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Vancouver service exports to the Asia Pacific and the role of local government in their promotion 1991

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VANCOUVER SERVICE EXPORTS TO THE ASIA PACIFIC AND THE ROLE OF LOCAL GOVERNMENT IN THEIR PROMOTION by LAURA ELLEN TATE B.A., M c G i l l U n i v e r s i t y , 1988 A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS (PLANNING) in THE FACULTY OF GRADUATE STUDIES SCHOOL OF COMMUNITY AND REGIONAL PLANNING We accep t t h i s t h e s i s as conforming to the r e q u i r e d s tandard THE UNIVERSITY OF BRITISH COLUMBIA November 1991 (c )Laura E l l e n Tate 1991 '7 In presenting this thesis in partial fulfilment of the requirements for an advanced degree at the University of British Columbia, I agree that the Library shall make it freely available for reference and study. I further agree that permission for extensive copying of this thesis for scholarly purposes may be granted by the head of my department or by his or her representatives. It is understood that copying or publication of this thesis for financial gain shall not be allowed without my written permission. Department oiComVtilTM +'Z£fi1f)flAL PUM/fdk- The University of British Columbia Vancouver, Canada Date OCTO&B/L /C; \c)e)\ DE-6 (2/88) ABSTRACT T h i s t h e s i s l ooks at the f e a s i b i l i t y of promot ing knowledge i n t e n s i v e s e r v i c e (KIS) expor t s to A s i a as pa r t of a l o c a l economic development s t r a t e g y . To t h i s end a two p a r t study was c o n d u c t e d , c o n s i s t i n g of a p o s t a l survey and a s e r i e s of e l i t e i n t e r v i e w s . The study demonstrates tha t many Vancouver KIS f i r m s have a l r e a d y e s t a b l i s h e d a presence in P a c i f i c Rim markets ; f u r t h e r m o r e , f u t u r e growth in these markets i s l i k e l y . The s tudy examines v a r i o u s c h a r a c t e r i s t i c s of KIS e x p o r t e r s to A s i a so as to enab le p o l i c y makers to d r a f t a p p r o p r i a t e recommendations. The remainder of the t h e s i s o u t l i n e s c u r r e n t i n i t i a t i v e s at s e n i o r and l o c a l l e v e l s of government. A case i s made f o r i n c r e a s i n g the scope of l o c a l government a c t i o n in t h i s sphere , and some p o t e n t i a l i n i t i a t i v e s are sugges ted . TABLE OF CONTENTS CHAPTER/SECTION PAGE NO. ABSTRACT i i L IST OF TABLES v ACKNOWLEDGEMENTS v i 1.0 INTRODUCTION 1 2.0 LITERATURE REVIEW OF THE SERVICE SECTOR 6 2.1 G e n e r a l Theory and Trends of Economic R e s t r u c t u r i n g 6 2.1.1 Economic and Bus ines s Developments 8 2.1.2 Employment and O c c u p a t i o n a l I m p l i c a t i o n s 11 2.2 S e r v i c e s and the Vancouver Economy 14 2.2.1 Prominence of S e r v i c e s in the Vancouver Economy 14 2.2.2 Vancouver S e r v i c e Employment 18 2.3 Chapter Summary 20 3.0 STUDY OF VANCOUVER KNOWLEDGE INTENSIVE SERVICE FIRMS' PACIFIC RIM EXPORT PROPENSITIES AND CHARACTERISTICS 26 3.1 Study R a t i o n a l e and Assumpt ions 29 3.2 Methodology 30 3.3 Ev idence of Vancouver KIS f i r m s ' P a c i f i c Rim Presence 34 3.3.1 Expor t P r o p e n s i t i e s - Cu r ren t and P o t e n t i a l 34 3.3.2 Importance of A s i a n Market D e s t i n a t i o n s to Cu r ren t E x p o r t e r s 37 3.3.3 M o t i v a t i o n f o r P a r t i c i p a t i o n i n A s i an Markets 38 3.4 Ch a r a c t e r i s t i c s of P a c i f i c Rim Exporters 43 3.4.1 Spec i f i c P a c i f i c Rim Destinations 43 3.4.2 Marketing Approach 49 3.4.3 Sources of Market Information 54 3.5 Policy Recommendations - A Firm Perspective 57 3.5.1 Questionnaire and Interview Participants 57 3.5.2 Interviewees' Assessments of Vancouver 61 3.6 Immediate Study Conclusions 61 4.0 RECOMMENDATIONS 65 4.1 Current Assistance 65 4.1.1 Federal Programs 65 4.1.2 B.C. Prov i n c i a l Assistance 73 4.1.3 Local and Private Sector Programs 79 4.2 Local Options - Some Recommendations 82 4.2.1 Research 90 4.2.2 Networking 95 4.2.3 Education 99 4.2.4 Improving the Local Business Environment 103 4.3 Chapter Summary 105 5.0 CONCLUSION 107 APPENDICES 113 REFERENCES ' 123 iv LIST OF TABLES TABLE ; PAGE NO. 1. Expor t revenues of B.C. env i ronmenta l companies, 1986 and 1987 18 2. D e s c r i p t i o n of S . I .C. codes and number of respondents i n each . 31 3. Average p r o p o r t i o n of U.S. , A s i a P a c i f i c , and European s a l e s by S. I .C. code 35 4. A s i a P a c i f i c expor t s as a percentage of t o t a l s a l e s f o r c u r r e n t e x p o r t e r s 39 5. M o t i v a t i o n f o r A s i a P a c i f i c market p a r t i c i p a t i o n 42 6. S a l e s d e s t i n a t i o n s f o r i n t e r v i e w e e s 45 7. Marke t ing t echn ique s of c u r r e n t A s i a e x p o r t e r s 50 8. Ma rke t i ng t echn ique s of i n t e r v i e w e e s 52 9. Ma rke t i ng t echn iques of p r e v i o u s e x p o r t e r s 53 10. Sources of market e x p e r t i s e ( i n t e r v i e w e e s ) . . . 