Why Mexicans Don't Drink Molson

by Andrea Mandel-Campbell

  According to one well-placed observer, Scotiabank could have avoided its costly exit from Argentina, including a $540 million writedown of its Quilmes subsidiary, by merely paying a bribe. “I know for a fact that a few million to the president’s office and it would have been dealt with, but Scotia decided it wasn’t going to play jiggery-poke,” said the insider. “One could argue that if you are not willing to do that, then you don’t go into markets that require you to do those sorts of things. There are certain sectors where it is very, very difficult to be morally upright. In certain countries it’s a matter of routine and, let’s be honest, it’s tax deductible. It’s only in certain, rarefied parts of the world where it’s not like that.”

  For a quick guide to a country’s corruption quotient, Transparency International, the German-based non-profit, writes up an annual list of the world’s worst offenders. If you decide to take the plunge anyway, bear in mind that bribery was made a money-laundering offence under the Canadian Criminal Code in 2001 and is considered the equivalent to trafficking in heroin, advises James Klotz, who heads up the international corporate governance practice for Davis & Co. There are also additional implications for Canadians who may one day want to sell their companies to American buyers, whose lawyers are increasingly on the look out for so-called “agency payments” as part of their due diligence. Being “wilfully blind” as to where these payments go is no longer an adequate defence, warns Klotz. “Canadian companies just cannot pay bribes right now. It’s not only commercial suicide potentially, but there’s a five-year prison sentence.”

  THE CANADA CARD

  Canadians are by no means as pure as the driven snow. Toronto-based Acres International became the first prominent Western engineering firm to be sanctioned by the World Bank in 2004 after it was caught paying bribes in Lesotho. One of the most notorious scams in recent Chinese history was pulled off by two brothers, Barry and Stuart Hansen, from London, Ontario. In the mid-1990s, the pair was promoting an exclusive us$500 million golf club and housing development on the outskirts of Shanghai. To get a clutch of international investment banks to finance the deal, the brothers faked documents showing they had paid the land use rights to the five-hundred-acre development and forged leases indicating multinationals like Exxon and General Motors had already signed on to house their expat employees at the upscale estate. Millions of dollars disappeared, touching off an ignominious legal battle spanning nearly a decade and involving half a dozen countries.

  But although many Canadians’ carry-on luggage includes the proverbial “suitcase full of money,” Canadians generally are considered to be more honest, straightforward and reliable than many other nationalities. In a world where personal trust regularly usurps contractual obligations, Canada’s reputation for fairness and decency is an invaluable commodity. Free of the lingering ill-will that follows former colonizers like France and Britain, and combined with a non-threatening demeanour, it’s a tremendous calling card, one that Canadians do not avail themselves of often enough. “No country in the world starts off with so much goodwill behind it, bar none,” says Tim Plumptre, a long-time champion of Canada–Latin America trade. “It’s a major competitive advantage, and of course we don’t realize it because we’re Canadian.”

  In China, Canada still starts out with a “huge” advantage, say observers, despite the waning trade and investment ties between the two countries. The Chinese are taught about the heroism of Norman Bethune* in school, and many of them, drawn by Canada’s reputation for tolerance and safety, have either immigrated or sent their children to study here, including leading officials of the Communist Party. In 1998 Chinese premier Zhu Rongji called Canada China’s “best friend,” and that friendship, combined with Canada’s traditional approachability in the wake of China’s increasingly thorny relations with the United States, is a significant opportunity just waiting to be mined. “Canada has a great brand in China and a lot of links with the Chinese,” says lawyer and Sinophile Omer Ozden. “We’re in a great position. With the advantages we have, we could be a major force in China.”

