Photo: REUTERS/Kacper Pempel

Thanks to its entrance to the European Union and closer ties with Western Europe, Poland has been transformed from a dour ex-Soviet backwater to one of the continent’s brightest stars. While other European countries struggle to restart their economies amid an ongoing financial crisis, Poland dodged recession, delivering gross domestic product growth of 3.8% in 2010 and 4.3% in 2011. Its government predicts a 2.5 per cent increase this year.

Poland’s image will be burnished further next month when it co-hosts the Euro 2012 soccer championships with neighbouring Ukraine. The three-week tournament will give a big boost to its tourism industry, introducing thousands of travellers who have previously never set foot in Poland to the cities of Gdasnk, Warsaw, Poznan and Wroclaw.

“Everybody in Poland will tell you that you can see how much in the country has changed in a relatively short time,” Mr. Kucmin said.

It’s no surprise, then, that doing business in Poland is becoming very appealing for Canadian companies like Bombardier.

“It’s one of the very important markets for us,” Mr. Kucmin said.

Investors around the world are taking notice. Export Development Canada has proclaimed that Poland is one of the “tier one” markets in Western Europe this year, joining economic heavyweights Germany, France and the U.K. This designation will bring a greater focus on the opportunities in the Polish market for Canadian firms.

Indeed, one Canadian government report predicts Poland will be one of the 20 biggest markets for Canadian merchandise exports by 2040, replacing well-established business partners like Hong Kong, Switzerland and Saudi Arabia.

Poland has “ a really stable system,” said Klaus Houben, EDC’s senior regional manager for Europe. “It’s in the middle of Europe. … It’s the gate to the more eastern countries.”

For now, Polish exports to Canada are far outpacing what Canadian firms send to Poland. Canadian exports to Poland totalled $251.6 million last year, while Poland exported $1.44 billion worth of goods to Canada. The Canadian government is eager to foster deeper economic ties with Poland, recently hosting Polish Prime Minister Donald Tusk during a visit to Canada. There are more than one million Canadians who are of Polish heritage.

The biggest markets for Canadian firms in Poland are in the areas of aerospace, turbine equipment and medical instruments, according to Houben. Canadian firms could benefit from contracts for updated infrastructure throughout Poland, as well as that country’s shale gas exploration, according to Houben. A Rabobank Group report, citing the Economist Intelligence Unit, says Poland may have the largest hidden reserves of shale gas within the EU.

Bombardier is one of the Canadian firms that have pursued business in Poland. It entered that market through the 2001 acquisition of a global railway giant Adtranz, which expanded its presence in Europe. Bombardier currently has 1,000 employees in Poland, with offices and factories in Katowice, Lodz, Warsaw and Wroclaw. Bombardier doesn’t release sales figures for Poland.

The Canadian maker has steadily won business in Poland in recent years. In 2010, it won a contract to make 24 trams for the city of Krakow, netting Bombardier €40 million ($51 million). This year, it secured an order for eight of its Q400 NextGen aircraft, valued at $246 million (U.S.), with an option for another 12 planes. Fans attending the Euro championship this summer will ride on Bombardier trams in Gdansk and double-decker train coaches in Warsaw. Bombardier is optimistic about its prospects in the country.

“The infrastructure needs serious investment,” said Kucmin of Bombardier. “Poland is a member of the EU. There’s a significant amount of money available for the Polish government and for local authorities for investment in railway transport.”

InterHealth Canada, a Canadian hospital management company, is a newer entrant to the Polish market. It started looking at that market as part of a global expansion for several reasons: its solid economic growth, good work ethic and a “significant” need for improvements in infrastructure and health care services.

Last September, InterHealth Canada won a contract to build and operate a hospital in the city of Zywiec in a public-private partnership, the first of its kind in the Polish health care sector. The contract is not immense (some €46 million), but InterHealth Canada’s Polish head Nasser Massoud believes it is just the tip of the iceberg. He says some 600 hospitals in Poland do not meet all EU regulations and need their infrastructure updated. “This is going to be a very large market once it picks up,” said Massoud, who also heads up the company’s transactions and corporate development on a global basis.

Though executives are careful about airing frustrations, doing business in Poland is not without its roadblocks. Massoud from InterHealth admits that the language barrier can be challenging as few people speak fluent English outside the large cities. As well, in sectors controlled by the government, politics can play a role at the negotiating table, Massoud adds.

Canadian firms must also come armed with patience as the bureaucracy can drag things out, according to Houben. Other complaints involve Poland’s labour regulation and slow judiciary system, according to Rabobank.

Another hurdle is the EU debt crisis that refuses to dissipate, a worry for Poland, which sends the greatest bulk of its exports to that region. The International Monetary Fund cut its outlook for Poland’s GDP last month as the EU problems start to hurt the Polish economy.

Cranes dot the skies in Kurdistan
Photo: Susan Mohammad

Unlike the rest of Iraq since the ouster of Saddam Hussein in 2003, the Kurdistan Region in the north (which is governed by the semi-autonomous Kurdistan Regional Government, or KRG) is stable, even thriving. A U.S. Consulate was opened in the regional capital of Erbil in 2011, and both the Hilton and Marriott hotel chains are building properties there to take advantage of increased tourism to an area rich in history, natural gas and oil. In the past few years, business offices or consulates representing 24 different nations have been established.

According to the KRG, Kurdistan experienced GDP growth at an impressive rate of 8% last year. This growth, combined with the replacement of socialist policies with free-market legislation in the years following the collapse of Hussein’s regime, has succeeded in attracting foreign investors. To add to the prosperity, Iraq has just passed the largest annual budget in its history—US$100 billion, up from $82.6 billion in 2011—with Kurdistan set to receive 17% of that figure through transfer payments under the new Iraqi constitution. After Saudi Arabia, the budget is the second largest in the Middle East.

Following decades of war, sanctions and repression, Kurdistan is rebuilding at a break-neck pace. The region is in need of many services, creating opportunities for foreign firms in everything from construction to agriculture, education and banking.

In 1988, more than 180,000 Kurds were killed and 90% of their villages destroyed by Saddam’s regime during an operation known as the Anfal campaign. Many Kurds were also forced off their agricultural lands and into relocation camps or cities. As a result, the region’s rich farmland is mostly unused making Kurdistan very dependent on trade and imported goods from Turkey and Iran. Turkey is Kurdistan’s largest trading partner, with more than $6 billion worth of goods traded between the two neighbors in 2011. While Kurdistan does export oil to Turkey, trade is mostly a one-way street. The regional government is redeveloping the local agricultural sector in the hopes of becoming more self-sufficient. To achieve this, the KRG is encouraging city dwellers to relocate to villages using financial incentives such as no-interest agricultural loans, and by providing up to US$20,000 for families to build a home in the countryside. Improvements to neglected infrastructure such as roads and dams, and the construction of massive food storage silos are also under way.

There are an estimated 2,000 foreign-owned companies operating in Kurdistan, which has a population of nearly five million people (in an area roughly the size of Switzerland). Of that number, the regional government says 53% were Turkish-owned, while the other companies were mainly from the United Kingdom, Europe, Asia and the United States. There are currently 87 U.S. firms operating in the region (compared with just nine in 2010) and that number is expected to increase dramatically by the end of 2012 as more American companies learn of the region’s attractive incentives.

