Doing Business in Canada Business Climate, Culture Challenges and Opportunities Jerry Bouth Brief History of Canada • • • • • • • • • • • • • • 10,000 to 15,000 BC - Inhabitants in the Blue Fish Caves in the Yukon. 1001 AD: Lief Ericsson explores the coast of Labrador and Newfoundland. Ericsson also may have explored along the coast of Nova Scotia and New England which he called Vineland. Early Contact(1000 - 1534) New France(1534 - 1760) British Settlement(1590 - 1760) Clash of Empires(1702 - 1760) British North America(1791 - 1815) Confederation(1860 - 1867) Nation Building(1867 - 1890) The Great War(1911 – 1919) World War II(1938 - 1945) The Cold War(1949 - 1960) The Quiet Revolution(1960-1968) Modern Canada(1993 - Present) Map of Canada Map of Canada (major cities) Current Socio-Demographics • Population 32.1 million (2004) • 10 provinces and 3 territories. • Largest provinces Ontario 12.4 million, Quebec 7.5 million, British Columbia 4.2 million. • Smallest province Prince Edward Island with 138,000. • Largest Cities Toronto 4.5 million, Montreal 3.4 million, Vancouver 2.0 million. • Capital Ottawa (1 million) • 99% of population aged 15 and over has a least a grade nine education. Current Socio-Demographics • Ethnic groups: 28% British/Irish, 23% French, other European 15%, Asian/Arab/African 6 %, Amerindian 2%. • 2nd largest country in the world (after Russia) • Official languages English, French. • Work force 16.2 million (2005) • Most of the French speaking (23%) population are in Quebec with some in Ontario, New Brunswick and Nova Scotia. • Approximately 90% of Canadians live in the southern part of Canada, within160 km of the US border. Other facts of interest • • • • • • • • GDP 991 billion (2004) Real GDP growth rate 2.9% (2004) GDP per capita $31,209. World’s largest bilateral trading relationship with 445 billion. 1 billion of goods crossing the border everyday. Canada is the leading export market for 39 of the 50 U.S. States. The two way trade that crosses the Ambassador bridge between Michigan and Ontario equals all the U.S. exports in Japan (95 billion). U.S. is the largest foreign investor in Canada with 183 billion or 65 % of the total foreign investment. Other facts of interest • Canada is the single largest foreign supplier of crude oil and natural gas in the U.S. (316.5 billion). • Unemployment rate 7% (2004) • Labor force by occupation; agriculture 3%, manufacturing 15%, construction 5%, services 74%, other 3% (2000) • Current account balance 28 billion. • Fiscal surplus of 6 billion in 2004. Revenues 151 billion and expenditures 144 billion. • Inflation rate 1.9% of GDP. • Sales Tax on every goods and services GST 7% (federal) PST 7.5% (Provincial). No sales Tax in Alberta. Political system • Canada is a constitutional monarchy with a federal system, a parliamentary government and strong democratic traditions. • The 1982 Charter of Rights and Freedom guarantees basic rights in many areas. • 308 member House of Commons elected by Canadians. • 105 member of Senate not elected but name by the Prime Minister. They served until the age of 75. • Prime Minister is the head of government and cabinet and the leader the political party in power. • Cabinet stay in power as long it retains the majority support in the House of Commons on major issues. • Queen Elisabeth II head of state represented by a governor general, she served as a symbol of unity. Exchange Rate (Canadian dollars per US dollar) Year Rate of Exchange 2004 1.301 2003 1.4011 2002 1.5693 2001 1.5488 2000 1.4851 1999 1.4858 1998 1.4836 1997 1.3849 1996 1.3638 1995 1.3725 1994 1.3664 1993 1.2902 Michigan Exports/Imports • The automotive industry dominated trade between Canada and Michigan. The state sold $20 billion worth of merchandise-60% of its foreign-bound exports to its northern neighbor and most important trading partner. On an average day the Great Lake State and Canada exchanged $177 million in goods. • The state of Michigan sold $8.6 billion worth of motor vehicle parts to Canada, including $6.6 billion in motor vehicle parts, except engines and $1.6 billion in motor vehicle engines. Sales of motor vehicle parts amounted to 43% of total exports to Canada. • Motor vehicle parts traveled in the other direction with $6 billion in state purchases - $4.3 billion in motor vehicle parts, except engines and $1.6 billion in motor vehicle engines and parts. Automobiles drove trade at a steady pace. The state imported $21.2 billion in automobiles - 47% of total imports from Canada and an additional $7.8 billion in trucks. The partners traded $9.2 billion in trucks - $1.4 billion to Canada and $7.8 billion to Michigan. Michigan Exports/Imports • The state sold $1.5 billion in machinery and $1.4 billion in metals, accounting