  Michael Lobsinger, the chairman of tech firm Zi Corp., agrees. He has refused to move the company’s Calgary head office to the United States despite pressure from his New York investors. While heading south would make sense financially, especially given the fact that Bay Street has never bothered to give him the time of day, being seen as a Canadian company in China is worth more. “I was under huge pressure from the pension funds to move to New York,” explains Lobsinger. “‘What have the Canadians given you?’ they asked. ‘You got no help, no assistance, nothing.’ But in a foreign country, when we’re not embarrassing ourselves in Ottawa, they trust us.”

  In fact, while Canadians seem to spend a lot of time seeking approval from Americans, not being American is perhaps their greatest asset. On the one hand, Canadians have the technology and best practices associated with the United States, along with the credibility of having to compete and collaborate in such a sophisticated market. Yet they do not have the Americans’ battering-ram mentality, which has left so many with bruised egos. “I’ve always said it’s a pleasure to compete against Americans around the world,” says Methanex’s Pierre Choquette. “They rarely change their stripes. They go in and operate as if they were in North America. The Canadians I have been exposed to are much more respectful of different cultures.”

  The distinction between the two countries seems to be appreciated in Mexico, which has its own history of grievances with its northern neighbour. In a revealing example of the power of Canada’s reputation, Paul Brent recounts in his book, Lager Heads, how Labatt CEO George Taylor was able to convince the Mexican owners of Femsa to sell to the Canadians instead of to Milwaukee-based Miller, which already had a small stake in the brewery. “There is no way I could compete with Miller unless I could convince the Mexican family that we were better guys, we were nicer guys, than the Americans,” Taylor is quoted as saying.122 Loewen’s Roberto Amaya has also benefited from Canadian goodwill in Mexico. Unlike his American competitors, who have to “bribe” their Mexican distributors with all sorts of free materials and reassure them with exclusive sales agreements, Amaya doesn’t need a contract to sign on a Mexican distributor, and they pay him for promotional material. “When I tell them no one else will sell in their area, they believe me and spend forty thousand dollars on a showroom without a contract,” he says. “We have a huge competitive advantage you can’t build, you can only tarnish. How is it you have trust before you actually meet the person? You shake hands and they are already smiling, because you are Canadian. ”

  Many countries are, in fact, very appreciative of Canada’s displays of decency and tolerance. Andrew Stodart was amazed by the reception Black Velvet whisky got when it was launched in Hungary. The head of international branding for the Canadian liquor label had no idea that Canada was held in such high esteem by Hungarians, many of whom had sought refuge in Canada after Hungary’s failed 1956 uprising against Soviet rule. Within two years of entering the market, Black Velvet became the leading imported whisky in the country. But while it was one of the rare instances of a brand being promoted as Canadian, for the most part it is Canada’s chameleon-like qualities that earn it kudos internationally. Without an imposing sense of national purpose and a still-congealing identity that lacks the personal ticks associated with old age and cultural homogeneity, Canadians are better able to blend in.

  In the case of Sun Life Financial, that means adopting an Indian mentality, work ethic and purpose when operating in India, says Gary Comerford. “We’re not a Canadian company doing business in India. We’re an Indian company owned by a Canadian company.” That fluidity, sensitivity and ability to downplay origins allows many firms to assume whatever identity suits them best in a given situation. Canadian companies will often pretend to be American when competing in the United States, only to switch tack and tout their French or British connections when in Europe. “I’m your best compromise,” says P
hilippe Huneault, former vice-president of strategic opportunities for tiw. “If you want me to be French, I’ll be French. If you want me to be American, I’ll be American. I’ll be the flavour you want. We’re somewhere in the middle, and that’s an advantage.”

