Information and communications technology to Canada

(Last updated: 30 Oct 2008)

Trends and opportunities

The market

Canada's 30,300 ICT companies are gathered in regional clusters that provide critical mass that takes advantage of the country's world renowned educational and research infrastructure. The majority of these companies (81 per cent) are SMEs with 1-9 employees – creating opportunities for various partnerships and collaborations with similar sized Australian companies. There are approximately 120 large companies, with over 500 employees.

The total number of workers in Canada’s ICT sector rose from 439,710 to 572,107 between 1997 and 2006, which represents an increase of 30 per cent.

Total revenues rose from $96 to $140 billion between 1997 and 2006, a 46 per cent increase. Since 1997, manufacturing revenues have declined by 13 per cent, while services grew by 104 per cent.

KPMG has recognised Canada as the most cost-competitive nation in the G-7 making it an attractive target for business setup and/or investment.

The Intelligent Community Forum (ICF) named three Canadian cities – Fredericton, Vancouver, and Edmonton – as part of their Smart21 shortlist for the 2008 Intelligent Community of the Year award. Waterloo, Ontario topped the list in 2007.

Connected Canadians:

• In 2007, 76 per cent of Canada’s urban residential population utilised the Internet on a regular basis (65 per cent of rural residents) making Canada one of the most connected countries per capita in the world.
• Cable and DSL dominate Canada's Internet connectivity options. In 2007, 88 per cent of residential users used a high-speed connection.
• Residential ISPs have consolidated greatly in the past five years with the high majority of service now being supplied by large telecommunication companies.
• Wireless Internet is being adopted very quickly as businesses and communities offer free WiFi ‘hotspots’.
• Finding government, health and travel information as well as banking, paying bills and ordering goods are all popular uses. Posting images, writing blogs, instant messaging, downloading content, and participating in discussions are fast emerging activities led strongly by the under 30 demographic.

Regional business clusters: 

• World renowned digital media hubs in Vancouver, BC and Montreal, Quebec encompassing film, music, visual effects, geomatics, and a host of digital entertainment sub-sectors (ie. animation, video gaming).
• The various sectors that make up Canada’s well-known technology triangle in south western Ontario include advanced manufacturing, biotech, and many pioneering technologies, from wireless to Internet to production technologies. 
• Ottawa’s strong telecommunications cluster housing the largest concentration of R&D labs in Canada – including more than 70 per cent of Canada’s industrial telecommunications research (led by Nortel Networks).
• Wireless technologies and data strengths in Calgary, Alberta and Vancouver with companies such as Sierra Wireless, Telus, and MDSI. 
• Internet applications and business software development expertise in Toronto, Waterloo, Vancouver, and Halifax.
• E-government and Intelligent Transport Systems strengths in Toronto, Ottawa, and Montreal.  

Software products and computer services:

• Canada has leading software products in the fields of film and media, video gaming, animation, security, business intelligence and document management, enterprise planning and more.
• Canada contributes C$1.2 billion in annual R&D investments and its 45,000 software and service companies employ over 160,000 workers producing C$29 billion in revenues.
• Outsourcing is expected to be the leading growth sector (16 per cent annually), followed by application software (19 per cent), and professional services (18 per cent).
• Company consolidation and acquisition has been the major trend of late with the larger players (ie. Hummingbird was acquired by Open Text).

Digital media:

• The digital media industry is made up of mainly video game developers, mobile content producers, e-Learning companies, education/training institutions, and broadcasters.Most operators are small businesses, with about half of these employing less than 10 people, which offer great opportunities for partnerships and support services (ie. as video games becomes more complex and demanding; developers are seeking niche middleware and gaming engine solutions to reduce time to market, costs and risk).
• Canada’s digital media industry is growing rapidly, however sustaining this trend in the face of limited financial investment and support is becoming a challenge. There has also been some turbulence with large players such as the break up of powerhouse CHUM Media and the disassembling of Alliance Atlantis Communications.
• Canada’s growing broadband capacity and shift away from predominately TV and radio use is driving strong demand for online media and digital content that in turn feeds the need for animation, graphics, and new software solutions.

Telecommunications and networking equipment:

• With approximately half of the world’s networking equipment market share, Nortel Networks is the leading Internet technology provider in Canada and a global leader in networking equipment.
• Canada has the world’s leading capabilities in: network equipment (ie. high capacity broadband switches, network management applications), fibre-optics (JDS Uniphase), enterprise equipment (ATMs), wireless equipment manufacturing (Research-in-Motion), semiconductor design, and computer-telephony integration technologies.
• There is strong growth in wireless subscriptions, together with demand for ancillary services, which is a key factor driving growth in the telecom industry.
• As a result, the number of wired lines continues to fall in Canada as people increasingly opt for wireless services, limiting expansion.
• Heavy price competition will continue to limit the industry’s profit growth.
• Shift to wireless creates opportunities for forward thinking suppliers in the mobile content realm including gaming, text, advertising, and business applications.

