In Why Mexicans Don't Drink Molson: Rescuing Canadian Companies from the Suds of Global Obscurity, journalist Andrea Mandel-Campbell asks why it is that despite our huge forest industry, it was Sweden, not Canada that produced a company famed for its inexpensive wood furniture. Furthermore, why is that despite believing ourselves to brew some of the finest ales and lagers in the world, Canada can claim no beer exports to speak of. In comparison, a country such as Mexico, with little barley or fresh water, sees its beer dominate sales in 150 countries, including ours.
Roger Martin, dean of Rotman School of Management at the University of Toronto, says Mandel-Campbell's perspectives "illuminate Canada's shortcomings in the new global economy" and considers Why Mexicans Don't Drink Molson "essential reading for any Canadian who cares about the kind of Canada we are building for future generations."
Mandel-Campbell was the Mexico bureau chief for London's Financial Times as well as the correspondent for Business Week magazine in Argentina. She now lives in Toronto and was here to discuss the issue of Canadian competitiveness abroad. Your questions and her insights are below.
Noel Hulsman Editor, Report on Small Business, writes: Andrea, thanks so much for joining us today. We appreciate your time. We have a number of questions and comments waiting for you, so let's get started.
Dave G from Canada writes: Would you agree that Canada being an immigration country without a colonial history is perhaps a key factor why Canada does not actively seek to appreciate and develop international markets and consumers on the scale of countries like Britain and France?
Andrea Mandel-Campbell writes: You make a good point. The fact that we were never an imperialist country and never had a history of going out and conquering other nations, definitely has something to do with it. We have never tried to impose our views on others - which is actually a huge competitive advantage if we used it - but has also made us reluctant at the same time to stake our own claim in the world. The US is an immigrant country as well, but it has a very strong sense of itself and has seen itself in a way as the inheritor of the British Empire.
Dave Parkinson from Toronto writes: Andrea - leaving aside the bigger question of our international competitiveness for the moment, don't you think a key reason why Molson or Labatt's beers don't have a significant piece of the global export market is that they're just not that good? I mean, let's face it, Canadian or Blue or Ex are mediocre beers; we're not going to convince Europeans, for instance, to drink them. You have to have a good product first before you have any chance in selling it to the world, don't you?
Andrea Mandel-Campbell writes: I would disagree. It's all about marketing. Have you ever tried Corona? In Mexico, it's considered a substandard beer, yet it's one of the world's leading beer brands, sold in 150 countries. Mexico doesn't have fresh water or barley - what they have is an image. What they are selling with Corona is sunshine, escape, beaches. It's not what's in the bottle so much of the idea of it - and I think that's where Canada often comes up short.
In fact an interesting anecdote - I met an Argentine businessman who told me he used to love to take the Air Canada flight between Buenos Aires and Santiago, Chile because it was the only place he could get Molson Canadian! Even if we don't particularly like Canadian, others who might think it's different or exotic, do.
Chris Fulker from Taiwan writes: Canada can't compete on price. Our overly high standards of living mean that our products, with some exceptions in natural resources, foods and niche high-tech or high value-added items, are priced out of world markets. Why would anyone want to buy a beer from a country, a company and employees who have to support two-car habits, vacations every year, confiscatory tax rates, massive winter heating bills, a 'summer driving season'(!) and expensive cadillac state medical and education systems, etc.? I don't want to call Canadians 'spendthrifts', but their efforts to ensure a constantly rising standard of existence have run up against a wall in recent years. Incomes no longer keep up with the real inflation rate, product quality is increasingly shoddier, homes smaller or vastly more expensive, and for those who need food or energy prices are truly soaring. Despite desperate Canadian middle-class consumers exhausting their various forms of credit, living standards continue to fall. But our products should become more affordable!
Andrea Mandel-Campbell writes: You are right Chris, we are being caught in the cross-hairs of a high-standard of living and uncompetitive industry in many cases. Traditionally Canada has tried to compete on price - using a cheap dollar and cheap wages (compared to Americans) to compete and produce essentially commodity products in many cases. But we can't compete on price, because someone will always be cheaper than you - which is why, for example the Canadian forestry industry, which pays high school educated workers $70,000 salaries to pump out two-by-fours instead of more value-added products, is being felled by foreign competition, hundreds of mills have been closing and thousands have lost their jobs.
