The multinational corporation is the icon of our globalized era.
These giant enterprises, which usually have two to 10 times as many employees as the Yukon has people, deploy unprecedented amounts of capital and technology around the world and produce an enormous portion of the goods we consume daily.
They are also the bête noire of anti-capitalist protesters, populist politicians and undergrad political science essays.
But the multinational is changing, with US and European giants being joined by rapidly growing colossi from emerging economies. Yukoners are among the first to see this trend, thanks to last July’s takeover of Yukon Zinc by Jinduicheng Molybdenum Group and Northwest Nonferrous International.
In the past, it might have been a big American outfit buying a Yukon mine. But Jinduicheng and Northwest Nonferrous are Chinese, the first to buy a Canadian mining project. They are now among the largest landowners in the Yukon and have interests from Finlayson to Rancheria.
The history of the multinational goes back hundreds of years to the creation of the global trading companies that spread European empires around the world. The incessant drive for new profits drove one of these early players, Hudson Bay, to send Robert Campbell to the Yukon to investigate growth opportunities in 1846.
The twentieth century was characterized by the emergence of American multinationals like General Motors, Proctor & Gamble and Exxon. These companies invented new products and produced them at such a low cost and grand scale that European and other competitors were simply astonished.
Since then, many leading European multinationals have emerged. And many multinationals have become truly global firms rather than national firms with a bunch of branch offices abroad.
The head offices of these firms are surprisingly diverse, with both large numbers of international staff and nationals with decades of experience living overseas.
Now we are seeing this process go further in two ways. First, it’s no longer just giant companies that are multinationals. Literally hundreds of “small” companies with just $1 billion or less in sales are operating in multiple countries, often with supply chains stretching across several continents. And the multinationals are accompanied overseas by a coterie of suppliers, from parts to banks to consulting firms.
Second, the rise of emerging-market multinationals has accelerated. Mexico’s Cemex is a global leader in cement. Korea’s Kia and Hyundai are growing fast. China’s Haier is selling appliances in growing numbers around the world. Brazil’s Vale owns Canada’s famous nickel miner, Inco.
So what does this mean, in particular for the Yukon?
Multinationals have brought us many benefits. Every Yukoner who shops at Wal-Mart benefits from their sourcing and logistics expertise, which results in lower prices. Condor flies us to Europe. Yamaha makes both our pianos and our snowmobiles. Cisco makes our internet work. Mining and oil companies have brought technical expertise and capital to develop our natural resources over the years.
But multinationals also bring worries.
Will they respect our local laws and customs? Will they treat us less compassionately when hard decisions have to be made? Are they exploiting us, taking more than their “fair share” of the profits or dodging local taxes?
Jinduicheng and Northwest Nonferrous only took over Yukon Zinc last year, so it is too early to tell what will be different with them as partners in developing their Wolverine deposit. Both companies have kept a low profile in the Yukon. Yukon Zinc’s board and CEO have been replaced, but the direction of the company seems much the same as before.
In terms of mining expertise they can bring to the Yukon, both have extensive mining experience in China, but have not run a mine in Canada before.
On their strength as a source of capital, both are owned by a large state-owned company belonging to the province of Shaanxi and a minority stake in Jinduicheng was floated on the Shanghai exchange. The financials released by Jinduicheng appear strong, but many analysts have concerns with the transparency of Chinese financial reporting. We also don’t know what the recent metal price collapse means for their core Chinese mining businesses, or for the state-owned holding company.
Inevitably, with multinationals, there are also political concerns.
Canadians used to worry about American multinationals because they raised questions about our independence. And Chinese investment has already proved controversial. The regime’s human rights record is notoriously unsavoury. There have also been repeated incidents involving health and safety standards, such as lead paint on toys and melamine in food. There have been persistent allegations that some state-owned Chinese companies benefit from the use of forced labour, particularly those owned by offshoots of security ministries or the People’s Liberation Army.
Politicians are also worried about control of “strategic” industries, as we saw during the controversy about China Minmetals attempting to buy Canadian icon Noranda a few years ago.
The ball is now in the court of Jinduicheng and Northwest Nonferrous. We will have to see how successful they are at bringing Wolverine into production, as well as how they adapt to North American expectations around transparency and community relations.
Undoubtedly, Peruvian and Kazakh citizens had similar questions when Canadian mining companies invested in those countries.
Or Chinese workers in one of General Motors’ factories.
Now we will get a taste of that uncertainty too.
Keith Halliday is a Yukon economist and author of the Aurore of the Yukon series of historical children’s adventure novels. His next book Game
On Yukon! appears shortly.