These enticements include loans of up to US$2 million for foreign-owned SMEs to set up shop in Kurdistan, and a low corporate tax rate that varies by industry but averages at 5%.

“Any foreigner can own land where they set up their projects free of charge and they are tax exempt for seven years, which may be extended for up to 15 years in some cases,” said Fathi al Mudaris, Economic Advisor to the KRG Minister of Trade and Industry, outlining further incentives for foreign companies. “Investment law here also allows foreigners to own 100% of the shares,” he added.

Al Mudaris pointed to the construction industry, and the current boom in hotel and residential development in the cities of Erbil and Sulaymaniyah, as one area of opportunity.

“Our infrastructure has been ignored and destroyed for about 40 years and the growth rate of the community is such that our population will double every 14 years,” said al Mudaris. “The demand for construction materials is very high. We have a few cement factories and a large steel one, but we also import materials from Iran, Turkey and the Ukraine, so we need new resources for construction materials.”

Kurdistan suffers from frequent but short-lived power outages. It also lacks an insurance industry and its banking sector is in its infancy. While this state of affairs can prove a challenge for some companies, it means opportunities for others.

Al Mudaris said the government is currently targeting smaller enterprises in order to “pave the way” for larger companies. “The policy of the KRG is to support all sectors to develop. Our people are friendly and we have no economic crisis. We hope to give the private sector a chance with our policies.”

GETTING THERE

There are currently no direct flights from North America to either of the two international airports at Erbil and Sulaymaniyah, but Lufthansa or Austrian Airlines provide service from Europe.

A temporary visa is issued to Canadian citizens at the airport upon arrival. Those wanting to extend their stays longer than 10 days must report to the Residency Office.

Photo: José Fuste Raga

The 55 million-person-strong Southeast Asian nation, tucked between India and China, is emerging from nearly two decades of Western sanctions. The military junta whose actions precipitated those U.S. and European strictures promoted the use of the name Myanmar, beginning in 1989. Before that, the country was known as Burma—a name still used by some.

Investor interest in Myanmar was first piqued in March 2011, with the formation of a new government, led by Thein Sein, which in turn followed on the release of the National League for Democracy leader Aung San Suu Kyi from house arrest in November 2010. Since then, reform has hurtled forward with the easing of sanctions and parliamentary by-elections in April 2012 (although NLD politicians have been refusing to take their seats because of wrangling over the phrasing of the oath of office).

Right now, though, the country’s economic isolation, a legacy of the Western sanctions, means there are only very limited ways to get financial exposure to it. Singapore is the most accessible route, but even there, options are essentially restricted to two micro-caps—Yoma Strategic Holdings, with a stock-market value of 280 milllion Singapore dollars (US$225 million), and the smaller Interra Resources. Yoma is the purer play. The real-estate developer is part of the SPA Group, a conglomerate of Myanmar-focused businesses.

Yoma’s primary assets consist of land-development rights for parcels close to downtown Rangoon. It also has plans for a 70% economic interest in development rights related to Star City, a new residential and commercial development close to an area expected to be designated a special economic zone. Plans call for the interest to be funded by a rights issue of S$91 million (about US$73 million).

While all this sounds exciting, that excitement is well-reflected in the price: Since November, Yoma has jumped more than 500%, to 53 Singapore cents a share. That is equivalent to two times stated net asset value. The problem is, even a still zippy one-times NAV would require some rosy assumptions about the future.

As of the end of December 2011, remaining land development rights were carried at their 2005-06 historical cost of S$63.4 million. But the exact market value is hard to judge. Yoma doesn’t break out selling costs per square foot by development-rights plot and building, and as with all Burmese economic statistics, there is a paucity of data for comparisons.

With very generous assumptions, the land development rights’ value has doubled since 2005. This takes net asset value to almost S$200 million from its stated S$137 million.

Assume that all Western sanctions are dropped permanently, and that land prices grow at an impressive 15% annually until 2015. Without factoring in any central-bank tightening and assuming that the currency remains stable, this could take 2015 net asset value to S$290 million, suggesting a slight discount to NAV at current prices.

Of course, this doesn’t take into account the potential of Star City, which could be highly profitable. On the other hand, it also nearly doubles the existing share count.

Indeed, the current price appears to reflect zero economic speed bumps, let alone any political risk. For example, the country has been plagued since World War II by an extremely complex web of ethnic insurgencies in its border regions, which may or may not have been put to rest.

Finally, given plans to establish a new Myanmar stock exchange by 2015, patient investors may end up having more choices, which would eliminate any scarcity premium for the current Myanmar plays.

This is not to say the future isn’t bright for Myanmar; but that assumption already is built into the price of the stocks available there. The current fervor also indicates how far the current global bull market has run since March 2009.

Frontier markets need a good story and typically capture investors’ imagination late in the cycle, amid plentiful risk appetite goosed with ample liquidity. In that respect, Myanmar’s mood feels similar to the excitement that whirled around Vietnam in 2006. But Vietnam had a fledgling stock market to soak up liquidity; the Burmese excitement has by default focused on small clutch of names. Alas, those who got caught up in the Vietnamese hype through late 2007 experienced a dizzying drop into 2008.

Will investors fare better in Asia’s latest frontier?

Erbil, Kurdistan | Photo: Susan Mohammad

The Virginia-based construction firm is currently building 310 luxury villas in the suburbs of Erbil, Kurdistan’s main city. Each unit sells at an average cost of US$250,000. Back in the early 1990s, it was building bridges and schools under Operation Safe Haven. An Iraqi company at the time—it became a U.S. firm in 2003—Sigma was helping to reconstruct the region after international forces created a “no-fly zone” to protect the Kurds from Saddam Hussein’s aerial assaults.

Damien Degueldre, spokesman for Sigma International Construction, said the company decided to go back into the Kurdistan region in Iraq’s north in 2006, because the investment laws being drafted by the Kurdistan Regional Government (KRG) created good opportunities for foreign companies.

The region is stable and a smooth visa process to access Kurdistan is another plus, said Degueldre. “Nowadays, you can also say the improved infrastructure, such as the international airport with multi-connection flights, international standard hotels, roads, power supply and international schools, are also advantages of working in the area.”

Kurdistan has come a long way in six years. Degueldre recalled the company having difficulty finding the right air conditioning contractors or roofing specialists. Sigma had to bring in technicians from the United States and Lebanon to train local employees.

“We also faced issues at the beginning of [our current] project securing proper materials as the local market was insufficiently supplied, mostly with cheaper products,” said Degueldre. “[However] there has been a real change … as international suppliers entered the market.”

Before a construction boom in Erbil began forcing Kurdistan’s main city to grow in all directions, another hurdle the company faced was convincing locals the suburban location of the villas — just over nine miles from the Erbil International Airport—wasn’t too far away. Construction on the Western-style villas (the planned neighbourhood is called the Khanzad American Village) is scheduled for completion at the end of this year.

Despite the obvious challenges that come with rebuilding a region at such a rapid pace, Degueldre said foreign companies should not wait too long to get into Kurdistan. “Come and participate now. You should no longer hesitate because the region is changing—it’s improving rapidly and you are welcome here.”

Photo: EschCollection

Instead, the emirate, which boasts the world’s tallest building and outlandish development projects such as a palm-tree-shaped artificial archipelago, is focusing on its economy’s traditional strengths: tourism, trade, transportation and logistics.

