Chapter 2: Importance of International Business
2.4 ADVANTAGES OF DOING BUSINESS IN CANADA
Pg 59-65
There are many good reasons to do business in and with Canada. Some of the
advantages to foreign investment in Canada are:
·
Lower production and business costs
·
Excellent human resources
·
A positive business climate
·
Almost seamless North American markets
·
Good infrastructure
·
Good quality of life
Lower production and business costs
In January 2002, Canada was declared the low-cost leader among industrial leaders. It
was also found that Canada was the most cost effective industrial nation in which to do
business. The study results are achieved by 27 components (e.g., land,
telecommunications, utilities, wages) that are most likely to vary in different countries,
on an after tax basis. Canadian business costs are 14.5 percent lower than in the
United States. Canada also has the lowest phone and internet access charges in the
G8 countries. Canada compares well to the United States: Canadian construction costs
are 15 percent lower, electricity costs 24 percent less, and transporting costs are 13
percent lower.
Human Resources
Canada has a skilled labor force due to our level of educational achievement and great
amount of first-class business schools within our country. For instance eight top
management schools, ranked top in the world, and eighteen of the top engineering
schools in the NAFTA countries are in Canada. With this in mind it is no wonder
Canada has the highest percentage of individuals with a college or university
qualification.
The Canadian Labor turnover rates (the frequency with which a worker leaves one job
for another) are half the American rates, resulting in greater stability for companies as
well as less overall costs. Canada is also the forefront of communications of technology
as stated by the Organization for Economic Cooperation and Development, which also
pointed out Canada has the highest computer literacy rate in the G8. Canada puts such
a high value in this that those immigrants with technology qualifications are rushed with
fewer limitations into our borders.
Positive Business Climate
The business climate of Canada has been ranked fourth in the world as a measure of
ease that companies can run their business. A positive business climate is one that
encourages success of business, fair competition and welcomes foreign investment,
and proper business ethics. The international Policy Center (IPC) has ranked Canada
first in ethical practices, which includes equal opportunity, promotion of human rights,
equal labor standards and sound environmental stewardship, not to mention protection
of workers‟ health and safety. Finally Canada also has a higher rate of unionization
than the U.S.A. and therefore our workers lose fewer person days per capita than those
in the U.S.A. This allows a stable and smooth operating environment.
Seamless North American Market Access
The US and Canada are the worlds largest trading partners, with two way trade valued
at $502 billion in 1999. One half of north American population lives within a 10 hour
driving distance from Toronto. This proximity makes delivery cost affordable and allows
businesses to fulfill orders quickly and reliably.
Following attacks on New York world trade center increased security checks along the
Canada-US border. This has had serious economic impacts on many firms, especially
those awaiting raw materials or parts for just-in-time production facilities.
If potential border problems are a concern for U.S customers, their lack of confidence
could put Canadian suppliers at a disadvantage in the future.
Business Infrastructure
The Infrastructure Canada Web site‟s list of priorities is helpful in understanding what
„infrastructure‟ means. Its first priority is “green municipal infrastructure- projects that
improve the quality of the environment and contribute to our national goals of clean air
and water.” Its further priority projects target “water and wastewater systems, water
management, solid waste management and recycling, local transportation, roads and
bridges, affordable housing, telecommunications, and tourist, cultural, and recreational
facilities.” The choice of such project priorities and the quality of these infrastructures
and services in Canada make the country very attractive to investors and businesses
interested in operating here. Canada also favors research and development through its
numerous private and public research institutes and generous tax incentives in some
jurisdictions. Education systems are also considered part of a country‟s “infrastructure,”
as they contribute to the qualifications of a workforce and are vital to business
competitiveness.
The Economist Intelligence Unit, which belongs to the same organization that publishes
The Economist newspaper, is a world leader in the provision of country intelligence. The
unit helps business people to make sound decisions by providing up-to-date, reliable
information on market trends and business strategies. The Economist Intelligence Unit
monitors political, economic, and business conditions in almost 200 countries.
In 2001, the unit forecasted that the Netherlands, Canada, and the United States would
be the three top countries in which to conduct business for the next five years. Topscoring countries attained their scores because of their political stability, political
effectiveness, policy towards foreign investment, and finance availability.
Quality of life
In the 1990s, Canada was ranked the best place to live by the United Nations for seven
years in a row. In deciding the annual ranking, the UN takes average measurements for
174 countries, looking at such issues as life expectancy, adult literacy, education and
income distribution. Canada has a world reputation as a multicultural country that
welcomes immigrants and has a humanitarian policy towards refugees.