Evidence of meeting #29 for International Trade in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was companies.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Cam Vidler  Director, International Policy, Canadian Chamber of Commerce
Lorna Wright  EDC Professor of International Business, Director, Centre for Global Enterprise, Schulich School of Business, York University, As an Individual
Keith Head  Professor, Sauder School of Business, Strategy and Business Economics Division, HSBC Professorship of Asian Commerce, University of British Columbia, As an Individual
Karna Gupta  President and Chief Executive Officer, Information Technology Association of Canada

12:40 p.m.

Liberal

Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC

Thank you, Mr. Chair.

Thank you to the witnesses for coming forward.

Ms. Wright, a lot of people talk about SMEs and the fact that they have trouble exporting. You refer to some of the problems such as lack of time of the owners. For example, normally it's companies with five to ten employees where the owner does everything, does the payroll, then another day, he'll do the fixing of his machinery in the shop in the back, and then he goes out and puts on his tie and does the selling.

My experience, from being an accountant, is that you'll say to somebody, “You should do this with your company”. The owner is all into it, but then some “fire” occurs in his business, and he changes the channel and forgets about what he said he was going to do the prior day. He doesn't have the resources to allocate that project to somebody.

And the major one is exporting. I'm in total agreement that they don't have the human resources, and then the capital is missing. If I'm in Canada—I'm from Montreal—and I'm going to pay for a plane ticket to go to China, it's going to cost me at least $10,000, between plane tickets, accommodations, and then trying to take people out—that's a lot of money for a small business.

I like your idea of mentoring business students, but the problem with that is, the business student doesn't have practical experience, the business student is going to want to get paid, and so how do you start that? How do match that? What's the starting point?

12:40 p.m.

EDC Professor of International Business, Director, Centre for Global Enterprise, Schulich School of Business, York University, As an Individual

Dr. Lorna Wright

On the mentoring side, it's not only mentoring the students, it's also mentoring with companies that have done it. But, on the students side, it's not true that they don't have experience. If we're talking about the MBA level, they come in with experience. If you're at the undergraduate level, yes, you're quite correct. There are several ways, and I'm going to use Schulich as an example, but other universities do this as well. For a company that wants to look at a market—let's say China, for example—but isn't sure, doesn't have the capital to expend at the moment, our students, in order to graduate in the MBA program, have to do a strategy study with a real live company, and they provide that cost-free except for out-of-pocket expenses. A company can access that, and can get a strategic plan for market entry.

12:45 p.m.

Liberal

Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC

Where is that available, if I have small businesses that want to get involved in that?

12:45 p.m.

EDC Professor of International Business, Director, Centre for Global Enterprise, Schulich School of Business, York University, As an Individual

Dr. Lorna Wright

We're situated in Toronto, but we do that in any place in Canada if the company is willing to pay for Skype or transportation. Carleton does something similar, and there are other universities around the country. This is information flow, you need to find out about them. That's the same problem SMEs have: where do I find this?

12:45 p.m.

Liberal

Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC

Quickly on the follow-up, you said the GMAP is lacking a follow-up plan. What would be your vision, how would you see that? Would it be greater goals in terms of dollars, percentage? How would you measure it?

12:45 p.m.

EDC Professor of International Business, Director, Centre for Global Enterprise, Schulich School of Business, York University, As an Individual

Dr. Lorna Wright

It would be dollars, it would be percentage. I would have the trade commissioner service on the ground keeping track of who's come out, what have they done, and following up. This is an example from my own experience. A Canadian company went out to Thailand, made a deal with a Thai company to sell tiles. The Thai company was very happy. The Canadian company went back and, exactly as you said, had fires to put out and totally forgot about Thailand.

12:45 p.m.

Liberal

Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC

The way you envision it, would there be a reporting of accomplishments and failures? How would that look?

12:45 p.m.

EDC Professor of International Business, Director, Centre for Global Enterprise, Schulich School of Business, York University, As an Individual

12:45 p.m.