What seems like a delayed acceptance of economic reality can likely be attributed in part to Dubai’s distraction in dealing with financial troubles at several of its biggest companies, said Florence Eid, chief executive of the London-based research firm Arabia Monitor.

“They had to get past the point of fighting fires before going back to thinking long-term strategy,” Eid said.

The original strategy “had extremely ambitious growth projections and objectives, and for the first years in 2007 and 2008 that worked quite well,” said Mohamed Lahouel, the chief economist of the Dubai Department of Economic Development. “Growth in Dubai was not far off the expectations, but then came the international financial crisis and obviously the objectives and policies had to be revised,” he said.

A revised version of Dubai’s 2015 strategic plan that scraps previous goals of 11% gross domestic product growth was sent to Dubai’s Executive Council and is expected to be completed by the end of next month, Lahouel said. The council is leading revisions to reinforce innovation and Dubai’s position as a regional hub.

Double-digit growth rates haven’t been seen in Dubai for many years. The global financial crisis took an exacting toll on its once-vibrant property market, which was central to Dubai’s boom and its bust. GDP declined 4% in 2009 and 2.2% in 2010, followed by modest growth last year and this year, according to data from the Institute of International Finance.

“Most of the growth between 2003 and 2008 was driven by the boom in construction,” said Garbis Iradian, an economist at the IIF. “Now things have changed.”

The Department of Economic Development hasn’t revealed its new economic-growth projections.

The agency has been consulting with companies in the private sector on how the emirate should adjust to lower growth and move forward, according to a person involved in the talks.

“The economy is outward-looking, and this model served Dubai very well, but it isn’t long-term sustainable,” the person involved in the talks said. “In order for Dubai to become an economic revival story its domestic economy needs to develop, maybe through innovation and entrepreneurship.” The emirate is looking to its strengths as an intermediate trading and tourism hub linking Asia, Africa, Europe and the Middle East.

Deborah Wince-Smith, CEO of the Council on Competitiveness explains frugal innovation and how this is being used to help solve some of the most stubborn issues in developing countries: health, food, water and energy.

When Siemens was establishing its wind power business in India, it literally had to set up operations in an old shack. Ingrid Jaegering, CFO of the Germany-based company, discusses why companies need to forget about Western norms of doing business when moving into emerging markets.

Luis Mello, director of Technology Institute for Vale, the world’s largest producer of iron ore, discusses how innovation can occur simply through the act of entering new markets—and tailoring a product to meet the market’s needs.

Thomas Ligocki of Clevest Solutions Inc. with
a Chinese trade official and Stephen Harper

He went on a mission to China organized by the Canada China Business Council (CCBC) and led by Prime Minister Stephen Harper. The trip was joined by cabinet ministers John Baird and Ed Fast, Richmond MP Alice Wong and former cabinet minister Stockwell Day. His company also went along on a separate mission to China led by British Columbia Premier Christy Clark.

Clevest Inc. provides software that helps gas, water and electric utilities manage their field operations and meet the demands of smart-grid regulations. Its clients are in Canada, the United States, Asia, Australia, Latin America and Europe. The company has 104 employees; its head office is in Richmond, B.C.

Ligocki, 39, has a master’s degree in software technology from the University of Alberta. Working with a handful of software developers, he started Clevest in his basement in 2006.

Why did you go on this trip with the Prime Minister?

In China, government-sponsored activities are highly valued. We’re a small-to medium-size business and it’s hard to get the recognition we need, especially in a country where everything is done in a big way. Having the prime minister step forward and add his name, and his office having done due diligence on our company, is a huge validation.

Also, sometimes getting the other party to find that critical moment, that moment where there’s a deadline—the prime minister’s visit was that specific focal point. You could always define things a little more and negotiate a little more. So having the prime minister’s trip forced us and our counterparts to really get down to business and focus on completing the agreement.

Describe how the trip unfolded.

I had about 16 meetings in one week, of which two occasions included the prime minister. So it was an amazingly busy time. We met at our business partner’s office. We talked about the agreement. We talked about other aspects of how we’re going to work together, who the project people will be, etc. Then we went down to the Beijing Hotel, which is where the CCBC had organized this program, and we had an opportunity to meet with some of the ministers from the Canadian government.

The first day was the CCBC-organized presentations; the next day was a dinner in Guangzhou, in southern China. Another person of note at both events was Stockwell Day. He has a very strong presence and he was on the speaking panel at the CCBC. He also spoke at the dinner, so he has an important profile and continues to have an important influence in how government does work with business.

How did you get on the list of participating companies?

We found out about it from the B.C. Trade Commissioner’s Office, and that led us to the Canada China Business Council. The commissioner’s office couldn’t tell us it was the Prime Minister. It was somebody high up in government. Soon it became obvious who that high-ranking official might be.

What kind of channels to China did you have before you went on the trip?

We had four customers in China. Partnerships have been key to everything we do. People have encouraged us to open up an office in China, but I’ve really tried to stay away from that. I believe that we know a lot about China—and that gives me even more respect and worry about what I don’t know. This is why I’m shying away from us trying to do this on our own, and prefer to work through our partners.

What kind of partners?

Living on the West Coast, there are people connected to China and we’ve been able to find people who we trust here that have an understanding for our way of doing business and yet have an understanding also for the Chinese way of doing business.

What should Canadian business people know about the culture of doing business in China?

I think that at some level, everybody is different and everybody wants to have you acknowledge that they are different; but at some level also, everybody is the same and oftentimes we focus so much on the differences that people don’t fully appreciate that people are pretty much the same, no matter where you go in the world.

How do you do your due diligence on your partners?

It’s a long process. You ease your way into it – you allow the relationship to develop and you have milestones along the way, because no matter how much research you do it is almost impossible to know who’s connected to whom and what all their motivations are. I think you need to prove it to each other. You have to develop trusted relationships and you have to develop a process by which you ease into it, where maybe you go together to sell to a specific customer and eventually that relationship can broaden and they’re reselling for you, or you’re co-sponsoring or doing a joint venture. I wouldn’t jump to that too quickly.

What is your future vision of your company in China?

There’s a lot more business to be had in China. The need is there. We developed our product when we had zero customers. We had a big vision that included the world, so we developed a product that was fully internationalized and supports the Chinese characters.

Some say these trade missions are overrated. How do you respond?

These trade missions are not about starting something new or opening doors. These trade missions are important to us because they demonstrate that we are a worthwhile partner and that there is strength and that somebody’s standing behind us. I would encourage more trade missions.

This interview has been edited and condensed

Mining entrepreneur Robert Friedland
Photo: Mike Hutchings/Reuters

Friedland, along with six board members and four senior executives, stepped down from the company he founded in 1994. Under Friedland, Ivanhoe discovered what could be the world’s largest copper and gold mine, Oyu Tolgoi, in Mongolia. Financing such a politically risky endeavour was problematic, but London-headquartered behemoth Rio Tinto ponied up with a private placement for Ivanhoe in 2006. Friedland, fearing a creeping takeover, adopted a shareholder rights plan in 2010. Rio Tinto objected and brought the matter to arbitration, which ended in its favour in late 2011. Rio Tinto had increased its stake in Ivanhoe from 5.3% to 49% during that time.