Daniel Roy from Toronto writes: Hi Andrea, Do you think that our governments unwillingness to do anything about some de-facto price-fixing arrangements among players of various major industries has anything to do with our lack of (corporate) competitiveness skills in Canada? Some examples to illustrate my point: Gas companies: is it a coincidence the 4 major companies follow each other's price up to the the tenth of a cent per litre?. And surprise, a long weekend is coming, and prices are way up! Banks: Go shop for any banking service, and notion of competition among banks you might initially have had won't last very long. What we have is market sharing. Telcom: If you decide not to do business with Rogers or Bell for your cable, who else is there? Why can't our government allow foreign companies to come here for a bit of fresh competition? Thank you
Andrea Mandel-Campbell writes: Hi Daniel, you've hit the nail on the head. We really don't have competition in this country. Because we have things like foreign ownership rules in banking and telecommunications, foreigners are barred from entering Canada. As a result, we've tried to 'invent' competition here in Canada by trying to over-regulate domestic companies. The end result is that we end up with pseudo monopolies or oligopolies who carve up the market amongst themselves. Consumers are gouged on one hand (why is it that Canadian banks DON'T charge ATM fees in the US for example) while our companies remain coddled and complacent and without the skills to compete internationally.
Mark Chynoweth from Beijing and Toronto writes: The difference between an American and a Canadian: An American will turn a steak on a 45 degree angle call it Steak Wichita or something, open a steak theme park, have it printed on the state license plate, then start a global steak restaurant chain. A Canadian will say, 'the steak's crooked.' Any comments about Canadians' lack of shameless self-promotion and it's effect on our presence globally? (Note: I'm not saying shameless self-promotion is necessarily a good thing)
Andrea Mandel-Campbell writes: I believe marketing and branding are at the very core of the challenge Canadians face. We are historically commodity producers and we have lacked the 'boldness of claim,' so to speak, to go out there and brand our products. It comes down to a bit of laziness, and I believe, issues of identity. Having said that however, I don't think you have to be a "shameless self promoter" to brand and make the real money off your product.
In my book I make the comparison between Donald Trump and Paul Reichmann. Both are huge real estate magnets, but Trump will put his name on anything from bottled water to panty hose and names all of his buildings after himself. Paul Reichmann in comparison, has never put his name on a single building he has built, but his buildings are no less monumental. When he was asked what he wanted his legacy to be, it was for his buildings to contribute to the culture and society around them.
Gordon White from Vancouver writes: I heard you on CBC radio Andrea, and loved your comments. I did have a question, as an 20-year old Canadian, exactly what must young Canadians do to make sure that Canadian brands stay competitive overseas? And how can we make sure our existing 'international' brands stay 'Canadian?' - Bombardier, RIM, etc?
Andrea Mandel-Campbell writes: Hi Gordon. I guess the first thing I would say is to begin by first believing in branding and investing in branding. Canadians in general do not put much value in brands, preferring to compete on price, while remaining highly domestically focused. You have to believe that your Canadian brand - even if it is not ostensibly 'Canadian' is for global consumption. The world has to be your market.
I'll give you an example of what I mean - there is a Vancouver based company called Methanex. It sells methanol, a clear petrochemical - the ultimate commodity. Yet they turned their product into a 'brand'. How? Instead of just waiting for Japanese tankers to show up, who would then sell their methanol around the world, Methanex took control of the sales of their product. The set up distribution centres around the world and leased a fleet of tankers to transport their product. They also built new manufacturing centres around the world. Their 'brand' is security of supply and tailoring deliveries to customer needs. As a result, they are market makers in methanol - in other words - they set the world price.
"Somewhere over the rainbow" writes: Our esteemed right wing thinkers espouse selling out for short-term profits and the authors' application to U of T's law school (see their propaganda). You'd think there was a way to have some poison pills or other mechanism that would have kept Massey-Ferguson, Labatt's, MacMillan Bloedel etc. under our roof. Take Daimler for example. The German Banks and Pension funds own so much that it would be next to impossible to sell out to a foreigner. The Myopic Frazer sell outs make a good case in pointing out our trade relations, but offer no other solution but to dig in deeper with the U.S. What about these new and growing markets? Their report is akin to telling the big three to invest in new, bigger and better gas guzzling SUVs. Our smart thinkers in Vancouver suggest joining further into the missile defense treaty to appease those who espouse in the media Free Trade and Free Markets, yet in reality are nothing of the sort in practice. As pointed out by a Chinese diplomat recently, the U.S. is anything but about free markets in reference to Iraq, I think. This comment really caught my eye in terms of showing the contradictions that the world finds difficult to fathom when dealing with the United States.