56 11. P o l i c y recommendations of c u r r e n t e x p o r t e r s 59 12. P o l i c y recommendations of i n t e r v i e w e e s 60 13. I n te rv iewee r a t i n g of Vancouver as a P a c i f i c Rim market ing base 62 v ACKNOWLEDGEMENTS I would l i k e to thank my advisors Craig Davis and Tom Hutton for a l l their help throughout the thesis-writing process. I would also l i k e to thank my parents, for their encouragement, and for encouraging me to atta i n the goals I set for myself. F i n a l l y , I would l i k e to thank Joel Lawson, for his support, e d i t o r i a l comments, and for just being there. v i 1 .0 INTRODUCTION Dur ing the 1980s, Canada began to t r u l y r e c o g n i z e the e x i s t e n c e of t r a d i n g o p p o r t u n i t i e s w i th A s i a P a c i f i c c o u n t r i e s . For c i t i e s l i k e Vancouver , A s i an t rade has a lways c o n t r i b u t e d to l o c a l development. Indeed, Much of the h i s t o r i c r a t i o n a l e f o r the c r e a t i o n of the p r o v i n c e of B r i t i s h Columbia was a means f o r l i n k i n g Canada i n e x t r i c a b l y to the P a c i f i c (Edg ington and Go ldbe rg , 1989. p. 2 ) . U n t i l r e c e n t l y , however, most of Vancouve r ' s t r a d e w i th the A s i a P a c i f i c has been l i m i t e d to pr imary commodit ies and t r a n s p o r t a t i o n s e r v i c e s . Whi le s t a p l e s s t i l l compr i se the bulk of the p r o v i n c e ' s A s i a -bound e x p o r t s , s e r v i c e s are becoming a s i g n i f i c a n t export in t h e i r own r i g h t . The he i gh tened prominence of the P a c i f i c Rim as a t r ade d e s t i n a t i o n ; the s t r e n g t h e n i n g of t r a d e , communicat ion, and human se t t l ement l i n k s between P a c i f i c Rim c i t i e s ; g l o b a l economic r e s t r u c t u r i n g ; and broad changes in the nature of s e r v i c e p r o v i s i o n have l e d many Vancouver -based e n g i n e e r i n g , market ing and c o n s u l t i n g f i rms to deve l op l u c r a t i v e markets in A s i a . T h i s development has a l s o been f a c i l i t a t e d by s p e c i f i c p o l i c y measures, i n c l u d i n g : * the d e s i g n a t i o n of Vancouver as an i n t e r n a t i o n a l f i n a n c e c e n t r e . * the development of an i n v e s t o r ca tegory f o r immigrants 1 coming to Canada. . This has been favoured by many Asians, p a r t i c u l a r l y people from Hong Kong, seeking a more stable base to reside and conduct business. * deregulation of several service industries. * the development of strategies and i n s t i t u t i o n s to f a c i l i t a t e trade l i n k s with the Asia P a c i f i c Region. It i s my contention that the trend of increasing service exports to the P a c i f i c Rim i s b e n e f i c i a l to the region. Vancouver has a long history as a transportation node and d i s t r i b u t i o n centre for staples extracted from the p r o v i n c i a l hinterland. Yet Vancouver would be wise to look to other a c t i v i t i e s for regional income generation. The terms of trade for most primary commodities have rarely been favourable; in fact, primary commodity prices are extremely v o l a t i l e . Over- dependence on t h i s sector may perpetuate a state of economic underdevelopment. S i m i l a r l y , continued dependence on non- renewable resources for income w i l l lead to environmental degredation and a bleak economic future once resources are exhausted. The development of an export-earning service sector i s an e f f e c t i v e means of maintaining economic v i t a l i t y and balance. Vancouver's service sector represents both a p o t e n t i a l l y major source of exports to P a c i f i c Rim markets, as well as an element of Vancouver's comparative advantage in pursuing a larger share of P a c i f i c Rim investment, trade and commerce (Hutton and Davis, 1989. p. 15). 2 Know ledge - i n ten s i ve s e r v i c e s in p a r t i c u l a r have a complex set of backward and forward l i n k a g e s , and s u b s t a n t i a l c a p a c i t y fo r income g e n e r a t i o n w i t h i n the r e g i o n . Know ledge - i n ten s i ve s e r v i c e s , or KIS, f a l l i n t o the producer s e r v i c e c a t e g o r y . They i n c l u d e , but are by no means r e s t r i c t e d t o : e n g i n e e r i n g ; a r c h i t e c t u r e ; env i ronmenta l m o n i t o r i n g , r e m e d i a t i o n and p l a n n i n g ; computer sof tware development; management c o n s u l t i n g ; a d v e r t i s i n g ; te lecommun ica t i ons systems d e s i g n ; and f i n a n c e . They have a h i gher expor t p r o p e n s i t y than p e r s o n a l s e r v i c e s . Fur thermore , a s u i t a b l e economic and p h y s i c a l i n f r a s t r u c t u r e f o r these a c t i v i t i e s a l r e a d y e x i s t s in Vancouver . S i m i l a r l y , the c i t y ' s l i v a b i l i t y a t t