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Investing in canada

Investing In Canada

Investing In Canada - Factors that are attractive for direct investment in


Canada is the second largest country in the world, occupying close to 10 million

square kilometres of land bounded by the Atlantic, Pacific and Arctic oceans.

Canada shares a 6,000 kilometre border and the five largest freshwater lakes in

the world with the United States. Known as the Great Lakes, they provide a route

to the Atlantic via the St.- Lawrence Seaway, permitting direct access to

international markets.

More international companies are investing in Canada. The stock of foreign

direct investment (FDI) in Canada has increased steadily over the past five

years to reach over $130 billion last year. Investor confidence is high.

International companies are discovering what firms in the United States have

known for decades: it pays to invest in Canada. There is a government commitment

to attract foreign direct investment. Canada's government provides a competitive,

welcoming climate for international business. It is committed to fiscal

responsibility, deficit reduction and job creation.

The following are some essential points all of which prove Canada is a favorable

choice: Domestic market; wage competitiveness; work force quality; International

business skills; raw materials; energy costs; infrastructure; business services

and legal environment.

Domestic Market

Canada's per capita purchasing power is second only to that of the United States,

among the G-7 countries, and the OECD expects Canada to lead the industrialized

countries in near-term economic growth. Inflation is below two per cent and

forecast to remain low. Cost of money is lower than it has been for decades.

Exports are at record high, having increased by 14 per cent in 1993 over 1992.

Under free trade, Canadian-based companies have increased their market share of

the Canada-U.S. market. Further, the Canada-U.S. Free Trade Agreement (FTA),

together with the North American Free Trade Agreement (NAFTA) which came into

force on January 1, 1994, gives Canadian-based companies an unparalleled access

to 365 million people, forming an economy larger than that of the European

Community. The combined 1993 GDP value of the Canada-Mexico-U.S. market was in

excess of $8.5 trillion.

Competitive Wages and Benefit Rates:

Many international corporations find the Canadian work force to be highly cost-

effective. On average, wages in Canada's business centers are lower than those

in nearly all major business centers around the world. Hourly wages of Canadian

production workers have risen only 5.4 percent since 1990. Canadian

manufacturing wage rates showed the second slowest growth among G-7 countries in

1992, averaging 2.6 percent. In contrast, hourly increases in Britain and

Germany have been 12.4 and 14.3 percent, respectively.

Educated and Skilled Work Force

The cost-effectiveness of the Canadian work force becomes especially apparent in

the high level of skills and education of the workers. Canada leads the G-7

countries in advanced education, with about two-thirds of its 20 to 24-year-olds

enrolled in post-secondary education.

Canada's 67 universities and colleges produce more than 25,000 graduates

annually in engineering, the applied sciences, the physical sciences and

mathematics, while its technical institutes provide 11,000 graduates annually in

areas relating to electronics and telecommunications.

Canadian operations enjoy low turnover and absenteeism rates, and the days lost

to work stoppages have been cut by more than one-half in the past two years.

Major international firms have also won many productivity improvements in their

Canadian operations through work place initiatives in labor-management relations.

International Business Skills

Canada is a land of immigrants. Employers will find pools of experienced

workers who also offer fluency in foreign languages, knowledge of international

cultures and business practices, and networks of business contacts in the key

Asian, European and American markets. Canada is an effective bridge between

North America and Europe. Canadian business practices and laws are a blend of

American and European cultures. Canada's metric system of measurement means that

Canadian manufacturers can readily meet requirements for European standards and

measures. In addition, new government initiatives, such as the Skill Investment

Program, are further enhancing Canada's ability to train and retrain workers for

tomorrow's growth industries.

Abundant Raw Materials

Canada's rich mineral reserves and natural resources, coupled with its cost-

effective ability to extract and harvest, enable Canada to be a leader in

exports of both raw and processed commodities. Canada is the world's top

producer of newsprint and zinc, as well as the second largest producer of nickel,

pulp and potash. Canadian-based processors and manufacturers can enjoy reduced

transportation costs by being close to these globally competitive sources of


Vast, low-cost Energy Supplies

In addition to raw materials, Canada's rich mineral deposits involve mineral

fuels and river systems that have been tapped for massive energy reserves. These

include huge deposits of oil and gas, coal and uranium, as well as virtually

unlimited hydroelectric generating capacity. Canada is one of two G-7 countries

that are self-sufficient in oil supplies. Canada has the lowest electricity

cost of all the G-7 countries, and is the only G-7 member with enough natural

gas to be a net exporter. The resulting benefits of Canada's energy abundance to

industry are widespread. For example, low-cost hydroelectric power enabled

Canada to become a leading exporter of aluminum and aluminum products.

