Evidence of meeting #56 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 business.
A recording is available from Parliament.
Chief Executive Officer, Caboo Paper Products Inc.
I don't know, I was going to check my phone here.
Chief Executive Officer, Caboo Paper Products Inc.
We'll google.
We obviously work in partnership with our factory and manufacturing. So they have x number of employees. We work with brokers here who help us a lot. A lot of it, so to speak, is contracted. They have a three or four member team who go out and promote it, and the distributors have their sales people who promote our product. Everyone is obviously working for the brand in terms of marketing and sourcing.
To this point, we're a team of four to five employees in our actual headquarters. Of course, we have our sales teams, brand management teams, broker teams, and our manufacturing team, which are in various regions around the world.
Conservative
Mike Allen Conservative Tobique—Mactaquac, NB
With that said, it seems like, if I heard the answer to the question before correctly, you haven't really used the services of EDC and others a lot.
What kinds of things have you done? You talked about foreign exchange. What have you learned from that? What kinds of things are you trying to hedge your transactions, including your U.S. dollar transactions?
Director, Caboo Paper Products Inc.
For the Canadian market, we are very hard. Our work is trying to talk to the distributor, and they're trying to increase the price. It's still hard.
Luckily, we have our overseas markets. We have the Australian market, we have the Dubai market, and we have the U.S.A. market. From this kind of market we collect U.S. dollars. That will help us a lot.
Chief Executive Officer, Caboo Paper Products Inc.
When we export, it is in U.S. dollars. So that definitely hedges, so to speak. It helps our Canadian market as we're going through the slump right now. But at some point the dollar has to correct itself if we are to compete. The paper market is price driven, you need to have everything you can get.
In terms of the trade commissioners, though, just touching on that again, it would be ideal if they could just get a little more involved with those relationships in those regions. Credibility is so important, right? It's who you know, which unfortunately is the way it is. That would really help us further. I've met with several trade commissioners. I think it would be great if we could enhance that more.
In terms of the other programs you've mentioned, definitely we'd be utilizing those as best as possible.
Conservative
Mike Allen Conservative Tobique—Mactaquac, NB
You're recommendation for the new investment that we're putting into the trade commissioner service is to make it a little deeper and to make more contacts for businesses.
Chief Executive Officer, Caboo Paper Products Inc.
Yes, it's relationships. We would be happy to supply you with any information you need to facilitate that.
Conservative
Mike Allen Conservative Tobique—Mactaquac, NB
Thank you.
Mr. Hicks, I'd like to go to you. I was intrigued by a comment you made on something called zone partners. I just want to ask you how that model works. Specifically, as you say, you're building tools and you're manufacturing and building those.
Do you have any challenges when it comes to the export side of this? I'm assuming you export product, but do you also export some of your skills from a standpoint of maintaining those or providing maintenance from a manufacturing standpoint?
Vice-President, Canadian Association of Moldmakers
To answer your question, again if you looked at the news yesterday, the CEO from Volkswagen got fired because basically the costs for their building a vehicle in Germany are really high. They do have some subsidiaries, like in Tennessee and Mexico, but they just don't have enough what are called best cost countries now or best cost sources. We would like to see those automotive companies locate in Canada, but that's a story for another day.
When I say “zone partners”, those companies are in Europe or Asia for instance, and as they're coming to the Americas.... With our industry, we're servicing automotive, we're servicing housewares, computers, and so on and so forth. But primarily, when it comes to automotive, which is the biggest part of the plastics pie, as those companies are coming to the Americas, we are creating these zone partners because they are leaving their regular countries and they're looking for tooling sources and for service.
Again, in terms of the major build, just picture a mold that is a $100,000 or $200,000, it could be a fascia, it could be an instrument panel. Those molds are built here in Windsor, Ontario, or they could be build in Toronto or Montreal, and they are shipped to the southern states and Mexico, where those plants are, where they're running production.
Again, our companies either have strategic partners in those areas for service.....
Okay. Sorry.
Conservative
The Chair Conservative Randy Hoback
I'm sorry, but the time has well passed.
Mr. Davies, you have seven minutes.
NDP
Don Davies NDP Vancouver Kingsway, BC
Thank you, Mr. Chairman.
Mr. McKay, recently there was some big news in Canada. We opened up a currency hub for China's currency here, which will be set up in Toronto, so that we can have direct payment in the renminbi and the Canadian dollar.