r a c t s h i g h l y s k i l l e d pe r sonne l who are a b l e to undertake such a c t i v i t i e s . F i n a l l y , KIS a c t i v i t i e s are in most cases e n v i r o n m e n t a l l y sound. As such they w i l l h e l p i n m a i n t a i n i n g the c i t y ' s l i v a b i l i t y . E n v i r o n m e n t - r e l a t e d a c t i v i t i e s in p a r t i c u l a r w i l l enhance the l o c a l q u a l i t y of l i f e wh i l e p r o v i d i n g new bus ines s o p p o r t u n i t i e s . A c c o r d i n g to Robyn A l l a n , B.C. C e n t r a l C r e d i t U n i o n ' s c h i e f economis t : 'The f u t u r e of companies tha t s p e c i a l i z e in env i ronmenta l t e c h n o l o g i e s i s b r i g h t . I n d u s t r i e s that a re c l e a r l y committed to e n v i r o n m e n t a l l y sound p r a c t i c e s are a l s o l i k e l y to reap t a n g i b l e rewards . . . . S i n c e the wor ld i s go ing to have to a d j u s t to the c o s t s of a c l e a n environment - - i n c l u d i n g a massive c l e a n u p - - we might as w e l l make money do ing i t . As a bonus, we shou ld a l s o ga in new j o b s , i n n o v a t i v e s k i l l s , 3 enhanced p r o d u c t i v i t y and a b e t t e r q u a l i t y of l i f e ' ( c i t e d i n S e e l i g and A r t i b i s e , January 1991, p. 80). Hence, i t i s both f e a s i b l e and d e s i r a b l e to focus upon the KIS s u b - s e c t o r as a l o c a l economic development s t r a t e g y . I t i s the o b j e c t i v e of t h i s t h e s i s to demonstrate t h a t : * economic r e s t r u c t u r i n g , i n c o n j u n c t i o n with other t r e n d s , has promoted s e r v i c e e xports to A s i a ; * growth of such exports i s not only p o s s i b l e but worth encouraging; * a r o l e e x i s t s f o r the l o c a l government i n the promotion of Vancouver KIS exports to the P a c i f i c Rim. A P a c i f i c Rim focus w i l l enable the c i t y to take advantage of recent i n c r e a s e s i n immigration from Asian c o u n t r i e s . Moreover, t h i s focus w i l l encourage market d i v e r s i f i c a t i o n f o r f i r m s i n the l o c a l economy. D i v e r s i f i c a t i o n may become i n c r e a s i n g l y important f o r example, to f i r m s not e x p e c t i n g to b e n e f i t from the North American Free Trade Pact c u r r e n t l y being n e g o t i a t e d . Before s p e c i f i c p o l i c i e s can be formulated, however, a c l e a r understanding i s r e q u i r e d of the behaviour, p e r c e p t i o n s and e x p e r i e n c e s of A s i a - e x p o r t i n g s e r v i c e f i r m s as w e l l as t h e i r p r o s p e c t s f o r f u t u r e growth and development. Thus the immediate goal of t h i s t h e s i s i s to e x p l o r e f i r m needs as they r e l a t e to l o c a l c o n d i t i o n s . General p o l i c y recommendations f o r l o c a l economic development o f f i c e r s w i l l then be put forward. 4 The s t r u c t u r e of the remainder of t h i s t h e s i s i s as f o l l o w s . Chapter Two d i s c u s s e s g e n e r a l r e s t r u c t u r i n g t r ends in the g l o b a l and l o c a l economy to j u s t i f y a l o c a l economic development s t r a t e g y which h i g h l i g h t s KIS e x p o r t s . Chapter Three ana l y se s r e s e a r c h r e s u l t s and t h e i r g e n e r a l p o l i c y i m p l i c a t i o n s . Chapter Four summarizes c u r r e n t i n s t i t u t i o n a l r e sou r ce s f o r P a c i f i c Rim export promot ion and makes f u r t h e r recommendations f o r a c t i o n . Chapter F i v e conc ludes the study and p r o v i d e s sugges t i ons fo r f u t u r e r e s e a r c h . 5 2 .0 LITERATURE REVIEW OF THE SERVICE SECTOR T h i s l i t e r a t u r e review was conducted as a p o i n t of d e p a r t u r e in the i n v e s t i g a t i o n of a knowledge i n t e n s i v e s e r v i c e expor t s t r a t e g y f o r Vancouver . The l i t e r a t u r e h i g h l i g h t s economic changes c u r r e n t l y underway in North American and o ther OECD c i t i e s . I t e x p l a i n s tha t such changes have impacts upon c i t i e s ' income g e n e r a t i o n and employment s t r u c t u r e s . Thus the l i t e r a t u r e enab le s one to a p p r e c i a t e the n e c e s s i t y of d e v i s i n g an economic s t r a t e g y tha t r e c o g n i z e s , and maximizes the b e n e f i t s o f , g l o b a l s t r u c t u r a l change. As w i l l be e x p l a i n e d in Chapter s Two and T h r e e , knowledge i n t e n s i v e s e r v i c e s a re c o n s i d e r e d to be among the more b e n e f i c i a l of s e r v i c e a c t i v i t i e s . The review i s d i v i d e d i n t o two p a r t s : the f i r s t s e c t i o n d i s c u s s e s g e n e r a l t rends a s s o c i a t e d w i th the i n d u s t r i a l r e s t r u c t u r i n g e x p e r i e n c e d in OECD c o u n t r i e s , and the second summarizes ev idence of these t rends m a n i f e s t e d i n Vancouver. 