Sophisticated and Efficient Infrastructure

As a consequence of the geographical vastness of Canada, the communications and

transportation infrastructure has become highly effective and advanced. Heavy

investment in fiber optics and high speed transmission technology, together with

a newly competitive long-distance market, will help maintain Canada's

competitive costs. The need to provide effective communications links from

coast-to-coast led to Canada's emergence as a major telecommunications equipment

exporter, and an international leader in satellite communications. Collectively,

Canada's transportation systems (roads, railroads, air transport and port

access) is the cornerstone of its industrial strength.

World-Class Business Services

Canada's business service sector has expanded considerably over the past 20

years, and now provides highly specialized service for all international

investor needs. Canadian banks rank among the largest in North America, with

international offices in the U.S., Latin-America, Europe and Asia. Trust

companies and other financial institutions provide additional financial services.

International investors who prefer to deal with financial services firms based

in their home country will find that many leading international banks,

investment dealers and insurance companies have offices in Canada. For example,

there are Canadian offices for global asset leaders of American, British, French,

German, Japanese, Hong-Kong and Swiss banks. Stock exchanges in Toronto, and

Vancouver provide many international firms with Canadian equity participation.

-Factors that discourage direct investment in Canada.

Canada is an excellent country for direct investment, although there are few

factors that might discourage direct and foreign investment; The political

instability that was created by the Quebec referendum, had discouraged current

foreign investment from expanding, and put a halt in new investments. As long as

the Quebec situation is not solved, uncertainty by foreign investors will


(2). -Factors that allow or make Canadian Industry to be competitive or not


-Dynamic economies constantly re-invent themselves and grow through innovation.

To grow and prosper, business needs an efficient marketplace an environment that

encourages innovation and expansion, free of unnecessary barriers.

-Increasing productivity, and creating jobs for Canadians. help the private

sector create more and better-paying jobs. Spending smarter, targeting resources

where the payoff is greatest, and reallocating funds to new priorities.

-Increasing global trade and advances in technology are changing the world

economy. Countries that ignore what is happening and take a "business-as-usual"

attitude will fall behind. On the other hand, countries that take bold actions

by adapting to new technologies and the realities of today's economy will meet

the challenges of tomorrow head on, seize new opportunities, and build a better


-Build a positive entrepreneurial climate and help small businesses grow

-Expand markets for jobs and growth through trade

-Create an efficient and modern infrastructure

-Increase global trade and business dealings, and continually upgrade Canadians'

skills and knowledge levels to ensure jobs and growth. All Canadians,

individuals as well as groups in both business and government, need to work

together to improve their chances for success

-Helping small business grow. Small business creates jobs, almost 90 percent of

the new jobs in the Canadian economy. The priority is to make sure that nothing

stands in its way, by removing obstacles to growth.

-Cutting paper burden: Entrepreneurs should spend more time growing their

businesses and less time filling out government forms

-Encouraging investment in small business:

-Encourage greater cooperation between levels of government, and work with the

provinces in streamlining the regulatory regime.

-High standards to boost sales: Developing and adhering to common standards for

products and services is important in a highly competitive, global economy.

-Concentrate attention on those countries seeking to become members of the new

World Trade Organization, and countries such as Chile who may join the North

American Free Trade Agreement (NAFTA).

-Increase the number of exporters and reduce the current account deficit and, as

a result, create more jobs for Canadians.

-Building global linkages. A more strategic approach to promoting Canada as an

investment site within NAFTA.

3. (A). The two likeliest strategies to adopt:

1. Open a plant in Mexico to assemble the auto parts. Canadian suppliers must

compete on the basis of lowest-cost, highest-quality, high value-added;

components. The low value of the peso will encourage parts and vehicle sourcing

from Mexico while discouraging exports to the Mexican vehicle market. Global

competition will intensify for both parts companies and assemblers, particularly

as emerging countries struggle to develop their economies, many using the

automotive sector to spur economic growth. It is expected that trade barriers

will be reduced further, thus opening new market opportunities for Canadian

firms. The risk of adopting this strategy is the firm will have to deal with a

completely different sets of rules and regulation of the Mexican government,

that might not suit the firms goals and policies.

