July 2003
 
BUSINESS


Building the Canada-Italy Bridge


by Corrado Paina
 

Accenti BUSINESS : Building the Canada-Italy Bridge by Corrado Paina
 
In December 2001, Italy's Minister of Foreign Trade, Adolfo Urso, headed a business delegation to Canada, sponsored by the newly created Canada-Italy Business Council (CIBC). During his visit to Ottawa, Minister Urso, and his counterpart Minister Pierre Pettigrew, officially launched the CIBC. The Canada-Italy Business Council is a joint effort of both the Canadian and Italian business communities, with the support of the Canadian and Italian governments, to promote joint business activities.

 

The main focus of the CIBC is on SMEs (small and medium-sized enterprises), as these are deemed to be the most flexible and dynamic, and the ones most likely to benefit from institutional support. Five sectors were identified as the most promising in terms of co-operative opportunities - agrifood, information and communication technology, forestry and wood (including furniture), energy and biotechnology.

 

The CIBC is headed by two co-presidents, Rodrigo Rodriquez of Goldenshare SAS on the Italian side and E. Paul Legault of the Montreal law firm Fraser Milner Casgrain on the Canadian side. Several sectoral co-chairs have been appointed. They are ultimately responsible for organizing activities within their sectors, and are comprised of Italian and Canadian entrepreneurs.

 

The Italian Canadian community in Canada is in a new phase of integration, and the term "globalization," at times inflated and overly used, seems to embody all the changes and aspirations of this transitional phase. After years of dormancy, that famous "bridge," (to use another clich秠between Italy and Canada seems to be entrenching its pillars and becoming more consistent more stable, more connecting and connected. In Italy we can see a clear trend: the Italian government wants to do business in Canada, using our community as a springboard for its penetration. This is a serious role, and one which our community should assume in every way: economic, financial, cultural, and social.

 

In October 2001 the city of Salerno hosted an international conference of the world network of Italian Chambers of Commerce, where it was stated that for the Italian economy to elude recurrent recession it must "internationalize" its SMEs - discover new markets for its products.

 

In Canada the federal government has been actively engaged in diversifying its markets. In 2000, more than 87% of our national exports were directed to the US. This has been altered somewhat as a result of the events of September 11, 2001, but the trend in Canadian exports remains strongly slanted towards our southern neighbour.

 

The will of Canadian exporters to continue their univocal and privileged relationship with the US seems unbreakable, but the Canadian government's guidelines and other indicators confirm the need for small, medium and large enterprises to create an alternative - to diversify their markets as a relief for their exports and their fears. If the border between the US and Canada still registers the biggest daily flow of goods in the world, the reasons are not surprising: proximity, language and NAFTA! This was confirmed in a government sponsored study of 800 Canadian businesses carried out by Ipsos Reid and released in July 2002. At the same time though, the study showed that most of these businesses demonstrated an interest in exporting to the European Union.

 

As much as immigration policies have changed after the dramatic events in New York, so too business attitudes and policies must change. As the process of globalization unfolds, one often has the feeling of being a passive observer rather than an active participant. But whether we like it or not, this process is taking place. The wheel of change is spinning, and there is plenty of evidence to prove it: the Kyoto Accord, a revised ethics in financial transactions, and the fight against the exploitation of child labourers, to mention a few. The escapable trend is towards a major integration of the markets and towards the lowering of trade barriers.

 

The Italian business community in Canada today is comprised of a large and diverse cross-section of companies and individuals. The two largest business associations, namely the Canadian Italian Business and Professional Association (CIBPA) with chapters in twelve Canadian cities and the Italian Chamber of Commerce with chapters in four, have memberships well into the thousands.

 

From humble post-war beginnings, today's Italian Canadian businesspersons run some of the most prosperous companies in Canada, and play a key role in the fabric of the Canadian economy.

 

Nevertheless, some real obstacles still hamper trade between Canada and Italy. In the study alluded to above, although the majority of exporters of goods to the EU stated that exporting has been relatively easy, the primary challenge most face is the cost of servicing EU clients. Other challenges include price competition, higher transportation costs, export financing, custom clearance, labelling and packaging costs.

 

The study also revealed that 59% of respondents prefer doing business with the US because they believed it would be difficult to do business in the EU. In reality however, only 9% of companies already exporting services to the EU stated that they encountered bureaucratic difficulties when doing business in the EU.

 

Somehow, the notion persists among some entrepreneurial circles (not already doing business in Europe) that Europe, and by implication Italy, is not sufficiently stable both politically and socially, nor sufficiently transparent to undertake business ventures. Be that as it may, Italy is Canada's tenth largest trading partner. Two-way trade in 2000 totalled over $5.3 billion. Italian direct investment in Canada rose from $277 million in 1994 to around $731 million in 2000. The Canadian presence in Italy increased significantly in 1999 with a $500 million investment by Celestica, a Toronto-based electronic materials manufacturer. Total Canadian investment in Italy now stands at $4 billion, and is an important bridgehead for Canadian companies doing business in Italy and the EU. As Italy privatizes its huge public sector and deregulates its markets, it will merit increasing attention from Canada, especially for cutting-edge technology and investment.

 

The Italian business sector also sees Canada as an increasingly attractive investment destination, and Canadian companies as potential players in strategic partnerships for exploring opportunities in third-country markets. Recently, Italy's Autogrill acquired 18 motorway travel centres located on two major highways in Ontario (the 401 and the 400) for several hundred millions of dollars. This expansion also includes 56 food and beverage utilities and four retail locations.

 

Significantly, however, the main item exported to Canada from Italy is machinery, and not wine, food products or fashion - contrary to what many might think! In fact, Italian machinery in some sectors (woodworking, plastic, tool, food processing) is among the top four in the world after Japan, the USA and Germany. The preference for American and German machinery is based on the perception that "they are so reliable." Before the era of the internet, maintenance and assistance, or the so-called aftersales support, were pinpointed as Italy's major weakness. Now, maintenance and training can be carried out through the internet, providing an opportunity for Italian companies to dispel any misconceptions abroad.

 

To be sure, Canadian and Italian entrepreneurs still face a perception problem from both sides of the great divide. But a lot more can and must be done to illuminate the dark areas that still cast a shadow on healthier relations between the two countries. Italy is not just spaghetti and Ferrari and pretty girls, Canada is not only space, lakes and primary resources.

 

It is up to our community to facilitate the process of integration, reconciling the two countries for what they are in real life: two of the most vibrant economies in the world, two places where intelligence, creativity and dynamism make the difference.

 

Corrado Paina is the Deputy Director of the Italian Chamber of Commerce in Toronto and Editorial Director of Partners - Italy & Canada, the quarterly business magazine of the Italian Chamber, paina@italchambers.ca

 

 

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