in China over an extended period.

Recent events have brought Chinese-Canadian relations into focus. We have followed the headlines from China and have appreciated the care and concern for our safety that many of you have expressed. On the ground, it has been business as usual. We have been welcomed by all the companies and individuals we had planned to meet and are grateful for their time and insights.

The first leg of our trip began in the Pearl River Delta, a region where the river flows into the South China Sea. Special economic zones were first established here when China was opening its economy to the outside world. Over the years, the Pearl River Delta has transformed from a primarily agricultural region to a centre for manufacturing, trade and innovation in China. Beginning our research trip here, in a place of such dynamism, was an exciting kick-off. The Greater Bay Area, which is the area around the Pearl River Delta, refers to 11 cities. The major ones are Hong Kong, Guangzhou and Shenzhen. With a population of 70 million and an economy the size of Canada’s, it is one of China’s most prosperous regions.

Over the past 15 years that I have been travelling here, transportation infrastructure has vastly improved. There are wide roads and lots of highways. Public transportation is efficient and affordable, and everything is well connected. It is truly world class. In the past, getting to company meetings and factory tours was a challenge. Hired drivers often wouldn’t know where to go and regularly got lost. You could end up being driven around for hours in heavy traffic.  Sometimes you never found your destination! Today, finding your way without losing hours in travel time is no longer an issue. With the smartphone, every driver has access to a navigation service, which has led to far more reliable rides.

China’s high-speed rail network has greatly improved the ease of commuting and allowed for increased productivity. Our experience visiting a power tool manufacturer in Dongguan puts this progress into perspective. We woke up on the morning of our meeting in Hong Kong, a distance of roughly 150 km from the factory. After taking the subway one stop to the high-speed train station, we went through customs and immigration in less than 20 minutes. The process was well organized. Ahead of time we had bought our tickets online. The seats were numbered and assigned, and the ride was comfortable. These trains can reach over 300 km/h, shaving off hours of travel time. We commuted to our destination (roughly the distance between Toronto and London, Ontario) in under 40 minutes.

Factory tours have also drawn our attention to China’s significant wage growth, particularly in this region. The first time I visited this area of China in 2003, factory workers were making around US$100 per month. When we asked this time, pay had risen to around US$1,000 per month (skilled workers earn significantly more). This tenfold increase works out to an average pay raise of 17% per year. While this rate of increase has recently come down, management teams still expect wages to grow 5-10% per year going forward. By comparison, wage growth in the U.S. over the same time frame averaged approximately 3% per year.1 Over 15 years that works out to a 56% increase.

To offset rising wages and challenges finding labour, there has been a significant push towards automation and higher operational efficiency. One memorable example came during our team’s tour of a home appliance manufacturer. To monitor the movement of merchandise and trucks around the country, this company developed a sophisticated inventory management system that allows goods to flow in a highly efficient manner. This type of advancement is only now possible following the country’s significant investments in infrastructure.

Our team travelling on China’s high speed trains and observing advancements in logistics.


Though we are in the middle of our journey and still learning, this first leg has already impressed upon us how dramatically life has changed for Chinese citizens over the past few decades. People living in the Pearl River Delta have experienced wealth creation and social change at a pace and scale that is difficult to comprehend. Nothing we have experienced in Canada in our lifetimes can compare

These observations are only a small fraction of our learnings so far, which are sure to build in the coming months. As we move on to the next leg of our trip, we look forward to sharing more of our experiences.


1. Bureau of Labor Statistics


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