In terms of e-commerce, I am wondering how it works in the virtual world where people are making sales on the Internet. I am wondering how payment is made. Is that going to make things like currency hubs obsolete, as money is electronically shifted around the world? Do you have any comment to make on currency in the electronic world?
Head, Public Policy and Government Relations, Google Canada
I think that any effort to make currency transactions easier is a positive step. Depending on the market you are trying to enter and the ways they have arranged currency transactions and payment processes, you may very well be paid in renminbi, Canadian dollars, or U.S. dollars. If you are working internationally, you need to have the ability to translate those revenues back into your domestic currency. It is a positive first step.
As a default, we largely see U.S. dollar transactions or some form of currency conversion through domestic banks, but we also see things like virtual currencies developing. It is a very fluid space, and the mechanisms themselves are very fluid. The flexibility to react with this sort of hub is certainly a positive development.
Don Davies NDP Vancouver Kingsway, BC
Thanks.
Mr. Addante and Mr. Yu, your company clearly offers a very sustainable option for the consumption of paper products. You mentioned the need for government support for green or sustainable new businesses and technologies.
In your view, what would be an appropriate government policy that might reward or encourage the kinds of new environmental products or services that you are bringing to the Canadian market? Do you have ideas in that regard?
Chief Executive Officer, Caboo Paper Products Inc.
Yes. We've talked about a lot of the issues we face with currency and CBSA policy.
Maybe Kevin could elaborate a little bit.
Director, Caboo Paper Products Inc.
I think there are a lot of ways to get support from the government. There are two major things. One is the funding support, and another is the tax deduction.
I was in Japan for around 13 years and I know that Japanese entrepreneurs have a lot of these kinds of programs. They have a support institution for small and medium-sized enterprises. They get money from the government, from public funding, and also from some associations. The institution supports new technologies, eco-friendly companies, and new technology fields. For some programs, they just give you money, because our small and medium-sized companies have a lack of cashflow. For example, I know for some programs they might give you maybe 5 million Japanese yen, which is around $50,000 Canadian.
NDP
Don Davies NDP Vancouver Kingsway, BC
They are providing seed money to small companies, that kind of thing.
Director, Caboo Paper Products Inc.
Yes. This is one thing.
Sometimes they have a low-interest loan for new companies. This loan doesn't come from the bank. It comes from the government budget, so it is easier to use to support small and medium-sized companies.
Tax deduction is very important, as well. I believe that in China for the last 20 years the Chinese government has not taxed its overseas companies in their first two years, and then only taxes them at half the rate in the next three years. Probably a lot of people know that. I hope that the Canadian government can offer our small and medium-sized companies this kind of tax deduction.
NDP
Don Davies NDP Vancouver Kingsway, BC
I have only a little bit of time left, so I am going to ask each of you to respond very quickly.
In Canada, 99% of businesses are SMEs, and we know that only about 10% of those businesses engage in international trade. All of us on this committee want to raise these numbers and get more SMEs engaged in trade.
If you could give the government one piece of advice as to something that would help in that regard, what would it be?
I'll start with you, Mr. Bergan, and then go to you, Mr. Hicks.
President and Chief Executive Officer, International Road Dynamics Inc.
I guess I'd like to start where we started. We used the foreign services and went overseas. We went and found the markets. The trade services were very good at introducing us to people and customers and at helping us with advice on how to enter the markets.
As I said earlier, I think the first step for many SMEs should be the United States, because they conduct their business very similarly to how we conduct ours. As far as currency goes, we deal in eight different currencies with our subsidiaries, and we use inactive hedging and a factoring program and are able to manage our currency risk very well.
Vice-President, Canadian Association of Moldmakers
I agree with Mr. Bergan.
I would have said something similar to that, but I would like to throw in again that you need to have a skilled and qualified workforce in Canada for what you do. Be the best at what you can do. Again, as I said, in our industry, we need to exceed industry standards, not just compete at industry standards. Please continue to fund the high schools, the community colleges, and so forth to increase the skill level of Canadians.
NDP
Don Davies NDP Vancouver Kingsway, BC
I'm going to stop you there.
Mr. McKay, quickly, what's your one piece of advice?
Head, Public Policy and Government Relations, Google Canada
I would say you should have a simplified interface for businesses so that they can answer the direct-to-business questions, so they understand what is available to them, they can examine export possibilities, and they can make decisions with information from government services.