A former Ivanhoe insider suspects Friedland’s hope all along was to instigate a bidding war for the company, which is why he wanted to stop Rio Tinto from gaining control. But with the shareholder rights plan quashed, Rio Tinto boosted its stake to 51% earlier this year, killing the chances of a big payday.

On the day of Friedland’s resignation, Ivanhoe announced a financing plan with Rio Tinto to ensure further development. The agreement should “dispel any remaining beliefs that Rio Tinto has been anything but the manager of this project for the past few years,” wrote Scotia Capital analyst Tom Meyer in a note. Rio Tinto has invested US$3.5 billion directly in Oyu Tolgoi so far.

Friedland’s departure stands in contrast to the biggest victory of his career. In 1996, he played mining giants Inco and Falconbridge off one another and later sold his company, Diamond Fields Resources, which owned a massive nickel deposit in Labrador, to Inco for $4.3-billion. One needn’t feel sorry for him when it comes to Ivanhoe. “Robert is not a child, and he’s been through many ups and downs,” says Marc Faber, who stepped down from Ivanhoe’s board along with Friedland. “He took the departure in stride.”

In any event, Friedland’s interests lie with exploration and fundraising, not overseeing a working mine. He’s already hyping another venture called Ivanplats, a privately held firm developing a platinum mine in South Africa. At a conference in February, Friedland claimed Ivanplats will be the world’s lowest-cost platinum producer. “This is a highly disruptive discovery of a world-class nature that will have an extremely long life,” he said. Friedland may yet orchestrate another bidding war.

Photo: Mehdi Chebil / Polaris / Newscom

European Central Bank president Mario Draghi is advocating for a “growth compact” for the continent in addition to maintaining budget discipline, a policy recently backed by the EU’s internal market commissioner. International Monetary Fund president Christiane Lagarde and European Commission president José Barroso are also talking more about growth—not just austerity—which is welcome news for some.

“The austerity doctrine that has ruled European policy is a big fat failure,” economist Paul Krugman wrote in a recent blog post. Greece, for example, reduced its government debt-to-GDP ratio by 6.5% between 2009 and 2011, but its economy shrank by more than 7% during the same time period. Spain has since fallen back into a recession. Same with the United Kingdom.

Often the only option to keep government debt from growing, austerity can nonetheless trigger a vicious circle. Indebted EU countries are scrambling to reduce spending, but slashing payrolls and public services only serves to damage an already weak economy. That means lower tax revenue in the short term, further imperilling government finances and ultimately worsening the very problem the EU is trying to solve.

Moreover EU citizens, even in the core of the free trade zone, are increasingly fed up. Witness the popularity of French presidential candidate François Hollande, who trumped incumbent Nicolas Sarkozy in the first round of voting, in part due to his opposition to spending cuts. The prime minister of the Netherlands also resigned in April after failing to secure support for massive budget cuts. The frustration may even be getting through to Germany, which has driven the EU’s austerity agenda. “We’re not the (fiscal) consolidation Taliban,” the country’s deputy finance minister said at a recent conference.

Whether talk of growth will turn to action is far from clear. “We’ll probably hear more about it,” says Megan Greene, a senior economist with Roubini Global Economics, “but it’s very difficult to come up with a growth strategy for the eurozone.” Countries that need to provide stimulus to their economies do not have the means—or the credit—to do so.

One approach touted by policy-makers is to increase funding for the European Investment Bank, which finances private-sector development. Similarly, EU-issued “project bonds” to fund development in energy, transportation and other infrastructure schemes could also boost growth. Even Germany has expressed support for more EIB funding, but remains skeptical about project bonds.

What’s clear is that continued austerity will only hasten the EU’s decline, says Greene. “It’s killed the patient.”

Using the hand-held Onsight system

Based in Winnipeg, the company founded by chief executive officer Kerry Thacher in 2003 makes a video collaboration system called Onsight that puts video conferencing into the palms of users’ hands.

The hand-held mobile device and its accompanying software allow for communication in places previously thought too remote, such as offshore oil rigs and operations facilities a continent away. Onsight’s reach is the result of collaboration software that runs on remote computers and handheld, rugged video devices that enable workers to communicate with multiple parties using video, voice and sound.

“Together the field workers and the remote experts connect and share live video and images, talk and draw onscreen, accelerating and improving decisions,” Thacher says. “When more than just a meeting is required to diagnose, review and resolve issues, Onsight provides the answer.”

How did you get started?

Those of us who started Librestream came from the mobile device manufacturing industry. There, we experienced the inefficiencies and high costs associated with collaborating across internal operations and externally with suppliers, who were often overseas. We found ourselves dealing with avoidable program delays, spending too much time in airports and hotels and felt there had to be a better way.

What’s your market?

Our core market includes global enterprises within the manufacturing and energy industry sectors. Manufacturers range from consumer packaged goods such as Procter & Gamble to industrial equipment manufacturers such as Baker Hughes. In the energy sector, we work with oil and gas operators, service providers and utility customers. These companies use Onsight in many ways. In some cases, Onsight streamlines new product development processes, performs safety audits and equipment maintenance, accelerates customer field service repair and/or improves supplier management.

Who’s your ideal client?

Onsight is designed for customers with geographically dispersed operations, which resulted in Librestream’s first customers being large multinational corporations. Onsight delivers the most value when it enables international collaboration, so Librestream targeted beyond Canada from the very beginning.

Was it a success from the get-go?

Librestream’s founders, myself included, had prior experience with large companies who simultaneously launched products in many countries. This translated into strong working knowledge of the regulatory approval steps necessary to achieve widespread international availability.

However, we quickly encountered interest from outlier countries where we had no experience. In those cases we sought out partners with experience in those markets. These partners helped with translation and approvals in their markets, in exchange for being able to resell Onsight in their market.

Our success with large multinationals immediately created an issue where the customer wanted Onsight available everywhere, meaning dozens of countries simultaneously. We agreed with these customers to a hub principle, where the U.S. headquarters would act as the central point of distribution and support for us. This meant we ended up dealing with a single point of contact.

In some cases, Onsight was deemed strategic enough to justify these customers offering their own front line support. We focused on these individuals and made sure that they received support from us that was well beyond the norm for any technology product. As a result, these people have become long-standing advisers and advocates, and Onsight was quickly deployed in many countries.

Can you address the universality of the product?

From an industry perspective, there are many additional uses for our product outside of manufacturing and energy in industries such as health care, insurance and general field service. For example, in the health care industry, Onsight is used to perform remote patient monitoring and consults as part of the home care service or in regions where access to specialists is challenging.

Where do you do the bulk of your business?

The majority of our business initially came from the U.S. and Europe. This geographic focus continues today, even though we have since also made inroads into Asia and initial deployments in Latin America through distributor relationships.

Do you have to travel much or has your own invention made travelling obsolete?

Due to the nature of our solution, travel is not a large part of our business. We deliver solutions that replace travel through remote collaboration. As a result, we deliver the majority of our pre-sales demonstrations and post-sales service through video and online meetings.

Do you partner with local companies?

We initially launched Onsight through a relationship with one of the largest video conferencing providers at the time, Tandberg, out of Norway. This partnership provided us with immediate global market reach through Tandberg’s large direct sales force and reseller channel. It also provided instant credibility for our new product category of operations-driven video collaboration.