2.1 GENERAL THEORY AND TRENDS OF ECONOMIC RESTRUCTURING A r i c h a r r a y of l i t e r a t u r e has been produced to e x p l a i n the causes of pos t i n d u s t r i a l i s m . Whi le t h i s term i s ma in ly a s s o c i a t e d w i th a s h i f t i n the r a t i o of manufac tur ing employment to s e r v i c e employment, i t i s a l s o a s s o c i a t e d w i th a s h i f t in the p r o p o r t i o n of d i s p o s a b l e income spent on manufactured goods 6 compared to tha t which i s used to purchase p e r s o n a l s e r v i c e s . For example, Rostow ( i960) c o n s i d e r e d such r e s t r u c t u r i n g the n a t u r a l c u l m i n a t i o n of a s e r i e s of phases : T r a d i t i o n a l S o c i e t y , the P r e c o n d i t i o n s f o r T a k e o f f , the T a k e o f f , the D r i v e to M a t u r i t y , and the Age of H igh Mass Consumption. B e l l (1973) c o i n e d the phrase p o s t - i n d u s t r i a l to r e f e r to the l a s t s t age . He p r e d i c t e d f i v e t rends would accompany p o s t - i n d u s t r i a l i s m . F i r s t , employment would s h i f t from manufac tu r ing to s e r v i c e predominance. Second, a p r o f e s s i o n a l and t e c h n o c r a t i c c l a s s would enjoy g r e a t e r prominence in s o c i e t y . Jobs would be i n c r e a s i n g l y i d e n t i f i e d by p r o f e s s i o n i n s t e a d of employer. T h i r d , t h e o r e t i c a l knowledge - -knowledge c o d i f i e d i n t o a b s t r a c t systems of s ymbo l s - - would be r e l i e d upon to a g r e a t e r e x t e n t . F o u r t h , t e c h n o l o g i c a l p l a n n i n g would be e s s e n t i a l . Because economic growth would depend upon the input of new techno logy , c o n t r o l over i t s i n t r o d u c t i o n would h e l p reduce u n c e r t a i n t y about i f , when and how economic growth would o c c u r . (Presumably reduced u n c e r t a i n t y would maximize s o c i a l and economic e f f i c i e n c y . ) F i n a l l y , t h e r e would be new emphasis on i n t e l l e c t u a l techno logy or r a t i o n a l p r o b l e m - s o l v i n g . The methods of i n v e n t i o n and the management of complex e lements and f o r c e s would be c o n s i d e r e d t e c h n o l o g i e s in t h e i r own r i g h t . Whi le shortcomings in both Rostow's and B e l l ' s hypotheses have been i d e n t i f i e d by o t h e r s ( e . g . D a n i e l s , 1985; P e t i t , 1986; 7 F i s h l o w , 1965; and Kuznets 1961), these hypotheses d i r e c t our a t t e n t i o n to the f a c t that a comb ina t ion of economic, s o c i a l and p o l i t i c a l p roce s se s have been r e s p o n s i b l e f o r economic r e s t r u c t u r i n g . U n f o r t u n a t e l y , such t h e o r i e s are n e g l i g e n t in a n t i c i p a t i n g the i m p l i c a t i o n s of both these p r o c e s s e s and r e s t r u c t u r i n g i t s e l f . The remainder of t h i s s e c t i o n w i l l look at r e c e n t l y documented consequences of r e s t r u c t u r i n g . 2.1.1 ECONOMIC AND BUSINESS DEVELOPMENTS A number of genera l t rends have accompanied and r e i n f o r c e d the s h i f t from secondary a c t i v i t i e s towards the s e r v i c e s e c t o r . For example, much of i n c r e a s e d s e r v i c e consumption r e s u l t s from the i n c l u s i o n of more s e r v i c e s in c o n j u n c t i o n wi th goods. These s e r v i c e s i n c l u d e product w a r r a n t i e s and i n s u r a n c e ; t o l l - f r e e numbers tha t u ser s may te lephone f o r a d d i t i o n a l i n f o r m a t i o n on p r o d u c t s ; and r e s e a r c h a c t i v i t i e s a iming at product improvements. T h i s l i n k between s e r v i c e s and goods has been used to argue that s e r v i c e s are dependent upon the manufac tur ing s e c t o r (Stanback et A l , 1981. p. 7 ) . In t h i s manner, d e c l i n e s in manu fac tu r ing output and employment are assumed to be accompanied by s i m i l a r d e c l i n e s in s e r v i c e output and p a r t i c u l a r l y s e r v i c e employment. A c c o r d i n g to M a r s h a l l (1988) t h i s assumption i s weaker f o r 8 producer s e r v i c e s , p a r t i c u l a r l y f o r those f a l l i n g i n t o the 2 i n f o r m a t i o n p r o c e s s i n g c a t e g o r y . The l a t t e r have continued to experience employment expansion when jobs i n manufacturing have been i n c r e a s i n g l y r e p l a c e d by automation ( c a p i t a l s u b s t i t u t i o n ) . In h i s a n a l y s i s of s e r v i c e growth i n B r i t a i n from 1976 to 1981, M a r s h a l l notes that producer s e r v i c e s were r e s p o n s i b l e f o r 51% of t o t a l employment growth i n s e r v i c e s (p. 36). M a r s h a l l a l s o reminds us that other s e r v i c e i n d u s t r i e s are g r e a t e r end-users of producer s e r v i c e output than are manufac- t u r i n g i n d u s t r i e s . On average, 