  But the real advantage of Canadians’ reputation for respect and quiet modesty is the fact that nobody expects much from you, says Jeff Swystun, global director for Interbrand. “We are the last people to beat our chests. We almost wait for someone else to recognize our accomplishments — which is a flaw in practice, a nice thing in character,” he explains. “Yet underlying all that, we want to compete. Anytime I tell people about my roots in Canada or Winnipeg, it’s greeted with a chuckle — until I drive them under the table.” Fellow Winnipegger Rick Waugh calls it the Canada Card. The Scotiabank CEO is not convinced that Canadians are necessarily “nicer or better,” but one-on-one they’re just as good and not as threatening. “I used to do business with very powerful companies and people in New York. We’d leave a little bit on the table while the Americans would go for the jugular. I used to call it my Number Two Strategy. I’d say: ‘You can deal with the American guy, but we’re a good alternative. Keep us at the table, and we’ll adjust.’”

  Another advantage that Canadians don’t always exploit is — wait for it— the government. Although there is plenty to fault in the plethora of disjointed government strategies, schemes and initiatives, part of the problem is how businesspeople wield the tools made available to them. In the same way that you can’t use a hammer to drive in a screw, many companies fail to understand the nature of government resources or how to exploit them in a way that will render maximum results. Accessing state support should not be an enigma wrapped in a conundrum, but almost without exception I found that while native-born Canadians complained about turgidly bureaucratic and misguided programs, new Canadians marvelled at the generous array of opportunities. I suspect the reality lies somewhere in the middle.

  Take the Team Canada trade missions. Arguably the most misunderstood of the government’s trade promotion policies, they are now a metaphor for Canada’s missed opportunity. Consultants like Beijing-based John Gruetzner advise against going on the missions because they prevent managers from rolling up their sleeves, understanding the market and meeting customers. But the missions, despite their penchant for multimillion-dollar signing ceremonies, were not meant to be a substitute for grassroots reconnaissance. “Team Canada is grossly misunderstood,” says Howard Balloch. “They are pr, a great way to draw attention. It’s like appearing in a beauty contest where you get everybody to look at you. It’s not a place to find partners or negotiate a deal.”

  In fact, the missions can be very useful, if you know how to use them to your advantage. Toon Boom’s Joan Vogelsang took advantage of a trade mission to China headed by Quebec Premier Jean Charest to present her Chinese customers with awards. In China, where government officials command a high degree of respect, Charest’s presence was a great honour, and the ceremony was carried on Chinese television.

  A 2001 Team Canada mission to China provided a definite boost to the power-plant project that David Fung was working on. He capitalized on Prime Minister Chrétien’s presence to arrange for a picture to be taken with himself, various high-level Chinese officials and Canadian executives involved in the project. Coordinating the travel arrangements of so many important people cost a cool $100,000, but the picture is the best insurance policy that Fung could have against corruption. “Every junior official looking for trouble sees this picture and decides there are better candidates next door. It tells them I have access, and they don’t want their careers jeopardized,” he explains.

  As a rule of thumb, in countries where the government wields significant influence over the economy, having the Canadian government on your side can be an important asset. The embassy in Beijing has been extremely helpful to Westport Innovations in securing meetings with senior Chinese officials, says Phil Hodge. In some cases, particularly when Westport is dealing with state-run enterprises, embassy officials will not only sit in on the meetings, but be the guests of honour. “In China, having the Canadian government sit beside you is a very strategic thing to do, especially if you are not a big company — it adds a lot of credibility,” he says. “It’s an interesting dimension that I don’t think Canadian companies give enough credit to. It’s a huge benefit.”

  Of course, you have to have a strategy. You can’t arrive at the embassy’s doorstep and say you sell specialized water-filtering equipment, and please set up five meetings. You need to know who you want to see and why. It also helps to have a little imagination. In the case of Mitel, the Ottawa high-tech firm had a very important business meeting in Australia and wanted to make an impression. It arranged to have the get-together at the Canadian embassy, which boasts a sumptuous view overlooking Sydney Harbour. “It didn’t cost us a bean,” said Simon Gwatkin, Mitel’s vice-president of strategic marketing. “If this had been the U.K., it would have cost thousands of dollars.”