Andrea Mandel-Campbell writes: I don't think protecting our companies from being bought out is the answer. There are specific reasons that Massey, Labatt's and MacBlo were all bought out - and it was all our fault, not the fault of foreign acquisitors. Massey leveraged itself to the hilt. In the case of Labatt, it tried to go international, buying into Mexico long before many others. But its management was not supported by its queasy Canadian shareholders who thought the company had lost its head - so they sold to the Belgians - who thought the Mexican move was great. As for MacBlo, the company was always facing criticism at home in BC - every time it went abroad it was criticised for not creating more jobs at home and every time it tried to grow bigger in BC it was attacked for being too powerful. The company drifted for a long time and was badly managed until it was finally bought out. I interviewed the chairman of MacBlo at the time. As he put it "We have ourselves to blame."
Sue W from Canada writes: We're too busy wasting time on non-productive, useless issues and competing with one another, who has the time to think about competing globally.
Andrea Mandel-Campbell writes: Hi Sue, I couldn't agree more. How can Canadians compete abroad when they can't even compete in Canada, with all the red-tape, government bureaucracy, interprovincial trade barriers and onerous regulation that doesn't need to be there. I think if Canadians were freed up from the millstones around their necks right here at home, they'd have a much better chance of competing abroad.
K Miles from Guelph writes: Andrea, what is it about the Canadian psyche that limits our growth and makes Canadian business so unwilling to be the first to try anything? Has business been spoiled by years with a low dollar and socialized healthcare? Or is it something more foundational. My company created a new way to bring strategy into complex, knowledge roles - it boosts performance quickly but it is new. Our sales have been 90 % in the US. US executives will try a new idea ('This will create an impact in 12 weeks which lasts for 2 years? Let's give it a whirl.')- while the Canadian execs pause, comment they haven't seen it written up in US magazines, then deline. Other Canadian business face the same rejection of the new. One Ottawa business has a better way to do e-commerce by forwarding the transaction to a person's online banking which keeps from having to reveal personal information. I spoke with the COO and when I asked if she'd tried selling it to Canadian companies she replied, 'We can sell this really quickly to US businesses, we've tried and we just don't have time to try to sell here in Canada.' Andrea, what's the root cause of the Canadian reluctance that so hinders our innovation and will hurt our standard of living?
Andrea Mandel-Campbell writes: It is definitely something very deeply rooted and goes back I believe to the very foundations of this country. If you think about it, we've always had a fear of the unknown and never really believed in our own judgment. Take the American Revolution- the Americans decided they didn't want to live under British rule anymore and were ready to make their own decisions. Canadians preferred to remain a colony, while those Americans who wanted to retain the status quo - the American Loyalists - moved wholesale to Canada. We've always preferred to play it safe, while the Americans are revolutionaries. And unfortunately you see that in Canadian business. Many businesspeople have told me that Americans, if they are introduced to a new technology, are ready to overhaul their entire system, while Canadians say, why see fix it if it ain't broke? We prefer to tinker at the edges, make very incremental change, because we are inherently conservative and we are always waiting for someone else to tell us it's alright.
John S. from Toronto writes: Canadians need a complete mindset change if they wish to compete in the world economy. The government, corporations and academia need to team together to create more research, investment opportunities that can lead to more companies, more employment, training -- training of both academic leaders in the humanities, sciences, engineering, and other important areas -- including doctors which there is a shortage of, and also of more 'blue collar' jobs including the trades. In the global economy, people work harder and longer and there is more to lose and more competition. Canadians need to understand this and realize that things move quickly. The government also need to lower taxes for businesses -- at least small and medium size to encourage growth and foreign investment and job creation.
Andrea Mandel-Campbell writes: I agree wholeheartedly. In my book I point to the example of Finland and it's 'three-legged stool' of government, business and academia working together. Unfortunately we are a long way from that in Canada. While the three worked together in Finland unashamedly, here in Canada there is a significant disconnect between the three and an anti-business rhetoric that is quite pervasive in government and academia. As a result, government funds academic research chairs that might not necessarily have anything to do with the innovative needs and demands of business. I compare the results to toddlers who parallel play - they may touch the same toys, but never really interactive.
Unfortunately, we've been able to coast for a really long time. My fear is, unless we make these changes, we will die the death of a thousands cuts - where we don't notice until it's too late.
Noel Hulsman writes: Andrea, that's our time. Thank you so much for your insights. We really appreciate it. Cheers.