21.8% of p r i v a t e producer s e r v i c e s are used by other s e r v i c e s , whereas -18.5% of that output i s consumed by the manufacturing s e c t o r . The l i n k a g e to other s e r v i c e s i s p a r t i c u l a r l y s t r o n g f o r f i n a n c i a l and business s e r v i c e s : 11% of t h e i r output i s consumed by the manufacturing s e c t o r , while 34.6% i s consumed by other s e r v i c e s . Indeed, 50% of p o s t a l and telecommunications s e r v i c e output i s used by other s e r v i c e s ( M a r s h a l l , 1988. p. 47). Hence, while there i s a l i n k between producer s e r v i c e s and the manufacturing s e c t o r , the Producer s e r v i c e s are g e n e r a l l y not consumed by i n d i v i d u a l households but are purchased f o r use i n the p r o d u c t i o n of other goods and s e r v i c e s . They i n c l u d e such s e r v i c e s as s h i p p i n g and d i s t r i b u t i o n ; insurance; l e g a l s e r v i c e s ; marketing and a d v e r t i s i n g s e r v i c e s ; c l e r i c a l s e r v i c e s , and o t h e r s . 2 M a r s h a l l s u b d i v i d e s producer s e r v i c e s i n t o i n f o r m a t i o n p r o c e s s i n g a c t i v i t i e s ( r o u t i n i z e d as w e l l as knowledge- i n t e n s i v e ) ; p h y s i c a l or g o o d s - r e l a t e d s e r v i c e s , which have the s t r o n g e s t t i e s to manufacturing i n d u s t r i e s ; and personnel support a c t i v i t i e s , which are more l i k e l y to l o c a t e near other business a c t i v i t i e s (1988, p. 15). 9 former i s not d i r e c t l y dependent upon the l a t t e r . At the same time, society i s placing greater emphasis on the development of human c a p i t a l , demonstrated by the growth in health and education services. A d d i t i o n a l l y , modes of production are changing. The production focus has shi f t e d from the plant to the head o f f i c e . This r e s u l t s from greater competition requiring, in turn, enhanced planning and marketing e f f o r t s . In fact, t h i s , s h i f t in emphasis i s i n t r i n s i c , not only to the c e n t r a l i z a t i o n of control within firms, but to dominant c i t i e s in the global hierarchy. To some extent, then, i t implies decreased potential for policy makers to set and meet economic goals at national l e v e l s , and even less so at l o c a l l e v e l s (Stanback et a l , pp. 7-10). These trends have s p e c i f i c consequences for the economies of c i t i e s and regions. As mentioned above, these consequences w i l l vary according to which type of services one analyses. For instance, the export propensity of an economic a c t i v i t y i s generally held as an indicator of the a c t i v i t y ' s r e l a t i v e benefit to the regional economy. If the a c t i v i t y ' s output i s exportable i t i s assumed to generate a more complex set of spinoffs within 3 the economy along with increased revenues within the region. 3 . . Of course, there i s a great variety among exports in terms of their linkages to the l o c a l economy. For some, the major l o c a l linkage i s solely the household consumption sector; other a c t i v i t i e s w i l l have a more profound effect on the l o c a l economy because they require the input of l o c a l producer services (which 10 If manufacturing and processing a c t i v i t y decreases are met with increases in service a c t i v i t i e s which are exported then, at least in theory, the economic health of the region w i l l not suffer. Of course, t h i s assumes that incoming revenues w i l l be d i s t r i b u t e d in much the same manner as manufacturing export revenues, which is generally not the case. Certain services are, in fact, increasingly exported --to other regions as well as to other nations. In 1980 services accounted for one-third of t o t a l world trade (Daniels, 1985. p. 35). This development has been f a c i l i t a t e d by the growth of multinational corporations. Telecommunication improvements such as the introduction of the facsimile machine and computer mail networks have also contributed to increased service t r a d a b i l i t y . International service trade i s largely concentrated among producer services. Van Dintern (1987) has estimated that up to 19% of producer service output in medium-sized c i t i e s i s exported outside the region of o r i g i n . It was once thought that services which were traded were t i e d to the trade of goods, such as shipping, cargo insurance, and finance. However, many services are now traded independently, such as engineering, architecture, education, and environmental consulting. 2.1.2 EMPLOYMENT AND OCCUPATIONAL IMPLICATIONS in turn have the i r own sets of linkages).. 