Canada is an Innovation Springboard for Companies From Mexico
STORY INLINE POST
In past MBN articles, my colleague Felipe Sanmiguel and I have explained how Export Development Canada (EDC) helps Canadian companies succeed in their business ventures in Mexico. Alternatively, where are the opportunities for Mexican companies looking to expand into Canada? In this piece, I’ll discuss how EDC is equipped to support international companies considering investing in Canada.
Canada has made headlines recently as a top destination for some of the most important multinational companies (MNCs), many of whom have announced greenfield investments in the country. EDC has met with companies that are setting up their science, technology, and innovation hubs in Canada, which lays the groundwork for further foreign investment. Of course, this may not come as a surprise to most, as Canada is ranked as the best country among the G20 in terms of starting and conducting businesses. The country has a welcoming and robust business environment, low taxations for new businesses, fiscal prudence, a solid banking sector, and a resilient economy. Furthermore, Canada has a highly skilled labor force and a multitude of natural resources.
Canada is a global leader in post-secondary research and development (R&D) spending, even offering one of the most generous R&D incentives and tax credit programs within the G7. It is an essential market for businesses looking for high standards in management and intellectual property protection, and for those who want to leverage their intellectual property. In 2021, Canada held the title of the world’s fifth-largest recipient of foreign direct investment (FDI) with US$60 billion, the ninth-largest economy, and 40th most-populated country. Canada is open for business and is looking beyond its own shores to help Canadian companies export. For example, Canada has negotiated 15 free trade agreements (FTAs) and 38 bilateral investment treaties with a total of 51 countries. This gives companies operating from Canada access to 1.5 billion consumers and a combined GDP of US$60 trillion, making Canada a bigger player in international trade circles.
Since I was appointed as EDC’s Chief Representative for Mexico in 2018, many local and international companies have approached our team looking to better understand some of the investment opportunities that Canada offers. Each time, those that come to us for advice and support are comforted to know that Canada has a whole-of-government approach to attract high quality FDI in a variety of competitive sectors. In fact, Canada has focused its efforts in addressing the significant global challenges facing businesses, such as climate change, global supply chains, and the Fifth Industrial Revolution, also called 5IR.
Mexican companies considering Canada in their business plans to achieve their goals will be further comforted with the Canada-United States-Mexico Agreement (CUSMA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). These modern and competitive trade agreements will allow companies to continue to expand their offerings, and set goals, with a view toward expanding their business abroad, increasing productivity and generating greater output and value for their products and services.
Canada is a global innovation champion and foreign investors are increasingly concentrating their efforts on Canadian solutions in a myriad of sectors: advanced manufacturing and advanced technology, sustainable agri-food, clean technologies, and information and communication technology (ICT). These sectors offer Mexican firms the innovation and strategy to integrate into global value chains, while boosting and diversifying Mexican exports.
Canada’s federal government serves as a national competitive advantage, as it offers foreign investors the extensive support of Canada’s public services, offering expertise and knowledge through various agencies, including Invest in Canada, the Business Development Bank and, of course, EDC. This support comes in various means, through R&D programs, incentives, direct and indirect financing, and consulting services.
EDC offers a combination of tools, knowledge, expertise, and connections to Canadian businesses. We help manage risk, provide financing solutions, deliver market intelligence, and connect investors with skilled and experienced Canadian suppliers. EDC tends to have a higher risk appetite than many commercial banks and we can supplement lending capacity in support of Canadian businesses looking to expand internationally. As such, through EDC’s solutions, investors can gain the momentum needed to grow their business. Some of our core solutions that help foreign investors are Financing Support for Inbound Foreign Direct Investment, and our recently launched Global Corporate Partnership Program.
Let me use an example to illustrate how EDC supports international companies investing in Canada. International companies with an interest in developing their business in Canada should directly contact our partner, Invest in Canada, to unlock potential investment opportunities and facilitate their international expansion. Based on the benefits that an investment would bring to Canada, EDC can support up to the full costs or purchase price of a company’s investment, offer competitive rates to borrowers based on credit quality, general market conditions, and the length of repayment terms being considered. EDC will partner with other financial institutions when providing this type of financing.
Another option sits within our Global Corporate Partnership program where global MNCs looking to grow their economic, and societal impact in Canada, in the so-called sectors of the future, are aligned with EDC’s 2030 Strategy. Nokia took advantage of EDC’s Partnership program to increase its presence in Canada, to sustain and grow its leading-edge R&D facility and further develop the ecosystem of suppliers and solution partners in 5G and the next generation network infrastructure for global deployment. For Canadians, the benefits are exponential, and for EDC, we work with the company to advance its community and social initiatives in Canada.
Our invitation to Mexican corporations is clear: EDC is committed to creating more investment success stories and increasing the impact for Canada and Mexico. The post-pandemic world is bringing more complex challenges that will require North American companies to stay at the forefront of innovation, sustainability, and responsible business practices. Our EDC team in Mexico has the mandate to promote, support and develop Canada’s international trade and investment in the region by bringing solutions and expanding business opportunities. Mexico has some of the most sophisticated companies in several sectors that, collectively with the US and Canada, make North America attractive worldwide. Now, we want them to come to Canada. EDC and Invest in Canada’s teams are ready to work with Mexican corporations to unlock opportunities and drive innovation, which will strengthen our industries, diversify our bilateral trade and investment partnerships, and create the right conditions to boost all segments of society.