Launching Alberta Business Abroad

“There are also areas where entrepreneurship in Canada could be strengthened because of the following:

  • Canada generates a lower proportion of fast-growing businesses in the service sectors than do most of the comparison countries considered here.
  • The percentage of exports accounted for by Canadian SMEs is lower than that for European nations examined for this report.”

(From the Executive Summary, Of the Report “The State of Entrepreneurship in Canada” by Industry Canada, Date modified: 2012-02-29)

 

 

A long time ago, I came across a book written by Andrea Mandel-Campbell. It’s called “Why Mexicans Don’t Drink Molson: Rescuing Canadian Business from the Suds of Global Obscurity”. In it, the author observes that Canadian Industry has a problem: we were not bold or aggressive enough in foreign markets. Rather our companies were very happy to expand within Canada and in a few situations go into the United States.

 

If one looks at some of our largest companies, one might say this. Cara Operations runs a number of food service companies in Canada including Harvey’s, Swiss Chalet, Milestones, East Side Mario’s, Casey’s and Montana’s. Before spinning Second Cup off, Cara significantly expanded Second Cup’s operations. Cara now operates 1,000 Restaurants in Canada and yet it has not tried to go into the United States.

They are not alone. Cable and Telephone companies like Rogers, Shaw and Bell have diversified within Canada but have not taken on larger foreign competitors in their markets.

 

We have had so few companies that have tried to expand, it is easy to find the failures. RBC, CIBC, Canadian Tire, Nortel, Corel and Blackberry have had severe problems in trying to create foreign divisions because of the lack of experience in our own market.

 

On the other side, Labatt, Unibroue  and Sleeman,  major Canadian Breweries, are now in foreign hands. Meanwhile, Molson merged with Coors because their attempts at growing their brand failed. The Bronfman family sold their stakes in large beverage company Seagram to a variety of firms including Diageo plc.

 

While some firms like TD, GWL, SunLife and ManuLife have expanded with some success, one can see that these firms are definitely the exception and not the rule.  Consequently, one can say that Andrea Mandel-Campbell has a point and I am in agreement.

 

However, one story presented by Ms. Mandel-Campbell is interesting. It is the story of an immigrant named Frank Stronach, CM. The founder of Magna International, an international automotive parts company based in Aurora, Ontario, Mr. Stronach used his knowledge of Austria and Europe to expand his tool & die company.

 

Ms. Mandel-Campbell argued that Mr. Stronach’s example – using the local knowledge provided by immigrants – could be an effective tool. Yet Canadian Industry doesn’t use it enough. In other words, imagine what a powerful sales tool one would have if one’s foreign sales force was made up of expatriates, diaspora immigrant populations or those with local knowledge.  Instead of using those powerful implements, as Ms. Mandel-Campbell noted, Canadian Business Executives tend to just assume that legal, cultural and business rules are universal.

 

Think about it. When travelling overseas as a tourist, one has to ask many questions. Just think about an electric razor. A Canadian razor will run about 110 volts, while a European razor will operate when it is plugged into a 220 volt receptacle. To make matters even more confusing, while British and continental European razors both use 220 volt plugs, British and Irish outlets have a different size. Consequently British/Irish razors with their three rectangular plugs don’t work on continental European outlets because European plugs have two cylindrical plugs. If the use of electric razors is complex, imagine trying to close a business deal in another country with a different language and a different set of laws.

 

You don’t have to take my word for it, just think about the issues that have been presented with the importation of raw milk and cheese to Canada. Starting in September 2000, because of complaints, Health Canada and the Canadian Food Inspection Agency visited France to “learn of its regulations and control systems concerning soft and semi-soft raw milk cheese manufacturing.” Consequently, by July 2011, Canadian Soft Cheese could be imported into Canada without too much trouble. On the other hand, California Raw Milk producers still have trouble importing their products into Canada.

 

Subsequently, while Trade Agreements like CETA, the TPP or NAFTA are important to “unlock” doors, those same agreements don’t “open” doors. So why doesn’t the Government of Alberta help to “open” these doors?

 

Our economy needs a lot of help in this regard. For our economy depends one single sector: the development of oil and natural gas. This is a problem because Iceland, New Zealand, Norway and Costa Rica are aiming to go carbon neutral (Four nations in race to be first to go carbon neutral, By Geoffrey Lean and Bryan Kay, independent.co.uk, Saturday 29 March 2008). Our dependence on oil and natural gas is troublesome because the Dutch are trying to meet the EU-set target of producing 14% of total electricity from renewable sources by 2020. While the Danes are getting so good at producing wind power that for one day in 2015, they produced so much power they meet their own “domestic electricity demand” and exported the balance of the power to Norway, Germany and Sweden. (Wind power generates 140% of Denmark’s electricity demand, the Guardian.co.uk). Alberta needs to export more products and we need to help our businesses do that. So let’s build “business launching pads” to do just that.

 

A Business Launching Pad would be an institution that would allow a firm to expand into a new market. For example, such an institution could provide Language Skills to companies. This would provide the necessary skills for management as well as matching up businesses and management with sales and other necessary personnel who can speak those languages.

 

For example, in 2012, wheat was Alberta’s largest agricultural export commodity. It produced $2.0 billion dollars’ worth of exports. Given that our agricultural exports only increased by 1% in 2012, one might wonder what we could do to increase exports. I would argue that it is easy: get more people to use a refined and processed version of our product. Take North Africa. Immigrants from North Africa know that couscous is a stable in their diet. For those who are not familiar with Couscous, it is a type of pasta. Now it doesn’t look like Elbow Macaroni, Linguine, Spaghetti or Lasagna noodles because couscous is the shape of a tiny ball. Consequently, couscous looks more like quinoa or buckwheat. But rest assured, couscous is made of Durham Wheat and water like other pastas. If we made couscous in Alberta, we would have a ready market in Northern Africa and the Middle East. However, the only problem would be finding sales people who could distribute the product. A Business Launching Pad could help solve that problem because they could find the people or attract the people and businesses which could help with distribution.

 

The same could be said of the chemicals, synthetic resins and fertilizers that are increasingly becoming an important export for Alberta.  While exporting to the US is easy, exporting of chemicals to China and Mexico can be challenging. There are complexities added because of differences in language, culture, laws, the legislative process and regulations. However, that challenge has to be taken on, for our economy needs to turn away from the US and to adventure into more challenging economies. This is what Andrea Mandel-Campbell has said. While Ms. Mandel-Campbell would never suggest a government programme, clearly a government programme might help the situation.

 

A programme that provides language skills and foreign market familiarity to corporate managers, whilst providing jobs and experience at home. This type of programme is a win-win that provides the most benefit for the most people. By expanding our economy, a Government-Sponsored Business Launching Pad would support job growth. It would grow our pie in such a way that all Albertans would be comfortable with. Surely this is the purpose of government. Therefore, by developing programmes that help investors, employers, employees and other stakeholders, the Government of Alberta could help diversify our economy and help us get off the rollercoaster effects of our Oil and Gas, Commodity-Dependent Economy. The only question is does this government have the bravery to act.

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