1 1 Concerns about .the d e s i r a b i l i t y of i n c r e a s i n g s e r v i c e employment have been" i d e n t i f i e d by a number of r e s e a r c h e r s . I t has been noted that employment i n c r e a s e s in the s e r v i c e s e c t o r have not o c c u r r e d as r e a d i l y as have dec rea se s in the manufac tur ing s e c t o r . T h i s i s because many jobs in both s e r v i c e s and manufac tur ing have been e l i m i n a t e d through automat ion and o ther forms of c a p i t a l s u b s t i t u t i o n . The r e s u l t i n tu rn i s s u r p l u s employment, and OECD unemployment l e v e l s have in f a c t r i s e n w i th d e - i n d u s t r i a l i z a t i o n . From 1973 to 1985 OECD unemployment rose from 11.2 m i l l i o n to 31.5 m i l l i o n , peak ing at 33 m i l l i o n in 1983 ( P e t i t , 1986. p. 2 ) . A r e l a t e d concern emerging from the s h i f t to s e r v i c e s i s the i nhe ren t l o s s of l abour power in wage n e g o t i a t i o n s . T e c h n o l o g i c a l i n n o v a t i o n s have i n c r e a s e d the a b i l i t y to s t a n d a r d i z e ta sks and d e c e n t r a l i z e them s p a t i a l l y wh i l e s t r e n g t h e n i n g c e n t r a l c o n t r o l over these a c t i v i t i e s . S t a n d a r d i z a t i o n and d e c e n t r a l i z a t i o n in t u r n i n c r e a s e the c o m p e t i t i o n both n u m e r i c a l l y and i n t e r - r e g i o n a l l y f o r jobs in s e c t o r s where those t rends have o c c u r r e d . When these t rends a re accompanied by low economic growth r a t e s , i n c r e a s e d c o m p e t i t i o n f o r jobs w i l l l e ad to h i gher unemployment and underemployment- - i n c r e a s e d p a r t - t i m e work- - c o n c u r r e n t w i th reduced b a r g a i n i n g power (see N o y e l l e , 1987). P r i m a r i l y s t a n d a r d i z a t i o n and d e c e n t r a l i z a t i o n are thought to occur w i t h i n the i n d u s t r i a l s e c t o r . However, those t rends can a l s o be seen i n c e r t a i n l o w e r - 1 2 order s e r v i c e s such as f a s t - f o o d r e s t a u r a n t s and h a i r d r e s s i n g c hains (Unvala and Donaldson, 1988. p. 464). Recently they have a l s o been seen i n business s e r v i c e s as w e l l , i n c l u d i n g p a y r o l l , banking and c l e r i c a l s e r v i c e s . P o l a r i z a t i o n of wage "and s k i l l l e v e l s i s another negative t r e n d a s s o c i a t e d with d e - i n d u s t r i a l i z a t i o n . N o y e l l e (1987) a t t r i b u t e s wage p o l a r i z a t i o n , s p e c i f i c a l l y downgrading, to the weakening of labour markets w i t h i n the f i r m . He e x p l a i n s that weakening has stemmed from three developments. F i r s t , as education l e v e l s improved, the labour f o r c e became i n c r e a s i n g l y d i f f e r e n t i a t e d . Second, the i n t r o d u c t i o n of d i s t r i b u t e d data p r o c e s s i n g technology made c e r t a i n jobs more g e n e r a l i z a b l e . They c o u l d thus be f i l l e d from a l a r g e r labour p o o l . T h i r d , i n c r e a s e d g e n e r a l i z a b i l i t y meant more o p p o r t u n i t i e s to e x t e r n a l i z e job t r a i n i n g . Such e x t e r n a l i z a t i o n weakened labour market s h e l t e r i n g p r o v i d e d by unions o r g a n i z e d on the b a s i s of i n d u s t r y - s p e c i f i c s k i l l s . Other w r i t e r s take t h i s argument f u r t h e r ; they p o i n t out that s k i l l d i s p a r i t i e s among workers w i t h i n a f i r m may be perpetuated by d i s c r i m i n a t o r y access to t r a i n i n g and u p s k i l l i n g programs p r o v i d e d by the f i r m (see f o r example, Ryan, pp. 3-20 i n W i l k i n s o n , 1980). N o y e l l e does see grounds f o r optimism, however. He i d e n t i f i e s a f o u r t h stage of labour development which e n t a i l s the p r o f e s s i o n a l i z a t i o n and p a r a - p r o f e s s i o n a l i z a t i o n of the labour 1 3 f o r c e . While he re c o g n i z e s that t h i s t r e n d i s i n i t i a l l y accompanied by wage p o l a r i z a t i o n , he reminds us that i t i s a l s o accompanied by decreases i n the p r o p o r t i o n of low s k i l l employment-. The l a t t e r i s a p o s i t i v e development because i t should mean more labour independence from the owners of c a p i t a l (1987, p. 98). N o y e l l e suggests that the most e f f e c t i v e way of reducing income gaps i s through government measures such as p r o g r e s s i v e income tax and the p r o v i s i o n of b a s i c s o c i a l w e l f a r e ; and improving access t o , and the q u a l i t y o f , e d u c a t i o n . There i s another p o s i t i v e consequence of i n c r e a s e d s e r v i c e s e c t o r growth, at l e a s t i n the producer s e r v i c e s e c t o r . Not only are producer s e r v i c e s i n c r e a s i n g l y a b l e to export output, they tend to have very l o c a l i z e d input procurement. In t h i s r e s p e c t the leakages to fi r m s o u t s i d e the reg i o n of jobs and revenue earned by such s e r v i c e s are minimized. As we s h a l l see l a t e r , t h i s tendency of l o c a l input usage has been the case f o r Vancouver as w e l l . 