  There are innumerable ways in which the government can help, says Alan Davitt, a former international business team leader at the Canadian Commercial Corp., a federal international contracting agency. It’s not always easy or obvious — nor should it be, he argues. While getting government support can be akin to “prodding an elephant,” if it were a cakewalk many companies would feel even less compunction than they already do to plan ahead before going international. “Business isn’t easy; why should government be?” asks the president of Tri-Star International, which specializes in helping companies access federal government support. The key is to approach government not as a bureaucratic black hole, but as any other business problem that requires sales and marketing finesse. “Canada is unique in terms of the help exporters can obtain from their own government,” says the U.K. native. “It’s a matter of learning how to use and access those resources and build relationships in Ottawa, just as you would with customers abroad. The disconnect happens because companies don’t know how to utilize government effectively.”

  TIME TO FIND SOME COJONES

  So you’ve got international goodwill and government support that, while not always entirely focused, can be valuable tools. What are you, the Canadian businessperson, going to do with them? What contribution will you make to this equation? How are you going to help build the foundation for a globally aware, savvy and sophisticated business culture?

  A good place to start is within your own company. One of the biggest failings I have come across in corporate Canada is the inability to appreciate, nurture and exploit international work experience. Few companies seem to invest in international training or have a strategy that includes overseas postings as part of an employee’s career advancement. In contrast, the German multinational, Siemens, has a deliberate policy of sending its most promising workers abroad. Its Canadian subsidiary even sent an employee to Japan for his master’s degree, notes Schulich’s Lorna Wright. “Can you imagine a Canadian company doing that?”

  Quite the opposite. Not only do Canadian companies tend to send retirees, B-teams and otherwise irritating personnel abroad, but they often have no mechanism for reintegrating them into the corporate ranks or profiting from their experience. “Canadian companies are notorious for not using the experience and knowledge that people bring back,” says Wright. A study of Canadian energy companies conducted as part of a thesis project for the University of Calgary found that a third of repatriated employees left their jobs within two years of returning to Canada (usually to work for the competition).123 The reason? They felt their international experience was not valued or put to use back at head office. “It’s like putting an axe to your career,” acknowledges Pierre Alarie, who returned to Canada after fifteen years in Latin America working for various Canadian companies. “You don’t realize that when you return home there’s no formal process to reintegrate you, and you lose money because your spouse can’t work. What’s the incentive for going abro
ad?”

  Canadians who have worked for foreign institutions overseas get an equally cool reception when they try to return home. Although there is a serious shortage of international experience among the very domestic rank and file, Canadian returnees are often rebuffed rather than embraced — considered a threat by the closed-shop mentality that pervades many institutions. “It’s not a welcoming culture,” admits John Hancock, a trade counsellor with the wto in Geneva, who says his foreign experience is considered a “liability” when he’s looked at finding work in Canada. “The attitude is, ‘Why did you leave? What do you know about the fiscal imbalance?’”

  Given such a parochial environment, companies at the very least should invest in language and cultural training for workers engaged in overseas business. “At least then they wouldn’t put their foot in their mouth,” says one European-born Canadian executive. All too often the shortcomings of the Canadian education system become painfully evident when Canadians routinely make the kind of embarrassing gaffes that they love to fault Americans for. “Very often they say things and you just want to disappear,” he laments.

  Of course, it’s difficult to create awareness within an organization if its leadership doesn’t have a global mindset. Not only should a company’s board of directors include members either from other countries or with international experience, but in this day and age it’s hard to believe a chief executive could be qualified to run a major operation such as a bank, mining company or forestry firm without having worked overseas. It’s not enough to know the technical ins and outs of an industry — this means nothing if you can’t apply it in another context. In the same way that a CEO can go from selling household cleaning products to flogging beer, there is a method to international business that you cannot learn without living it. As operational leaders, CEOS should be obliged to have this skill set, just as they should be obliged to speak at least two languages. The prime minister of Canada must be bilingual, and the head of a globally competitive company must speak more than one language.