Industry Committee on Oct. 5th, 2011

[The Chair, Conservative, David Sweet]

Thank you, Ms. McDonald. I'm sorry, I have to call that a round.

We're now on to Madame LeBlanc, for five minutes.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

Thank you.

Thank you very much for all the information.

I will speak in French. It will be easier that way.

Thank you for the information and the light you have shed on this matter which, as I understand, is fairly complex.

I thought I heard you say that only 8% of companies have indicated that they do business online. Is that correct? Do you know why some businesses do not do business online?

[Helen McDonald]

Unfortunately, that percentage dates back to 2007.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

I understand.

[Helen McDonald]

We don't have any more recent data. I imagine that the percentage is higher today, but we don't know for sure. I imagine that these are companies that buy or sell online. They might in fact be bigger companies.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

So you believe that this percentage, which goes back to 2007, and which might have increased by 2011, represents more big companies, who might prefer to do business online.

[Helen McDonald]

I imagine so, but the figure of 8% has been stable for many years now. However, I imagine that the percentage is higher today.

We have information on the three reasons why companies do not want to buy or sell online. First, they believe that their products or services are not appropriate at all for online transactions. This might be the case for vehicle sales, for example. Second, they believe the way they do business does not lend itself easily to online commerce. Third, they have concerns with regard to security or the lack of security of online transactions.

The 8% rate applies to companies that sell online. It is higher for companies that buy online: that percentage stood at 48% in 2007.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

There is a difference.

You mentioned that it is nevertheless a fairly big market. The number was $63 billion for online retail transactions in 2007.

[Helen McDonald]

That number includes both bulk and retail sales. And that figure indeed stood at $63 billion in 2007.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

Thank you.

[Helen McDonald]

That includes business between companies.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

Yes.

[Helen McDonald]

I am referring to sales between companies and sales to consumers.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

You broke down retail sales—or transactions—business by business. What proportion of the $63 billion goes to Canadian companies? What was the percentage of purchases made outside of Canada? For example, I can purchase something from the United States or from elsewhere in Canada.

Do you have those kinds of details?

[Helen McDonald]

I don't know whether the $63 billion includes purchases made by Canadian companies outside of Canada. However, I know that a distinction was made between Canadians who bought from Canadian companies and Canadians who bought from American ones. I believe that it was 40%. I am looking for that number.

It seems that 60% of the sales of Canadian companies were made to foreign companies or individuals.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

It is nevertheless interesting to note that a fairly low percentage of Canadian companies are opening themselves up to this huge market. I believe that you have explained some of the programs which you have put in place to try to bring SMEs on board, given that big companies have more means to get organized.

What program do you think would be most suited to help SMEs benefit from e-commerce sales, an emerging market which will only expand?

You also talked about internship programs, but it seems that SMEs are still fairly reluctant to participate. Do you think there are other ways that would allow SMEs to benefit from this market?

[The Chair, Conservative, David Sweet]

Please be as brief as possible.

[Helen McDonald]

Instead of the two programs I mentioned, that of the BDC and of the NRC, it might be better for government or for the public sector to deliver services in order to encourage clients to do business online.

[The Chair, Conservative, David Sweet]

Thank you very much, Ms. McDonald.

I'll try to give you some time for closing remarks. If there are any questions that you can't fulsomely answer, then hopefully in your closing remarks you can do that.

Now we'll move on to Mr. Braid, for five minutes.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Thank you, Mr. Chair.

Thank you to all of the witnesses for being here this afternoon.

Ms. McDonald, at the beginning of your presentation you provided us with a number of statistics. You reiterated that many were from 2007.

Can you benchmark any of the information against our G-7 partners? I'm thinking in terms of Canada's use of e-commerce and our uptake or embracing of digital technology.

[Helen McDonald]

The G-7 is a little more difficult because the data is not always comparable.

I think the adoption statistic I used in my opening remarks was that Canadian businesses are investing, per worker, 60% of what the U.S. is doing. That is a gap that has maintained itself, if not increased, over the last seven or eight years. The concern is that this underinvestment is linked to productivity; that we're less productive, perhaps because we've had the benefit of a lower dollar or we've had the benefit of lower wage rates; and that perhaps we're a little more risk-averse, and therefore the companies are not investing to the same extent.

It's hard to benchmark, but we try to look at how our legislative regime compares with that of other countries and what pieces we do have to put in place. The data breach legislation, the amendments to PIPEDA, the anti-spam, the copyright--they'll all help that way.

But in terms of engaging in electronic commerce, Canadians are not doing badly for some types of services. I think our percentage for Canadians willing to engage in online banking compares well.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

In terms of the business community, then, the private sector, you see a direct link between increased innovation, increased use of e-commerce and digital technology, and increased productivity?

[Helen McDonald]

Yes. When we were consulting on the digital economy strategy, there was a very thoughtful think piece put in by the Council of Canadian Academies. They focused on the adoption question, and they felt it was essentially causally related.

It doesn't explain all of the productivity difference, but there was a key role due to the underinvestment in ICTs; hence the emphasis on trying to pick examples from different types of firms that can be used as best practices for others and generally raising awareness through every vehicle we have, through all government programming, to emphasize the need to think smart about the use of ICTs, whether it's to protect your existing market position or to improve productivity, cut costs, reach new markets, or have new products.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

How will the anti-spam legislation, once it's enforced, be foundational to the increased use of digital technology?

[Helen McDonald]

I'm going to ask Janet to talk a bit about that, but just generally, the more we can take down the concerns over security or the concerns over the cost of spam to the small business owner...that's one of the things we're trying to accomplish beyond protecting Canadians.