The original Tandberg relationship ended in 2010. By then, we felt it was more important to develop closer relationships with our enterprise grade customers, and we had already gained credibility in the industry. Our current distribution model is a mix of direct sales alongside strategic partnerships such as Cisco and Verizon, distributors in new markets such as Asia as well as indirect sales through reseller partners.

Does a strong Canadian dollar hurt you?

A strong Canadian dollar hurts us because most of our sales are in U.S. dollars, and the majority of our costs are in Canadian dollars. However, we built our pricing and business model from the beginning to not be dependent on a weak Canadian dollar. So over all, while a strong Canadian dollar hurts us somewhat, it is a relatively minor factor in our overall performance.

Your biggest surprise?

Librestream continues to be much more successful outside of Canada than here at home. We find that there is a propensity in Canada to be very conservative when it comes to new technology and solutions, especially if a Canadian company is involved. We have a national inferiority complex about our own technology companies until they prove themselves somewhere else first. This is a surprise, but also a disappointment: Librestream is more successful with the U.S. government than our own Canadian government,  whose procurement policies have turned out to put us at a disadvantage in our home market.

What would you tell others in your shoes to do?

The Canadian market is neither large nor representative enough for you to focus exclusively on it. Plan to be international right from the beginning.

Anything else you’d like to tell Canadian entrepreneurs?

Don’t think of yourself as a Canadian company. Treat borders as irrelevant.

This interview has been edited and condensed.

Photo: Bloomberg via Getty Images

The addition of 600 dealerships would bring the company’s dealer network in China to 3,500 stores, up from 2,900 at the end of 2011. At that size, China’s dealers would begin to rival the company’s U.S. network of 4,400. GM is adding new models and factory capacity and expanding a technology center near its China headquarters in Shanghai, which will soon be its second-largest global development centre. The largest is in Warren, Mich., near its Detroit headquarters.

Like GM, many of the world’s major automakers are expanding in China, concentrating on a market expected to grow to more than 30 million vehicle sales by the end of the decade from 18.5 million last year. But China auto sales fell 2% last year after a stretch of explosive growth, raising questions about demand. Akerson said he is confident the market will grow over the long term. “If you didn’t believe in this country and its growth potential, you’d have feet of clay—we don’t,” he said, speaking to reporters at the Beijing auto show.

Alon Ozery, left, with his brother, Guy Ozery

In retrospect, he says trying to develop brand recognition in the highly competitive markets of the United States was “crazy” for a small company to undertake. The key is to be a leader within a niche market, which depends on continual product development and unique offerings.

Ozery’s Pita Break has 150 employees based in Toronto, and two California-based sales agents who are often on the road. Ozery, 43, studied hospitality and business at Toronto’s Ryerson Polytechnic Institute, and runs the business with his brother Guy. His grandmother, from Jerusalem, taught him how to make pita.

Why did you decide to go international?

Demand was through the roof and we were scrambling to meet it, and we got to a point where most of our eggs were in a couple of our customers’ hands. That’s a challenge for Canadian food manufacturers. It needs to be more fragmented.

What’s the risk of that?

As a rule, you don’t want to have one of your clients have 40% or 50% of your business, especially if they’re somewhat aggressive and always look for change. We decided we needed to branch out.

What is the key challenge for your company?

We’re trying to build a brand in the United States, which in retrospect is a crazy thing to do for a company our size. Not many Canadian companies attempt to build a brand at the consumer level in the United States.

Why is that so crazy?

The funds you need to allocate to penetrate the market are huge. The products we make are baked fresh and then they’re frozen instantly, packaged in order to maintain highest freshness and then they’re shipped frozen. Once they get to the store level, they’re defrosted and then they’re sold as fresh. That’s a very common method of extending shelf life and maximizing freshness and quality. The challenge with baked goods is the moment they’re defrosted, the clock starts ticking and you have around a six-day shelf life that you need to sell a product. If you don’t get it off the shelf quickly, the retailers begin to think the product isn’t selling, so you have to be extremely aggressive at the beginning to get it off the shelf, into the customer’s hands, get them to taste it, get the retailer to believe it’s a successful product.

How do you meet that challenge?

We invest a lot of money, with coupon specials and very aggressive programs at the store level.

What was a specific hurdle you had to get over to get into the United States?

There were many. In Canada, we have the breakfast pita. In the United States, buyers didn’t connect pita and breakfast. They said Americans won’t get the fact that pitas are good for breakfast.

How did you overcome that hurdle?

We got a brand consultant out of the United States, a wonderful woman, very smart, who worked with Kellogg’s, and with a whole bunch of food producers in the natural market, and developed Morning Rounds. Our Morning Rounds brand is basically a breakfast pita. Then we redid the entire package and all the messaging.

What’s your strategy?

Our goal is to specialize in tasty natural baked goods. We went into snack foods also. We’ve launched a crispy pita, a unique line of four products, two of them organic, all of them all-natural with unique and different taste profiles. Our goal is to be a small player, but a unique one.

You beat the challenge by finding a niche?

Correct. Our goal is to be a leader within a niche. We don’t have the ability or the funds to compete with the behemoths, nor do we want to. It’s funny, if you asked me five or 10 years ago, I’d say I want to develop a kick-ass product that everybody will like. Today I don’t want to develop products that everybody likes, because we’ve done it a couple of times and then the big guys just attempt to take them over. In Canada, we held our ground; in the United States, no, just because it’s a much larger market and a more aggressive one, and we’re not local, so it’s a lot harder. So today when we develop products, it is in the niche market of healthy, tasty, with a twist of some sort.

What goes into product development?

We have a lab. You need to be in a certain state of mind. I have a technician, a very good guy, who works with me and together we develop. There’s never a lack of ideas, never. We have in our drawer a bunch of products that we think could do well. When we were small, it was easy to launch a new product. You mix, you do this, you do that, and you go ahead. Today, we need to make sure that our production capacities can meet demand if it’s successful, so there is a definite balancing act.

How widespread is your product in the United States?

Very widespread. We do very well in California. We do well in Colorado. Texas, for some reason, is an amazing area for us. We’re pretty much everywhere in the United States.

Who did you work through?

You have to build two things. One is distribution. You also need a broker network that represents your product and will go into the store, communicate with store employees and try to push that product. We have a very good VP of sales and a director of sales, one in San Francisco and one in L.A. Even that is an expensive proposition, keeping two highly skilled individuals doing that.

How have you gone about penetrating Mexico?

We attend about five shows a year in the United States, business-to-business, natural and organic food shows, and the fancy food shows. In those shows, we meet buyers, and if you meet a buyer for a certain chain in Mexico, that’s bingo.

How did you learn about pita?

Whenever we had family events, the bread was made on the spot. We never bought commercial bread. I learned how to make pita at our family events, and about the texture, consistency of the dough and what it requires. I used to work at Canada’s Wonderland, at the food service department. I had access to pizza ovens and mixers and at night after the park closed I would mix doughs and put them through the pizza ovens and see what happened.

This interview has been edited and condensed

Export Development Canada, as part of its recent 2012 Global Export Forecast, recently released data on “experience and attitude” for most of the world’s countries and territories. Short-, medium-term and sovereign risks are measured by the numbers and size of EDC claims in each country over one year relative to EDC’s business volume growth. A “positive” indicator means that the number of claims or amount of claims have decreased in proportion to EDC volume growth. A “negative” indicator means that the number of claims or amount of claims has increased in proportion to EDC volume growth.