2.2 SERVICES AND THE VANCOUVER ECONOMY 2.2.1 PROMINENCE OF SERVICES IN THE VANCOUVER ECONOMY To understand r e s t r u c t u r i n g i n the Vancouver m e t r o p o l i t a n a r e a , i t i s necessary to a p p r e c i a t e the r e l a t i v e importance of the s e r v i c e s e c t o r to the r e g i o n a l economy. Vancouver's economy has t r a d i t i o n a l l y been l i n k e d to resource i n d u s t r i e s i n the 1 4 p r o v i n c e ' s h i n t e r l a n d . While manufacturing has never been a dominant a c t i v i t y i n Vancouver, resource p r o c e s s i n g a c t i v i t i e s have been important. Yet between 1960 and 1983 the number of producer s e r v i c e f i r m s i n Vancouver t r i p l e d (Grass, 1984 i n Ley and Hutton, 1987); and s e r v i c e s c u r r e n t l y account f o r 81.6% of Greater Vancouver companies l i s t e d i n the Greater Vancouver Business D i r e c t o r y (Hutton, June 1989). The three i n d i v i d u a l s e c t o r s with the g r e a t e s t number of firms a r e : r e t a i l trade (21.6% of a l l l i s t i n g s ) ; h e a l t h , e d u c a t i o n a l , l e g a l , s o c i a l and m i s c e l l a n e o u s s e r v i c e s (20.1%; and pers o n a l and busi n e s s s e r v i c e s (19.2%) . T h i s i s not s u r p r i s i n g given the a s s o c i a t i o n of d e c r e a s i n g f i r m s i z e with the s h i f t from secondary economic a c t i v i t i e s to s e r v i c e s ( t e r t i a r y and q u a t e r n a r y ) . Of a l l f i r m s l i s t e d i n the Greater Vancouver Business D i r e c t o r y , 92.5% employed t w e n t y - f i v e or fewer people. S i x t y - s i x percent of a l l f i r m s employed 5 or fewer people. (Vancouver Economic Database, January 1989). Were data a v a i l a b l e f o r Vancouver's C e n t r a l Business D i s t r i c t alone i t would l i k e l y demonstrate an equal or g r e a t e r percentage of small f i r m s . Nor are these s e r v i c e s as c l o s e l y l i n k e d to the B.C. resource i n d u s t r y as one might expect: markets o u t s i d e the p r o v i n c e have become more important f o r producer s e r v i c e firms than p r o v i n c i a l markets o u t s i d e m e t r o p o l i t a n Vancouver (see Ley and Hutton, p. 23). 15 The c o n t r i b u t i o n of s e r v i c e s to Vancouver's r e g i o n a l income i s a l s o i n c r e a s i n g . C o n s i s t e n t d i s a g g r e g a t e d data on the s e r v i c e s e c t o r ' s c o n t r i b u t i o n to r e g i o n a l income i s d i f f i c u l t to o b t a i n . Nonetheless, i t has been estimated that the s e r v i c e s e c t o r accounts f o r over f i f t y percent of r e g i o n a l Gross Domestic Product f o r M e t r o p o l i t a n Vancouver (Hutton, June 1989. p. 23). As with producer s e r v i c e s i n g e n e r a l , Vancouver producer s e r v i c e s are only i n d i r e c t l y dependent on manufacturing and resource i n d u s t r y s e c t o r s f o r revenues. T h i s has been demonstrated by Ley and Hutton (1987). They summarized responses to i n t e r v i e w s and a q u e s t i o n n a i r e sent i n 1984 to Vancouver producer s e r v i c e s d e f i n e d as f i n a n c e , i n s u r a n c e , r e a l e s t a t e and business s e r v i c e s i n the c i t y c o r e . On average, 67% of producer s e r v i c e f i r m s ' c l i e n t s were w i t h i n the s e r v i c e s e c t o r . By c o n t r a s t , manufacturing and resource i n d u s t r y c l i e n t s purchased only 16% of producer s e r v i c e output. Furthermore, s e r v i c e s i n Vancouver are becoming i n c r e a s i n g l y important as r e g i o n a l e x p o r t s . The Ley and Hutton study i n d i c a t e d that 29% of a l l s e r v i c e b u s i n e s s by value occurs o u t s i d e of the c i t y ; 17% of a l l b u s i n e s s o u t s i d e the p r o v i n c e , and 7% o u t s i d e the c o u n t r y . T h e i r f i n d i n g s a l s o showed that c e r t a i n types of business s e r v i c e s are more l i k e l y to export than o t h e r s . Firms with a focus on r e g i o n a l markets i n c l u d e d p r i n t i n g , a d v e r t i s i n g , a c c o u n t i n g , banking, p e r s o n a l s e r v i c e s and l e g a l s e r v i c e s . Firms more l i k e l y to export to the r e s t of 16 Canada i n c l u d e g e o l o g i c a l and e n g i n e e r i n g s e r v i c e s , management c o n s u l t i n g , s e c u r i t i e s and commodities, r e a l e s t a t e and m i s c e l l a n e o u s s e r v i c e s . Of the l a t t e r group of f i r m s , o n l y management c o n s u l t i n g and m i s c e l l a n e o u s s e r v i c e s l a c k e d a g r e a t e r p r o p e n s i t y to export to i n t e r n a t i o n a l (as w e l l as e x t r a - r e g i o n a l ) markets (see Ley and Hutton, p. 21). A s e c t o r - s p e c i f i c study conducted by the A s i a P a c i f i