2. Outsource the assembling of auto parts to Mexican plants. In the longer term,

the Mexican market is expected to increase assembly capacity over 50 percent, to

about 2 million units per year, and parts sales are expected to grow to $20

billion. The phasing out of the protectionist Mexican Auto Decree will create

significant trade, sourcing and investment opportunities for both assemblers and

parts manufacturers. The risks of adopting this strategy are the possibilities

of jeopardizing quality of the firms auto parts, and the difficulty of

implementing quality and control check on their products.

3. (B). The services that Canadian Government can provide to assess Canadian


Department of Foreign Affairs and International Trade (DFAIT)

DFAIT promotes and protects the interests of Canada and the common values of

Canadians throughout the world. Within its International Trade mandate, DFAIT

strives to maintain and enhance Canada's economic health and competitiveness by

actively pursuing and promoting Canada's economic and commercial interests with

its global partners. Through International Trade Centres (ITCs) in Canada and

its missions abroad, DFAIT implements a wide range of initiatives designed to

attract productive foreign investment to Canada and promotes Canadian firms as

strong investment, commercial and technology partners. DFAIT programs and

initiatives ensure that Canadians have full access to investment opportunities

in Canada and abroad. DFAIT meets its objectives through working closely with

federal departments such as Industry Canada, as well as with the provinces and

major business and industry associations.

Services provided, in Canada, by DFAIT include basic export and trade-related

advice, investment and technology development counselling; including

publications, market studies and information on government assistance programs.

To support its activities abroad, DFAIT has five geographic branches, each

focused on a specific area of the world: Africa and the Middle East, Asia-

Pacific, Europe, Latin America and the Caribbean, and the United States. DFAIT

also has a network of trade commissioners and commercial officers, in Canada and

abroad, to assist Canadian firms and promote trade, investment, technology and

strategic alliances.

Canada's International Business Strategy

Canada's International Business Strategy is a blueprint which lays out how

government and industry can best work together to generate new international

opportunities for Canadian business. CIBS is central to the federal government's

commitment to a Team Canada; partnership with Canadian industry and the


Industry Canada (IC)

Industry Canada is responsible for Canadian industry and science, tourism,

telecommunications, business and consumer framework policy. IC also administers

the Investment Canada Act which includes investment review and notification

procedures. IC is organised on an industry sector basis, and works directly with

Canadian companies and business associations to promote industrial, scientific

and technological development, including promoting and facilitating foreign

direct investment in those sectors in Canada. It manages a portfolio of programs

and provides services in the areas of business intelligence and information,

technology and industrial development, and trade and market development. It also

maintains a network of regional offices across Canada and works closely with the


3. ( c). The specialists to use in import/export: Export Development

Corporation (EDC) EDC is a customer-driven, financial services corporation

dedicated to helping Canadian business succeed in the global marketplace. EDC

facilitates export trade and foreign investment through the provision of risk

management services, including insurance (export credit, foreign investment),

financing and guarantees to Canadian companies and their customers.

Canadian business center

Where you meet and how you present yourself could make the difference between

closing a deal or closing a door. That's what the Canadian Business Center is

all about. The Canadian Business Center can play a key role in your positioning,

marketing, and sales strategies. You can host special events including sales

presentations, seminars, receptions, meetings an exhibits in the deluxe meeting


The firm can have a single contact point for their Mexican clients and partners,

where they can. reach you any time you are in Mexico. Up to 30 fully equipped

individual booth spaces available Ideal for a variety of events including mini-

trade shows, product demonstrations, special exhibits and receptions. The center

offers Professional Services. The Canadian Business Center can give you

immediate access to the resources of the Canadian Embassy and the extended

network of clerical resources to assist you with all your business


Translation and Interpretation Services to facilitate quick and effective

communication with your Mexican partners and clients

Centrally located in downtown Mexico City, the Canadian Business Center service

offered through the Department of Foreign Affairs and International Trade's

Access North America program. It is part of an overall strategy to help

Canadian companies take advantage of emerging business opportunities in Mexico.

Experts In International Law and Trade

For the firm to survive and be competitive in the global market, it must be

aware of the international laws and regulations of the foreign countries they

are dealing with. To facilitate this task, its extremely important to consult

experts in international laws and global trade.

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