for 15% of its total exports to Canada. Michigan's metal exports included $312 million in steel plate, sheet and strip, and $190 million in bolts, nuts and screws. • Its machinery exports included $82 million in plastics and chemical industry machinery, and $77 million in welding apparatus and equipment. • In return, metal imports from Canada included $375 million in aluminum, including alloys and $372 million in basic metal products. The states machinery imports included $214 million in metalworking machinery and $107vmillion in plastics industrial machinery and equipment. • Residents of Michigan made over 8.4 million visits to Canada, spending $754 million. Canadians made over 1.9 million visits to the Great Lake State, spending $165 million. Michigan's Leading Exports to Canada 2003, in millions of U.S. dollars Year Exports Motor vehicle parts, not including engines $6636 Organic Chemicals $3071 Motor Vehicle Engines $1593 Trucks $1403 Motor Vehicle Engine Parts $387 Steel Plate Sheet & Strip $312 Air conditioning and refrigeration equipment $270 Bolts, Nuts, and Screws $190 Furniture and fixtures $184 Michigan's Leading Imports from Canada 2003, in millions of U.S. dollars Year Imports Automobiles $21159 Trucks $7805 Motor vehicle parts, not including engines $4383 Motor vehicle engines and parts $1583 Natural gas $921 Synthetic rubber and plastics $534 Petroleum and coal products $437 Aluminum, including alloys $375 Basic metal products $372 Softwood lumber $275 Exports Partners (2004) • • • • US 85.2% Japan 2.1% United Kingdom 1.6 % Commodities: motor vehicles and parts, industrial machinery, aircraft, telecommunications equipment, chemicals, plastics, crude petroleum, aluminum, natural gas, electricity, wood, timber. Imports Partners (2004) • • • • US 58.5% China 6.8% Mexico 3.8% Commodities: machinery and equipment, motor vehicles and parts, crude oil, chemicals, electricity, durable consumers goods. Culture (True or false) • There is absolutely no difference between Canadians and Americans. • Canada is a sovereign country in its own right, and not just another English-speaking market for US goods. • Canadians tend to have more “World view”. • Canadians treasure their association with Europe (Queen is still the Head of State), French speaking treasure their association with France. • Canadians expect government to play an important role in providing for society. • Canadians tend to have a more social welfare consciousness especially for Health care and education. • Greater emphasis on organization and detail. Culture • • • • • • Use a firm handshake with good eye contact when meeting and leaving. Both French and English areas use and expect a firm handshake. French Canadians will shake hands more frequently, even with a subsequent encounter the same day. Others may just nod or smile at a subsequent encounter on the same day. Use a person's title if he or she has one. Otherwise, use Mr., Mrs., Miss and the surname. English is spoken in most of Canada. French is spoken in Quebec, and some area of Nova Scotia and New Brunswick French Canadians may use their first name when talking to you on the telephone, but will generally use their full name when meeting you in person. Don't be boastful, and don't overstate your product or service's capabilities. You could implicate your company in a legal situation. Culture • Personal space and body movement or gestures differ between the English and the French provinces and cities. In English areas, body movement is minimal, there is rarely touching other than handshakes, and personal space - how close someone stands - is about two feet. In French areas, people stand closer together, people will frequently touch, and gestures are more expressive. • If you are from the U. S., don't say, "we Americans", inferring you are including your Canadian hosts or guests in your reference. Canada is a distinct country with its own wonderful history and culture. • Be open and friendly in your conversation. If you are naturally reserved in your behavior, you will appear confident and credible. If your natural tendency is large sweeping arm gestures, restrain yourself when meeting and talking with Canadians other than with French Canadians. • French Canadians stand closer and are more demonstrative when talking. • For French Canadians, print all material in French and English. References • Hofstede, Geert (1980), Culture’s Consequences: International Differences in Work-related Values, Beverly Hills, CA: Sage. • Moran, Robert T. and Jeffrey Abbott (1994), NAFTA: Managing the Cultural Differences, Houston, TX: Gulf Publishing Co. • US Department of State’s country profile • US Department of Commerce • Gouvernement du Canada • Central Intelligence Agency ‘s Fact book.