International Trade Committee on March 9th, 2015

[Todd Winterhalt]

The 50 I mentioned are in the mentoring program. Those are the ones that have what we call a “white glove service,” which means they have a dedicated relationship manager who will meet with them. Almost all of them would be in the small and very small categories.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you.

In the view of the government, what proportion of small and medium-sized enterprises should be exporting? Is there a target?

[Susan Bincoletto]

We don't have a target but our road map is what is in the GMAP. That is keeping us on the straight and narrow, in a sense.

One of your colleagues mentioned our great dependency on the United States market. We are trying to diversify. To do that, we need to de-risk the value proposition for the SMEs, and each of us has a piece of that de-risking. There are 21,000 SMEs that we want to reach.

[The Chair, Conservative, Randy Hoback]

Thank you.

We'll go to Mr. Allen.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Thank you very much, Mr. Chair, and thank you to our witnesses for being here.

I'm going to pick up from where Mr. Cannan left off concerning your workshops. I'd like to explore that subject a little more.

One thing is that the number of these businesses that you indicate is impressive. It's comforting to know that you get a lot of these very small businesses with fewer than 20 employees. I come from New Brunswick, where the majority of our businesses actually have fewer than 10 employees. With that said, I'd like to understand a little more about the feedback you're getting from the SMEs.

I'll ask that question in some context. Many small businesses in New Brunswick, where the business owner is the person working on the floor and is the same person as is doing the accounting, the same person as is doing the sales and everything else.... What is the challenge in trying to get these folks out to a session such as this?

Second, how are you making these sessions productive? It sounds as though you have a lot of great people providing them with advice. What are some of the big things you're learning from some of these very small, owner-run companies?

[Susan Bincoletto]

I'll start, and then Todd, who has participated in seven of those sessions, might provide more colour on the ground.

First of all, these workshops are advertised by either the EDC, BDC, or our trade commissioner service client base, and by CCC as well. People come because they are interested in understanding more about what they've been missing by way of export opportunities, so there is a variety of sectoral representation and of sizes of firms.

That said, some of them don't even know that some of these programs exist, so they operate at the basic awareness level: “I didn't know that if I want to export the product I currently export to the U.S. to Mexico, I can call the Canadian embassy in Mexico, and they can help me find local partners or find a lawyer who can tell me how to incorporate, if I need to incorporate”—things of that nature—or “I didn't know that if I want to sell to a big buyer, EDC can provide some insurance. I didn't know all this.” So the workshop is a first introduction for some of them who may not have thought about it.

Todd, why don't you speak too?

[Todd Winterhalt]

Thank you.

They have been very interesting sessions to this point. I think you're exactly right to suggest that the CEO is also the guy who runs the mailroom and who does the laundry, if it's required. That is the nature of the individuals who are there.

The feedback we've been getting really is, speaking to Susan's point, that they simply didn't know this existed, or if they did, they thought everything happened in four or five distinct silos across the table. So there has been a lot of building of awareness that it's less an individual race, in terms of the four of us running, than a relay. The session is about how you utilize the services at the right point in time and where the hand-offs are between us across the table.

For example, in BDC, some consulting work may be done up front while they're getting their international plan together. They then get to the point at which they have the first contract—usually in the U.S., if it's an SME, but potentially in Europe or maybe in Mexico. Now it's the question: “Do I bring in EDC, or how do I make sure that I have the right contacts in place?” I'll talk to my folks on the ground and with the trade commissioner service in market or maybe I will deal with another government entity abroad; then the CCC comes in.

What we have tried to do through the workshop sessions is adapt to that feedback on the fly. The sessions have now changed into a bit of a case study, in which we have a fictitious company walking through each stage of an export as they look to a new market, and the participants see how the services are provided across all of the agencies at the table here. It makes it a little more tangible, a little bit more real.

I'd end by saying that out of the seven I've been to now, I've come away with six to eight real leads out of each of them, cases in which there is an organization that is ready to export but that has been waiting for the opportunity—looking to mitigate the risk, in some cases. Seeing us all there has really helped to stimulate them.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Following up on that, when you talk about other departments and agencies, it is striking that for some exporters, whether of wood or of agricultural products, there is always the integration of, for example, phytosanitary certificates from Agriculture Canada. Are the regulatory aspects that some of these small businesses wouldn't even know about factored into these sessions as well, so that you give them a heads up on how some of those things go?

[Susan Bincoletto]

Yes, that is one thing that the trade commissioners, either in Canada or around the world, have to always be aware of, all the regulatory and legal changes that are happening in Canada and in their country.

Our regional offices, for example, are the first point of contact for those kinds of enquiries. Then we dispatch the information to our colleagues at the federal level or also at the provincial level. We are the go-to point to find a solution to those problems.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

My next question is on trade commissioners. You talked about that. I had some experience in dealing with one in the U.S. who was specifically targeted on certain markets, like for instance the high-tech sector in California. How do you leverage your experience in these various trade commissioners' offices, for example, for a company that maybe wants to export a non-traditional product into a different market in which you might not have the trade commissioner expertise? How do you bring all that together to the benefit of the small business?