Opportunities

Canada is a significant player in the global ICT industry with a strong technology service oriented industry and declining tech manufacturing industry. It has an appetite for high quality, creative, innovative, and unique service and product features that can provide subtle or significant points of differentiation. 

Canada is a ‘springboard’ to the USA and an important market in its own right. It has well-developed financial markets, low business costs, sophisticated technological infrastructure and a highly educated workforce, which provide Australian companies attempting to do business in North America location advantages. Stable and growing economy and rapid development of geographic technological clusters are drivers of demand for imported products and services.

Specific opportunities for Australian ICT companies exist in:

• Niche and specific application software/enterprise solutions in most of the vertical markets (ie. education, security, agriculture, government, health care, and transportation)
• Outsourcing and support to fast growing industries, such as video game development, mobile content, and e-Government initiatives
• Wireless and satellite technologies
• Telecommunications and network software
• Knowledge-based tools

Competitive environment

Canada is a mature and highly competitive market with some of the world's most prominent multinational ICT enterprises present. IBM, Ericsson, Electronic Arts, Ubisoft, SAP, EDS, Motorola, Nokia, Intuit, Convergys and many others are operating in Canada.

Tariffs, regulations and customs

Each product is being judged on its own merits. French and English labelling required for most products.

There are no quotas on Australian products.

Industry standards

Electric current is AC 60 cycles, 120/240 volts, 1, 3 phase, 3, 4 wires and the video system is NTSC.

Canada's broadcasting and telecommunications system is regulated by the Canadian Radio, Television and Telecommunications Commission, an independent agency.

Marketing your products and services

Market entry

All types of market entry strategies will apply in Canadian ICT context, depending on the financial abilities of exporter/investing company. A local strategic partner (ie. licensee, manufacturer, distributor, joint venture arrangement, etc.) is recommended for cost-efficiency.

Many international ICT companies choose Canada as their primary entry point to North America. Not only does Canada have relative cost-advantage as an office location, but it boasts North America wide integration of distribution channels.

Canadian companies are equally or more likely to partner with an Australian business then US companies, partly due to similarity in historical backgrounds and understanding of each other’s market entry challenges.

All common promotional strategies can be employed by Australian ICT companies. Most of the marketing mix elements successfully employed in Canada, can be also equally well applied in the US ICT market. Attention should be given to the promotional efforts in French-speaking areas of Canada (mainly Quebec), particularly when selling into the consumer segments.

The size of the online market is second to USA only. Both Business-to-Consumer and Business-to-Business sites proliferate. Online Federal Government procurement is common. Bids are posted on Merx, Canada's official electronic tendering service. Some provincial governments also employ their own online procurement mechanisms. 

Distribution channels

Well-developed infrastructure allows both traditional and non-traditional (ie. electronic) means to distribute products effectively in Canada and across North America.

Links and industry contacts

ICT–related resources

Advanced Card Technology Association of Canada – www.actcda.com
Association for Media and Technology in Education in Canada – www.amtec.ca
Association of Internet Marketing and Sales – www.aimscanada.com
Canada IT.com – www.canadait.com
Canadian Association of Internet Providers – www.caip.ca
Canadian Association of Supply Chain and Logistics Management – www.sclcanada.org
Canadian Cable Television Association – www.ccta.ca
Canadian Interactive Digital Software Association – www.media-awareness.ca/english/index.cfm
Canadian IT Law Association – www.it-can.ca
Canadian Telecommunications Consultants Association – www.ctca.ca
Canadian Wireless Telecommunications Association – www.cwta.ca
CATA Alliance – www.cata.ca
Information Research Management Association of Canada – www.irmac.ca/index.htm
Information Technology Association of Canada – www.itac.ca
it World Canada.com – www.itworldcanada.com

Contact details

The Australian Trade Commission (Austrade) is the Australian Government’s trade and investment development agency, operating as a statutory agency within the Foreign Affairs and Trade portfolio.

Austrade assists Australian businesses contribute to national prosperity by succeeding in trade and investment, internationally, and promoting and supporting productive foreign investment into Australia.

Austrade:

• Delivers services that assist Australian businesses initiate, sustain and grow trade and outward investment.
• Promotes Australia as an inward investment destination and, with the States and Territories, supports the inflow of productive foreign direct investment.
• Administers the Export Market Development Grants scheme.
• Undertakes initiatives designed to improve community awareness of, and commitment to, international trade and investment.
• Provides advice to the Australian Government on its trade and investment development activities.
• Delivers consular, passport and other government services in designated overseas locations.

A list of Austrade offices (in alphabetical order of country) is available.

More information

For further information please contact Austrade on 13 28 78 or email info@austrade.gov.au

Sources

Industry Canada – www.ic.gc.ca/epic/site/ict-tic.nsf/en/home
New Media BC – www.newmediabc.com 
Invest Canada – www.investincanada.gc.ca
Canada's Technology Triangle – www.techtriangle.com 
MaRS Discovery District – www.marsdd.com
Entertainment Software Association of Canada – www.theesa.ca