Photo: Fotosearch

Under his leadership, the developer—Southeast Asia’s largest by market value—expanded aggressively into China over the past decade, and now owns there a portfolio worth about 12 billion Singapore dollars ($9.5 billion), or 38% of the company’s total assets, including residential properties, offices and shopping malls.

CapitaLand’s China push isn’t without its detractors, especially among investors who have shied from the stock amid rumblings of a possible hard landing for the Chinese economy and its softening property market.

But Liew remains unfazed. “Urbanization and economic growth will support demand, and the Chinese people love to buy their own homes,” he said. “Also, there’s no alternative class of investment—they can’t invest outside of China, they don’t understand anything about equities, but they understand how to buy an apartment.”

Mr. Liew shared with Chun Han Wong his views on real-estate trends and management experiences. The following interview has been edited.

How has recent market turmoil and global economic woes affected real-estate investment in Asia? Are you concerned about policy risks in your key China and Singapore markets?

Asia is still attractive for investors, but they will be selective. For instance, I doubt they will put much money in India. Instead they would look at countries like China, Singapore, Hong Kong, while the more daring ones may put money in Vietnam, even if they may be worried about the macroeconomic situation there.

Cooling measures are good. We’d be worried if there weren’t any; that means people will be speculative, and bubbles will generate. If there are cooling measures, we will account for them, but we won’t slow down or halt our investments.

After the global financial crisis, we bought [Orient Overseas (International)'s real-estate business] for US$2.2 billion. Now with the euro-zone debt crisis, we’ve put S$4.3 billion in Chongqing [for the Chaotianmen mixed-used project]. We can do this because we do our capital management on a long-time-horizon basis.

For China, we’re there for the long term; we have always reinvested our profits there. With the recent cut to the reserve-requirement ratio, China has signaled that they know they have to relax. It won’t be sudden; it will be incremental.

In Singapore, there’s still an underlying shortage of residential units. From 2005 to 2011, the resident population grew 9.3%, or 320,000 people, but the number of dwelling units increased only by 6.4%, or about 70,000 units. The government may intervene from time to time, but the demographics are positive.

Credit availability in China is a concern for some real-estate market watchers. How might the industry be affected?

The days in which small developers can get started by borrowing a hundred million yuan are gone. Consolidation is possible; more and more will realize the burden of debt and run into trouble. If these companies have good assets, we will look at them for possible acquisitions.

During the global financial crisis, we secured over 20 billion yuan (US$3.16 billion) in credit allocation from the likes of Bank of China, ICBC, Agricultural Bank, and China Merchants Bank. It’s a flight to quality. They have to lend, and between some small Chinese companies—in which they have little confidence—and CapitaLand, who would they choose to lend to?

What about prospects closer to home in Southeast Asia and India?

I think Vietnam will grow very well in the next five to 10 years. It’s a big economy with a young population—the Vietnamese are hardworking and very prepared to learn—and has got stable government as well. We have a presence in India—serviced apartments and some shopping malls—but progress is slow. We haven’t made money yet. I worked on an IT project in Bangalore back in 1993, but from then till now, I haven’t seen any visible signs of change in the business environment.

What’s your approach to managing your large work force and businesses in more than 20 countries?

I don’t manage the business; I select the right people and manage them. We’ve been successful in attracting and retaining talent and the key is staying close to them. I spend a lot of time on people—interviewing them, looking at their training, reviewing their postings, and visiting overseas staff regularly. Every year, I give lectures on management and leadership for two days, eight hours a day. Anyone can write to me, and I get many responses to my weekly emails to staff, which address a broad range of business and human topics in a casual, conversational tone.

We also devise a lot of family-friendly policies. For instance, every employee can book a free four-day stay at our Ascott (serviced residences).

During the financial crisis, you cut your pay by 20% to avoid retrenching staff. What was the philosophy behind that move?

As a company, we all have to pool together and suffer together. I call it the “theory of common happiness and common misery”—something I learned from my days in the Ministry of Defence. I always tell my staff: “I’m not the lao-ban (“boss” in Mandarin). I’m also a salaried worker.” I wasn’t born with a silver spoon in my mouth; I champion the proletariat.

What did you take away from your civil-service experience, and how did you manage your transition into the private sector?

The civil service taught you integrity—we were “brainwashed” into being honest—and the importance of good corporate governance and compliance. You also learned how to work with systems, and deal with people and policy makers. The Singapore government is very paranoid; they plan for everything. I worked at the Ministry of Defence—and the concept of defence is founded upon paranoia—so I learned to be even more paranoid and plan for things.

But I think I am basically a private-sector person, but was caged in the public sector for too long before I was released to become my natural self. By nature, I am outgoing and more prepared to take risks.

Peter Hall, chief economist for
Export Development Canada

Hall is the chief economist for Export Development Canada, and he has been speaking across Canada as part of his annual-forecast presentations. This year, he says, the United States will power the global economy forward. And while he has also championed trade diversification for Canada, Hall says that we will able to offset troubles in Europe and in the BRIC countries thanks to our close association with the U.S.

His enthusiasm is almost palpable. He says that Canada is “on the threshold of some of the most exciting economic years in its history.”rece We will be able to depend on the U.S. for the short term and over the long term emerging markets will come back with strong demand for what we have to sell—provided we take advantage of the opportunity. But there are signs that Canada could do a better job of it.

Hall’s views are somewhat at odds with what many other economic forecasters are saying these days. They see a world hobbled by European recession, a global winter of sovereign debt, and potentially serious BRIC slowdowns. Hall scoffs at such forecasters and says much of their melancholy is a result of the nature of their business. “Forecasting tends to concentrate on what just happened, not on the bigger challenges and opportunities,” he says.

Although the global economy is expected to grow this year at 3.4%, “Europe is in recession this year, and that accounts for 20% of global GDP. But other things are happening. The U.S. economy is doing positive things—it’s the engine that will pull the world forward.” U.S. housing, he says, is back from the abyss—the construction market will expand by 25% this year.

If there is a weakness in Canada’s immediate future it is that, Hall says, “our potential is greater than our capacity to do what we could.” There are problems in the forms of labour shortages, laggardly productivity and capacity restraints. “We need to grow the supply side to meet the demand side,” he says.

To overcome these problems Hall says that Canada just can’t plug in more immigrants “and skills-training can’t be done fast enough.” He prescribes a new way of thinking: importing labour without actually moving it. That means doing more contracting-out to jurisdictions where labour skills are either cheaper but also more available. If there is a bottleneck of software engineers in Waterloo, Ont., or Richmond, B.C., assign the work to countries where they are more readily available. Hall says this would add a half to a full percentage point to growth. “We have to shed this mercantilist notion that everything has to be done inside Canada,” he says, and that offshoring jobs still requires high-quality onshore jobs to manage them.

Still Canada cannot escape the uneven performance of other countries in the year to come. Accompanying Hall’s cross-country tour is Export Development Canada’s annual Global Export Forecast annual forecast document, called Anchors Aweigh. It outlines the multi-speed world we currently live in. Europe continues to be mired in sovereign-debt crisis and recession, and even the BRICs are showing signs of slowing—dramatically in Brazil—but India is too slowing, a result of legislative inertia, infrastructure deficits and mounting debt. Add to that commodity-price gyrations are no longer a matter of familiar cycles but wild gyrations. Hall describes these as the “new normal” in the global economy and will have to be accepted.

