International Trade Committee on April 29th, 2015

[The Chair, Conservative, Randy Hoback]

We'll have to stop you there and move on to Mr. Shory.

[Devinder Shory, Conservative, Calgary Northeast, AB]

Thank you, Mr. Chair.

Thank you, witnesses, for being here.

I'll start with Mr. Addante and Mr. Yu.

It seems that you import your raw material from China and some other countries, maybe Thailand, and it seems as if you do not have direct experience with trade commissioners, subsidies, etc. Since the focus of this study is government subsidies available to SMEs for export, or looking to expand in export markets, I wonder if you export any of your products back to China, Thailand, or any other country. If you do, then I want you to comment on whether there are any trade barriers you face, and if you do face them, what the Government of Canada could do to lower them. If you're not exporting, then my question will be whether you are looking to expanding your business to export.

[Albert Addante]

As was mentioned earlier, we definitely think this is a global product. We would be interested in continuing to look at export options.

Now are you referring to export from Canada or—

[Devinder Shory, Conservative, Calgary Northeast, AB]

Yes.

[Albert Addante]

So that's not necessarily from where our raw materials are based?

[Devinder Shory, Conservative, Calgary Northeast, AB]

It's from wherever. It doesn't matter.

[Albert Addante]

Definitely, from our origin, where we manufacture, whether it be China or anywhere else, we are definitely looking to do that. We believe it is definitely doable and workable and should be exported to as many regions as possible.

[Kevin Yu]

Actually, we export to a lot of other countries. For example, the U.S.A. is the first one, and we also export to Australia. We also export to Dubai. Actually, Al would attend a lot of international shows and we got a lot of interest from Europe as well when he went to Germany to attend a show.

I think when we export to other countries, the currency is the first challenge. For example, when we do business in Australia, as you know the Australian dollar is very low against the U.S. dollar, and so our Australian distributor is in a difficult situation, just as we are. I think currency is the first challenge. The second one maybe is information. We still have less information regarding other countries. For example, personally, I do not know much about Dubai. Probably we need to know more about their culture or how they do business there, something like that. Of course, the last gentleman mentioned the EDC program. Something like that will help us a lot as well.

[Albert Addante]

One thing that was just brought to my attention is that some regions have brokers. These are private enterprises that will facilitate your relationships with the distributors or with a master distributor in each region. We deal with brokers here in North America who channel us into the retail chains, for example, or the natural food chains. It would be great if those trade commissioners could dig a little deeper and start conducting relationships with these retailers and distributors to save us from having to look for someone like that, because they can be expensive as well. Also, they may be looking after their own best interests. If those trade commissioners could facilitate relationships directly with retailers and distributors, that would help us a lot.

[Devinder Shory, Conservative, Calgary Northeast, AB]

I'm very happy to hear that you intend to expand your business and export more, and I strongly suggest that you put a phone call in to the trade commissioner's office and they will put you through to the right person. It is a free service from the Government of Canada to help our businesses expand their exports.

Also I would suggest that you may want to google Go Global. It's a good program. It will tell you right there that we've had more than 10 seminars already on that, that more than a thousand entrepreneurs have attended those seminars, and that there are more coming up in the future. So get familiar with that, because that is very helpful. We have heard from virtually every witness that those services are excellent services. As I said, they don't cost you anything, so I suggest once again that you make a phone call.

[The Chair, Conservative, Randy Hoback]

Your time is up. We're going to go to Mr. Davies.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

Mr. Yu, I want to address a question to you. We know that China is Canada's second-largest trading partner now. It is certainly the second-largest economy in the world, and some think that in a few years it will be the world's largest economy. We heard Mr. Bergan talk a little bit about the challenges of doing business in certain places that don't have the same contract enforcement, the same rule of law, the same way of doing business.

Considering the importance of China to Canada's trade policy in our SME sector, do you have any advice for the Canadian government about the promotion of business opportunities in China? I know that you import your product from China. Is there anything you can tell us about how we could help businesses like yours improve their trade in China?

[Kevin Yu]

I think yes. For the North American consumer, I think maybe a lot of consumers think that if we say it's imported or made in China, they have a little bit of doubt about that, right? Even for things made in China, there are a lot of very high quality and good products.

If, for example, there was a Canadian program that could set up certain criteria to pre-examine some Chinese company, like give this company some credit to kind of certify that the company has a good reputation in China, so if we import from this kind of company, the Canadian consumer or North American consumer could trust them more.

I think this kind of certification would very much help us import because the Canadian government would have already built the credit for the Chinese company, and so we would not have to do it by ourselves. For example, for now, we do it by ourselves. We go to our factory, which has everything, and we even go to our factory supplier to see the pre-pre-suppliers to check that everything is on track and good. Then we talk with our distributor and we talk with our consumers to see that everything we are doing is good. If the government could do this kind of process for us or for other companies, it would be more effective and help us better, I believe.