Liberal

Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC

There would be a reporting once a year.

12:45 p.m.

EDC Professor of International Business, Director, Centre for Global Enterprise, Schulich School of Business, York University, As an Individual

Dr. Lorna Wright

I would think that would be a good way to do it, with each of the trade commissioners in each of their territories giving a report back.

12:45 p.m.

Liberal

Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC

I want to get a question in to Mr. Gupta, because I have less time than the other people.

Mr. Gupta, do your member companies get affected by tariffs? Because they are mainly in the service business, free trade agreements are not an issue. It's more getting into the company, free flow of—

12:45 p.m.

President and Chief Executive Officer, Information Technology Association of Canada

Karna Gupta

Yes, goods and people. Tariff has very little impact for the ICT sector. There are some component pieces that would get tariff and the range is probably between 7 and 20. None of our members really have a major issue with the tariff items.

12:45 p.m.

Liberal

Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC

How about in terms of flow of human capital, trying to get people in and out of country?

12:45 p.m.

President and Chief Executive Officer, Information Technology Association of Canada

Karna Gupta

Well, human capital is a big issue now. We all know what's getting played out in the media with the temporary foreign workers. In the ICT sector today, we are running between 2% and 3% unemployment, which means we can't find people to fill the jobs.

There are two ways to fill it: you grow your home-grown talent, so we ask the schools to send them to the STEM program and graduate with the technical knowledge; and you import talent, access global talent. We should attract top talent into the country, and if we build the bench with top talent, they can contribute to the economy and build more jobs around here. Our sector pays 52% more than any other sector—

12:45 p.m.

Liberal

Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC

I understand, but is your industry being affected by the temporary—

12:45 p.m.

Conservative

The Chair Conservative Rob Merrifield

Mr. Pacetti, your time has gone.

We'll go to Mr. Hiebert.

May 15th, 2014 / 12:45 p.m.

Conservative

Russ Hiebert Conservative South Surrey—White Rock—Cloverdale, BC

Thank you.

I'll continue that line of questioning.

Mr. Gupta, you talked about the importance of access to markets, to capital, and to talent. All of us have been talking about access to markets, the use of the TCS to connect businesses to businesses.

From my experience on the trade committee for several years now, and having done a fair amount of travel overseas, I've seen that happen. I've seen our trade commissioner service actually tracking this data, and there's probably more that needs to be done there. But simply throwing more resources at them, I don't think is always the answer either.

I mean, we've heard complimentary things about the TCS for many years now at this trade committee, but the reality is that these are temporary postings. These people aren't there for the rest of their lives, except for the locally engaged staff. They're typically there for two or three years. It takes them a year simply to re-connect with the connections that the previous trade commissioner service established, and then they have about a year and a bit before they start thinking of their next posting. So there is this transitional complication that's added to this.

I want to open it up to all three of the presenters today to talk about the follow-up side, because I think, Ms. Wright, you're absolutely correct, we're good at aspirational objectives here, but the hard work is getting it done and concluding it.

I don't disagree with my colleague, Mr. Pacetti, in terms of the challenges that SMEs face. It's exactly as he described, where they will be distracted by urgent situations.

With the time we have left, all three of you, how would you increase the access to capital?

We'll start with you, Mr. Gupta. How would you make Canada a more attractive place for this international talent you have identified?

12:50 p.m.

President and Chief Executive Officer, Information Technology Association of Canada

Karna Gupta

I think there are two pieces here. One is the talent for the companies themselves to continue to produce and expand, the talent internally within Canada. There are really limited resources to push kids at a younger age in high school more towards STEM programs, science and math, so they can go into the technology arena. Technology doesn't mean that they're going to be sitting at a computer writing software. It could be marketing of technology or it could be finance. Technology is the enabling tool in our lives today, so better understanding of technology is important.