Looking more closely at domestic prospects by province, Anchors Away found some real export champions and a few provinces less focused on external trade. New Brunswick is the national champion: merchandise exports account for 40% of its GDP while in next-door Nova Scotia it accounts for only 19% (see chart below). Saskatchewan and British Columbia sent 24.9% and 24.5% of their exports to emerging markets in 2011. But Alberta and Ontario send only 7.2% and 5.8% respectively.

For British Columbia, the EDC believes that whatever slow-down in lumber sales to China that follow a reduced pace of home construction will be offset by reconstruction in Japan following last year’s earthquake and tsunami. Construction of liquefied natural gas terminals on the Pacific coast, and other major projects such as shale gas exploitation in the north, will keep the B.C. economy humming. Meanwhile, EDC says that last year’s “blistering” export activity in Saskatchewan, when volume rose by 25%, will slow this year to a still very respectable 8%. Agri-food exports will recover from last year’s poor weather and potash sales will remain strong.

Alberta’s petroleum will continue to be sold to North American customers in 2012 and there will be limited growth in natural gas supplies so long as their sales remained locked in North America for want of coastal ports. Ontario can look forward to the opening of several new gold mines: Young Davidson project, La Ronde and Kirkland Lake as well as higher nickel output in the Sudbury basin. The EDC expects a softening in the value of the Canadian dollar, which will benefit manufacturing. As the average age of automobiles in the United States approaches 10 years, there will be heightened demand for new vehicles, aiding Ontario’s second largest industrial sector (after all other industrial goods).

Photo: Martin Poole

Due to rising demand in emerging markets, food companies and commodity traders are forecasting that global consumption of cocoa will surge by 25%, to about five million metric tonnes, by 2020. Industry officials and market experts say new and better cocoa plants are vital to future supplies—and to keeping chocolate an affordable luxury.

“I’m looking for an elite plant. That’s the goal,” Pinchi said. “There are a lot of people who depend on cocoa.”

Time, though, is running out. The process of grafting different kinds of cocoa trees to achieve the right genetic mix takes years, and it is far from a sure thing. Once planted, it takes at least four years for the trees to start bearing cocoa beans fit for processing.

“For the long-term health of the cocoa industry, high-yielding cocoa varieties need to be identified, propagated and distributed,” said Kip Walk, head of cocoa at Blommer Chocolate.

In the meantime, existing trees continue to struggle with the forces of nature. In West Africa, the world’s biggest cocoa-growing region, blasts of hot wind earlier this year seared plants. The prospect of a damaged harvest has pushed cocoa prices up 15% from a three-year low hit in early December. Cocoa futures recently traded at US$2,223 a ton, down 3.1% for the day.

Given the fragile state of cocoa trees under cultivation and strong demand, it is only a matter of time before a shortage of cocoa emerges and prices surge, said Julian Rundle, chief investment officer at Dorset Management, an alternative-investment manager.

“The major move, when it comes, is going to be a bull move,” Rundle predicted—meaning prices will rise.

Already, demand for cocoa is forecast to outpace supply this year by 71,000 metric tonnes, according to estimates from the London-based International Cocoa Organization.

Only a fraction of the thousands of varieties of cocoa trees in existence are grown to produce the world’s chocolate, because farming cocoa has historically been a low-margin business that hasn’t attracted investment. This practice of growing genetically similar plants leaves entire populations vulnerable if they are stricken with a disease for which they have no resistance.

Splashing through a sudden rainstorm, Pinchi is out to change that. He weaves among muddy rows of saplings, cradling lemon- and lime-colored pods and checking their weight and size.

He and his team at the Tropical Crops Institute, a research centre in Peru’s northern highland jungle, have collected hundreds of cocoa varieties from South America’s thick rain forest and are testing their ability to yield more and bigger beans. Researchers in Ivory Coast and Ghana are conducting similar work.

The cocoa tree’s scientific name is Theobroma cacao, which means “food of the gods” in Greek. As chocolate went from being a treat for special occasions to an everyday indulgence, swaths of rain forest were chopped down in the 1970s and ’80s to make room for cocoa farms, which now cover roughly 7.4 million hectares.

But the industry was dealt a blow when a fungus known as witches’ broom swept through Brazil. It more than halved Brazil’s cocoa output between 1990 and 2010.

Industry executives hope to stave off another cocoa crisis, which is why they are pinning hopes on researchers like  Pinchi. Expanding acreage isn’t an option due to widespread opposition to further deforestation in the tropics—the only places cocoa can thrive. “By 2020, we need another Côte d’Ivoire,” said Howard-Yana Shapiro, Mars’s director of plant science and external research, referring to the Ivory Coast. Shapiro led a team that was credited with mapping the genome for the cocoa tree in September 2010. He keeps close tabs on the work conducted by Pinchi’s institute and other researchers.

“There are two alternatives. One, we cut down all the trees in the tropics and only plant cocoa, which would be an unmitigated disaster. Or we increase [yields],” Shapiro said.

To be sure, higher prices on chocolate would likely cause demand growth to moderate. Slower growth would mean a target as high as five million metric tonnes a year of cocoa wouldn’t be necessary.

While Kona Haque, a commodities strategist at Macquarie Bank, agrees cocoa prices are likely to rise, she says some forecasts calling for the doubling of prices over the long term are extreme.

Increased use of fertilizer can boost output while scientists experiment with different kinds of plants, Haque said.

“Demand will grow steadily, but, with the right price, so can supply,” she said. “I’d expect cocoa prices to rise 50% in 10 years.”

Pinchi, though, is optimistic that he or one of his colleagues will strike upon the right tree before high prices sour consumers on chocolate. “The Amazon is the origin of cocoa,” he said. “There’s a lot of diversity, which gives us many options.”

Colin Naso inspects a turbine for Endurance Wind Power
Photo: Rafal Gerszak for The Globe and Mail

For Canadian companies, Greece’s misery has made doing business a lot tougher. Canada’s trade balance with Greece has moved from a surplus of $20 million in 2007, when total exports were $155 million, to a trade deficit of $80 million in 2011, with total exports of $88 million.

Despite all the gloom, however, some Canadian companies are finding there are still euros to be made at the epicentre of the continent’s economic crisis. Greece is at the front end of the deep austerity measures sweeping Europe as states wrestle their oppressive debt loads. In spite of this atmosphere–and partly even because of it–some Canadian exporters have found ways to keep European sales shooting higher.

Just four years ago, Glenn Johnson started Endurance Wind Power near his home in Surrey, B.C., making small-scale wind turbines for export to independent businesses, residences and farms. The product has found a receptive market in Greece, Italy, the U.K. and other European markets and Endurance expects it will soon exceed $80 million in annual sales.

Cash-strapped European governments such as Greece are offering feed-in tariff incentives to energy producers for several reasons: energy costs are high, aging power grids can’t handle large new power projects, and European Union countries are still aiming to hit a target of using 20% renewable power by 2020.

“The utilities and the government are not necessarily the most favourite people within these European countries so if [individuals]–whether it’s farmers or industrial-building owners or merchants–have an opportunity to get some autonomy from the leaders, that’s empowering to them,” Johnson said. “So our wind turbines, if they pay off in five to seven years and they have a 20-year life cycle, feel like a good investment to these people. That’s the main reason that we’re having some success in Greece.”