[Don Davies, NDP, Vancouver Kingsway, BC]

Mr. McKay, I have in my mind this example of software developers: four young computer engineers, software engineers, who have a small office somewhere in Canada. They develop software for the world and they market their service or product globally on the Internet. They start getting customers from all over the world, and money starts flowing into Canada. I'm just wondering whether or not the way that we capture that kind of investment and flow of dollars in our current account is actually accurate.

My question to you is, are we accurately capturing and measuring the e-commerce world so that we actually have a good idea in Canada as to flows outward and the inflows of capital? Do you have any suggestions in that regard?

[Colin McKay]

Thank you very much for that question because I think it's an important point as you discuss SMEs and exports. As I emphasized in my comments, some of the largest growth areas among SMEs are for IT-enabled and IT-focused businesses. They're exactly engaged in this level of service, the sort of product and export that isn't quantifiable, can't be held, and isn't very easily noticeable either by the current measurement systems we have right now or simply by the local chambers of commerce and other organizations.

For example, three blocks from here we have Shopify, which has customers in nearly every country in the world. They conduct a global business from an office here in Ottawa, yet they never ship a box, they never send anything over a physical border. It's important to identify, both through our labour market analysis and the data we have around the types of jobs we have in Canada, as well as the sort of cross-border transactions and physical flow that we have, which was mentioned earlier by the other witnesses, the sort of highly qualified and educated individuals who, whether they're in hoodies or in suits, are conducting business wholly online.

You're right; it is hard to identify the value of their exports and to quantify what is an export and what is simply a conduct of business because in the world they live in, they start off from day one with a customer base that they assume is global. They have the tools available to them to have as broad a business as possible in as many languages as possible, and they are trying to expand it.

[The Chair, Conservative, Randy Hoback]

I'm going to have to stop you there. I'm sorry, time is well past.

Ms. Grewal.

[Nina Grewal, Conservative, Fleetwood—Port Kells, BC]

Thank you, Chair.

I want to start by welcoming all of our witnesses and thanking them for taking time out of their busy schedules to come and share their thoughts with us today.

As those of us in this room are aware, Canada's more than one million small and medium-sized businesses are among the most competitive in the world, employing more than two-thirds of all private sector employees and accounting for more than half of Canada's gross domestic product. Our government's trade agenda is extremely ambitious and will shape our global trade patterns for decades. But our assistance for SMEs goes beyond lifting trade barriers to a full range of trade promotion tools available through Export Development Canada, the Business Development Bank of Canada, and the Canadian Commercial Corporation. Our goal is to help Canadian SMEs make the leap to exporting and increase their presence in the international market.

Mr. Addante and Mr. Yu, Caboo Paper Products has been able to capitalize on the growing public interest in tree-free paper. Using bamboo and sugar cane you are able to provide a rapidly renewable and environmentally friendly source of fibre for your household products. I see on your company's Facebook page that your products are available not just in Canada but also in the United States, Australia, and even in the United Arab Emirates. Was there a conscious effort to expand your business to international markets? If so, how important was this strategy in making the transition to international markets? What sorts of obstacles have you encountered when attempting to sell your products in foreign markets?

[Albert Addante]

We just started with expanding. This whole concept took us by surprise, so it moved quite quickly. I can't say we had a full, hundred-page strategy; we just went with how things were working out here in Canada and we went into the United States. Keep in mind we're still in the organic channels. The conventional channels, the food service channels, are completely different. That's who we'll be competing with, the big boys, so to speak.

But in terms of the international market, we work with master distributors in those areas, people like us who believe in the concept and have made a sacrifice by purchasing by container. We haven't had too much stress in moving into those markets because they facilitated a lot of those things. But as we grow into those markets we'll have to start to go deeper into the advertising and things like that. So that's still yet to come. They're in the organic channels.

Definitely there are always barriers, though. They have their own customs requirements, they have currency problems, we have to trademark in all those regions. We've had to trademark in almost 15 to 20 regions by now just to protect our name. There are so many things considering moving into the international makers, for sure. But at this point, it's so early. I think we've risked quite a bit up till now and it's working out quite well, but there's definitely more to come and we could definitely use the help from the government, whatever resources are available for us.

[Nina Grewal, Conservative, Fleetwood—Port Kells, BC]

Mr. Yu.

[Kevin Yu]

I think this question is similar to Mr. Addante's question. When we export to other countries we have a similar situation because we are a small company and are not well-known, so those distributing in other countries do not know us. I think this is a pretty big issue for us. Of course, we try our best to increase our reputation.

As I'm here, I just think that maybe the Canadian government can help us do something. For example, the government has certification. We can apply for that kind of certification. Then we can claim we are certified in Canada to export. Then our reputation will be higher, or we'll have more credit when we go to overseas markets.

Thank you.

[Nina Grewal, Conservative, Fleetwood—Port Kells, BC]

Mr. Bergen, in the—

[The Chair, Conservative, Randy Hoback]

Mrs. Grewal, you're actually finished.

We're going to move to Mr. Allen.

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

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

I'd like to start with Mr. Addante and Mr. Yu.

How many employees do you have now? What has been the employment growth in your company?

[Albert Addante]

You're looking at it. No, we—

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

What's happening today while you're here?