[Susan Bincoletto]

We work a lot in matrices, in a sense. In terms of helping the SMEs, if we know there are certain trade commissioners in some markets in the U.S. for example that have that specialty, then they are tapped into. Often the first point of contact is in our regional office. A company will come in and say, “I need something”, and we say, “Let us check.” We have a client management system with our 11,000 clients that helps figure out if your issue is similar to an issue that we've been trying to solve for another company; therefore, we make some of those connections.

It is teamwork, trial and error, and problem solving for those companies. Sometimes it takes little time to find a solution. Sometimes it takes tapping into the network of our trade commissioner service and our federal partners as well.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

I have one last brief question, very quickly. You talked about the case study, Mr. Winterhalt. Is that available for people who weren't able to get to that session?

[Todd Winterhalt]

Yes, the sessions are videotaped. As well, there is background material made available through a deck style of presentation.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Thank you, Chair.

[The Chair, Conservative, Randy Hoback]

Ms. Liu.

[Laurin Liu, NDP, Rivière-des-Mille-Îles, QC]

Thank you, Mr. Chair.

My thanks to our witnesses for their presentations, which will help us focus our study a great deal. Today, they answered a number of key questions and I thank them for that.

After I was elected as an MP in 2011, I visited the SMEs in my riding. I noticed a wide range of needs, but I also realized that a lot of demands are similar.

Last week, I visited a company that makes rubber parts. It is a very specialized business. Located in Saint-Eustache, it now exports to Asia, to China in particular. This is exactly the type of SME that needs encouragement and support.

Several concerns have been raised. SMEs are very versatile and change direction very quickly, which often makes it difficult for the government to adapt its tools to this reality.

During my visits, I asked the businesses whether they were aware of the existence of the Canadian Trade Commissioner Service, and most of them said that they were not. I think it is really important to focus on educating the SMEs and raising their awareness.

However, I would like to go back to another question that was raised.

My question is more on global payment issues that affect mostly medium-sized businesses. The number of businesses reporting that currency movements are having a negative impact on growth has increased over the past few months. I was wondering if this is an issue that you've looked at. Is this something you're planning on dealing with specifically?

I guess we could start with whoever would be best placed to answer.

[Todd Winterhalt]

Thank you for the question. Certainly the last few months have been a bit of a challenge for many businesses of all sizes, but in particular SMEs have the fewest reserves or wherewithal to withstand the fluctuations in currency changes.

At EDC we do offer a number of financial products, guarantees that would allow small companies to protect against the movement of the dollar. If their contract is in U.S. dollars or euros, for example, we can have a foreign exchange guarantee in place that permits them to mitigate that risk. That's the best product we can bring to bear.

[Laurin Liu, NDP, Rivière-des-Mille-Îles, QC]

We know that China recently established a currency hub in Canada. Do you expect that to have a big impact on SMEs? What positive impact do you expect that to have?

[Susan Bincoletto]

It's early days, but clearly for us it's a driver. It's a big success for Canada to have been able to do that. We're hoping to see the benefits of that very soon.

[Laurin Liu, NDP, Rivière-des-Mille-Îles, QC]

So you'll be watching closely, I guess.

[Susan Bincoletto]

Yes.

[Laurin Liu, NDP, Rivière-des-Mille-Îles, QC]

I'd like to follow up on a question asked by Mr. Regan on e-commerce in particular. We know that selling products online has actually grown enormously for Canadian companies over the past few years. Do you have any projections on how quickly online sales are expected to grow for SMEs in Canada?

[Michel Bergeron]

I can try to answer.

The first part is that, as I mentioned, right now the performance in terms of current sales is not optimal. It's probably below what it should be. In fact, if you look at purchasing patterns right now, a lot of those purchases are done with U.S.-based companies so it's not even SMEs, it's not even Canadian companies. That is obviously an issue of scale and the Amazons of the world obviously have a lot of power and they cover a lot of ground, hence the importance of our SMEs catching up.

What should the number be? Again, it depends on each business model. It all depends. Some products are easier to sell online than others. One of the important issues that I think it's important for this committee to understand is that there are a lot of changes in terms of the paradigm of businesses going global. We have companies that we support in the venture capital business that are born global. The market in Canada is too small to sustain their offering; they have to go global. Some companies with 10 employees have 95% of their revenues outside of Canada. The scalability of the business model is something. If you sell applications on the app store, you're global from day one.

A lot of changes are happening on this versus the traditional ways of building a regional leader into a provincial and national—

[Laurin Liu, NDP, Rivière-des-Mille-Îles, QC]

I just have a very short question that I want to fit into my time, so sorry to cut you off.

I'd be interested to know how the value of the Canadian dollar and the price of gas have influenced, if they have, exports for SMEs.

[The Chair, Conservative, Randy Hoback]

You have already had five minutes.

Just give a very quick answer, if you don't mind.