Then, have university programs. A lot of the universities are now using BTM, business technology management, as part of their curricula, and those graduates have a 90% hire rate today. Having kids coming out of the programs that our sector needs is very critical now.

There is no way the demand could be met internally, so we need to find a way to get the foreign talent into the country based on specific needs. They come into the country in three different ways: there are projects that are three to four months long, to get something done; there are people who could come in for two to three years for knowledge transfer; and then you have the permanent people through the normal immigration or permanent resident process. We need to attract talent into the country to meet all three dimensions. If we don't do that, we will not be able to compete on a global scale because people will go where they have the right conditions to work.

12:50 p.m.

Conservative

Russ Hiebert Conservative South Surrey—White Rock—Cloverdale, BC

Okay.

Ms. Wright.

12:50 p.m.

EDC Professor of International Business, Director, Centre for Global Enterprise, Schulich School of Business, York University, As an Individual

Dr. Lorna Wright

Perhaps I can pick up on the follow-up side because it's more than just measuring. It's also poking the companies. Basically someone comes out and looks promising, but they've gone back, and you haven't heard from them, so follow up and say, “Hey, I thought you were going to do something out here. What happened?” That just keeps it top of mind for the SMEs.

You made the point about the trade commissioners being there for only a short period of time, but really, bring to the fore the locally engaged staff because those are the ones who know what's going on. If you can bring them more in touch with the Canadian SMEs as well, I think that would be very helpful.

12:50 p.m.

Conservative

Russ Hiebert Conservative South Surrey—White Rock—Cloverdale, BC

Dr. Head.

12:50 p.m.

Professor, Sauder School of Business, Strategy and Business Economics Division, HSBC Professorship of Asian Commerce, University of British Columbia, As an Individual

Dr. Keith Head

I don't know the answers to these questions, but I think that the issue that Mr. Gupta raised, about the capital deficits of companies that could be exporting but don't have the capital to do it because of this hole, really needs to be investigated. Why aren't Canadian financial institutions willing to lend to these companies? If that financial side of it is a really important part of it, we need to address that. But that's sort of a separate set of policies that would address finance more than it would address this other issue about forming networks and building connections. We really need to know the critical thing that's holding us back. Is it one of these two things or both?

12:50 p.m.

Conservative

Russ Hiebert Conservative South Surrey—White Rock—Cloverdale, BC

Is there an opportunity for more joint ventures internationally between SMEs that don't have the natural resources to penetrate the markets, to connect them with companies in China, let's say, or in India, to keep that relationship alive? Once you have somebody on the other side of the world who you're committed to doing business with, you can't really let urgent matters distract you from that relationship because it's valuable to you.

Is there some way we can facilitate those kinds of relationships?

12:50 p.m.

President and Chief Executive Officer, Information Technology Association of Canada

Karna Gupta

Absolutely.

Again, to some of the other comments made, the staff on the ground is critical to connecting them. In any country, and take India or China, for example, as a market, it doesn't really matter, any of the Asian countries, it's tough to do business there. It's a lot easier for an SME to go down to Boston and try to peddle his stuff than to go to Mumbai. To go to Mumbai and be successful, they need local staff who know the local context. It is building a long-term relationship, so it needs multiple visits. From a funding point of view, a lot of the SMEs could benefit from what is now done through GOA.

I took seven companies down to India and then I took some to Dubai. GOA funded half of their travel costs. Typically SMEs' troubles are twofold: can I make my payroll? Where is my next customer? Those are the two things that keep them up at night, so they don't want to spend a lot of money going to India and China looking for new business. If we can help, that's one, financing for them, solving part of the cost, then have the local staff help them connect to the right people and build those networks. Whether they need joint ventures or selling, it all starts there.

12:55 p.m.

Conservative

The Chair Conservative Rob Merrifield

Thank you very much.

We have about four and a half minutes left. We will split the time going into the second round, and we'll allow a couple of minutes for the NDP and a couple of minutes for the Conservatives.

Mr. Morin, the floor is yours.