Endurance’s sales in Greece are expected to reach $2 million this year and hit $5 million next year. Other Canadian companies are making a much bigger splash. Vancouver-based Eldorado Gold Corp. received fast-track approval from the Greek government in April for a gold mine in the Thrace region. The project is valued at about $190 million and promises 400 construction jobs and 200 continuing mining jobs.

The project is just one of several Greek mining efforts for Eldorado Gold. In February, shareholders approved its $2.5 billion friendly takeover bid for European Goldfields, which operates a mine in Greece and has undeveloped deposits there. “Eldorado intends to invest more than $1-billion in Greece over the next several years in new mine development and related infrastructure. This significant investment will result in material direct and indirect job creation,” Paul Wright, president and chief executive officer of Eldorado Gold, said in an April 12 statement.

Eleftherios Anghelopoulos, the Greek ambassador to Canada, said in an interview that the government’s approval of the mine is an example of new policies aimed at encouraging foreign investment. Clearly frustrated by the barrage of negative attention his country continues to receive, the ambassador said he hopes these recent investments are a sign of things to come. He’s also hoping the large community of more than 300,000 Greek-Canadians will play a role. “I think the knowledge they have of both Canada and Greece could be instrumental in promoting business co-operation,” Anghelopoulos said.

A 2010 Canadian trade mission to Greece included several Greek-Canadians. One of them, Bill Drikos, vice-president of Toronto-based Vector Aerospace Corp., signed a deal on March 30 of this year with Athens-based Hellenic Aerospace Industry to provide helicopter upgrades. “Greece is changing,” Anghelopoulos said. “There are a lot of reforms that are implemented and I think that in this new, business-positive framework, there will be a lot of opportunities.”

Martin Schwerdtfeger, a Toronto-Dominion Bank economist focused on global markets, said it is true there are opportunities for foreign investors in Greece in areas such as tourism or the export of raw materials. But he predicts Greece will ultimately have to leave the euro zone, creating “tremendous foreign-exchange-rate risk” for investors. “For sure, there are good opportunities,” Schwerdtfeger said. “But it is an economy that is going to undergo, most likely, very drastic structural transformations and that always means a risk.”

THE TRADE SEE-SAW

Canadian exports to Greece have dropped dramatically in the past five years:

2007: $154.7 million

2008: $152.3 million

2009: $111.8 million

2010: $114.8 million

2011: $88.1 million

While imports from Greece have steadily risen:

2007: $134.6 million

2008: $138.8 million

2009: $140.8 million

2010: $142.4 million

2011: $168.2 million

Source: Industry Canada

Photo: Peter Muhly/AFP/Getty

While many companies have been scared off by the dire economic numbers, a dynamic market is often easier to enter for companies looking to expand their global reach. At the same time, says Klaus Houben, a senior regional manager with Export Development Canada in Dusseldorf, Germany, it is important to remember that not all 27 EU member countries have been equally affected by the debt crisis.

Market instability hasn’t stopped AeroMechanical Services Ltd., a Calgary-based company specializing in automated flight-information reporting systems, from ramping up its business in Europe. The company has had an office in Zurich for seven years and launched an office in Dublin three years ago, just as the debt crisis was beginning to crater the Irish economy.

Since AeroMechanical offers technology that will help airlines in Europe meet new regulations coming into effect in 2015, president and CEO Bill Tempany says, his business has not been impacted much by the European debt crisis. “Even during downturns, companies have to invest to comply with government regulations,” he says.

In fact, Tempany is so confident that he plans to add more staff to the Dublin office soon. “We’ve been able to get people at very reasonable pay rates in Ireland; there are lots of skilled, eager workers there right now,” says Tempany.

One of the hardest-hit countries in the EU, Ireland’s unemployment rate surged from 4.7% in January 2008 to a sky high 14.8% in January 2012, according to Eurostat. It was dubbed the Celtic Tiger in the ‘90s for its economic prowess, but now Ireland is being blamed for many of Europe’s economic woes—along with the EU’s other debt-ridden members, known collectively, and derisively, as the PIIGS: Portugal, Italy, Ireland, Greece and Spain.

Not surprisingly, similar unemployment situations exist in those countries. From a record-low unemployment rate of 5.7% in mid-2007, Italy’s unemployment had risen to 9.7% by the start of this year. In Greece, unemployment rose from 9.1% in the first quarter of 2007 to a high of 19.9% in December 2011. And Spain has faired worst of all, with unemployment rising from 8.3% in 2007, before the crisis hit, to a whopping 23.3% in January of this year. “There are also general labour advantages in eastern European countries,” says Houben.

The tough economic climate in the EU also has not deterred Glenn Johnson, CEO of Endurance Wind Power, a Surrey, B.C.-based manufacturer of wind-power applications, from expanding in Europe.

Endurance Wind Power launched in 2007, just ahead of the 2008 crash, yet things have only looked up for the company. Endurance currently does almost 65% of its business in the U.K., and the company recently inked deals to put up turbines in Italy, Greece and Germany.

“When people hear we do business in Europe, they feel bad for us, but in fact we’re growing,” says Johnson.

Endurance currently has to ship completed turbines to its overseas customers. But the demand for wind power is growing so much in eco-friendly Europe that the company now is planning to open a factory in the U.K. The environment remains a top concern for Europeans, and government commitments across the EU to cut greenhouse-gas emissions by at least 20% of 1990 levels by 2020 are helping firms like Endurance grow.

Houben says there are incentives available for companies looking to locate facilities in certain regions of the EU: “There are tax incentives, grants and subsidies; it differs from country to country.”

Meanwhile, cash-strapped governments and businesses throughout the EU are looking for ways to cut costs, creating an opening for companies offering products, technologies and services that allow organizations to do more with less. In addition, many European governments now are investing in infrastructure to create jobs, says Houben, and additional opportunities will spin off from these projects.

Houben says it also should get easier for Canadian companies to do business in Europe once the Canada/European Union Comprehensive Economic and Trade Agreement (CETA) is finalized, hopefully later this year. A recent study conducted by the Small and Medium-Sized Business Advisory Board and the Canadian Federation of Independent Business (CFIB) found that the main reasons cited by companies that no longer do business in Europe were cost (64%) and complexity (46%) rather than market instability.

However, the SME Advisory Board/CFIB study also found that 54% of SMEs surveyed plan to increase their business in Europe in the next three years.

And while it may take years for Europe’s economic and political systems to recover fully, Canada’s strong banks and stable political system have left us robust and poised to lap the Europeans.

Endurance Wind Power has raised capital for its European expansion from Canadian banks and private investors. AeroMechanical Services has a line of credit with a Canadian bank, but most of its funding has come from investors.

The story is quite different for European companies. “At this time, European companies have issues accessing financing, even major ones,” says Houben. “Banks across Europe have become more restrictive due to strategy changes and funding issues, while other banks have folded.”

In addition, Canadian companies should see less competition from Europe in emerging markets for some time, says David Roach, an associate professor at Dalhousie University’s Norman Newman Centre for Entrepreneurship. In the coming years, the BRIC countries—Brazil, Russia, India and China—will become increasingly important markets for Canadian businesses, Roach says: “Assuming things don’t get worse in Europe, Canadians have a two- to four-year head start.”