c Foundation (1988) a l s o confirms the export o r i e n t a t i o n f o r producer s e r v i c e s , p a r t i c u l a r l y those which we would c o n s i d e r knowledge i n t e n s i v e . The APF looked at exports of B.C.'s environmental i n d u s t r y , d e f i n e d as: c o n s u l t i n g e n g i n e e r s , c o n s u l t i n g f o r e s t e r s , manufacturers and d i s t r i b u t o r s , r e c y c l i n g companies, and other environmental c o n s u l t a n t s (see f o l l o w i n g c h a r t ) . In 1987 59% of the s e c t o r ' s t o t a l s a l e s or $ 67.6 m i l l i o n were e x p o r t s . T h i r t y - s e v e n percent of those exports went to the P a c i f i c Rim and 46% to the U n i t e d S t a t e s . While environmental products were r e s p o n s i b l e f o r j u s t under 26% of t o t a l s a l e s , the m a j o r i t y of environmental s a l e s were by f i r m s more c l e a r l y d e f i n a b l e as s e r v i c e i n d u s t r i e s . 1 7 % OF TOTAL 1987 CHANGE FROM RESPONDENT GROUPS: INDUSTRY SALES SALES 1986 ( '000) C o n s u l t i n g Eng inee r s 23% 26,480 35% C o n s u l t i n g F o r e s t e r s 8% 8,389 11% Other Env i ronmenta l C o n s u l t a n t s 14% 16,455 8% Manu fac tu re r s and D i s t r i b u t o r s 26% 29,621 1 4% R e c y c l i n g Companies 29% 33,483 22% TOTAL: 1 00% 114,428 1 9% Source : A s i a P a c i f i c F o u n d a t i o n , 1988. 2.2.2 VANCOUVER SERVICE EMPLOYMENT The importance of s e r v i c e s to V a n c o u v e r ' s economy in employment terms can be d i s c e r n e d through employment f i g u r e s , both in terms of s e r v i c e o c c u p a t i o n s ( t e r t i a r y and qua te rnary a c t i v i t i e s , which may or may not be conducted w i t h i n s e r v i c e f i rms ) and s e r v i c e i n d u s t r i e s (which employ peop le working in s e r v i c e and, sometimes, n o n - s e r v i c e o c c u p a t i o n s ) . O c c u p a t i o n a l groups have been aggregated i n t o th ree c a t e g o r i e s : * S e r v i c e s ( p u b l i c , consumer, producer and d i s t r i b u t i v e ) * Non S e r v i c e s (manufac tu r ing , e x t r a c t i v e , c o n s t r u c t i o n ) * Others 18 Of a t o t a l work force of 757,525 persons in the Vancouver Census M e t r o p o l i t a n Area (CMA) in 1986, 587,200 or 77.4% had s e r v i c e o c c u p a t i o n s . E i gh teen percent (137,485) had n o n - s e r v i c e o c c u p a t i o n s , and 32,820 had o ther or uns ta ted o c c u p a t i o n s ( S t a t i s t i c s Canada, 1986, adopted and r e v i s e d January 1989, Vancouver Economic Database ) . Us ing the same agg rega t ion f o r i n d u s t r y groups, the p i c t u r e remains b a s i c a l l y the same. Of a t o t a l 687,600 a c t u a l l y employed in Vancouver CMA in 1988: * 548,000 were employed in s e r v i c e i n d u s t r i e s * 118,000 employed in non s e r v i c e i n d u s t r i e s * 21,600 employed in u n c l a s s i f i e d / u n d i s t r i b u t e d i n d u s t r i e s (Household surveys D i v i s i o n , S t a t i s t i c s Canada, February 1989. in Vancouver Economic Database, C i t y of Vancouver , September 1990). Fu r the rmore , employment in n o n - s e r v i c e i n d u s t r i e s has been d e c r e a s i n g s i n c e 1981. Between 1981 and 1986, the t h r e e i n d u s t r i e s e x p e r i e n c i n g employment dec rea se s in the Vancouver CMA were: f o r e s t r y ( e x p e r i e n c i n g a 6.8% d e c r e a s e ) ; min ing ( d e c r e a s i n g by 12.2%); and manufac tur ing (a 5.5% decrease ) (1981 and 1986 Census of Canada) . 19 2.3 CHAPTER SUMMARY The p roce s s of economic r e s t r u c t u r i n g in Vancouver i s not as advanced as o ther l a r g e r Nor th American c i t i e s such as T o r o n t o , M o n t r e a l , and New York . Indeed, the r e l a t i v e l a ck of heavy i n d u s t r y to beg in w i th i n the G r e a t e r Vancouver r eg i on means that some of the m a n i f e s t a t i o n s of post i n d u s t r i a l i s m w i l l d i f f e r from those in the above c i t i e s . On the whole, however, there i s ev idence of many post i n d u s t r i a l c h a r a c t e r i s t i c s in the Vancouver economy. T h i s p r e s e n t s a c l e a r case f o r the development of an economic p o l i c y which maximizes the b e n e f i c i a l a spec t s of s e r v i c e s e c t o r dominance in the r e g i o n a l economy. Such a s t r a t e g y would focus upon producer s e r v i c e s f o r s e v e r a l rea sons . Producer s e r v i c e s have a more b e n e f i c i a l impact on the l o c a l economy than tour i sm and household consumption s e r v i c e s , which tend to pay lower wages and have fewer s p i n o f f s w i t h i n the economy. The l i t e r a t u r e s t a t e s tha t producer s e r v i c e s , p a r t i c u l a r l y b u s i n e s s s e r v i c e s , a re l e s s dependent upon the manufac tur ing and re sou rce i n d u s t r i e s than are o ther s e r v i c e s . The f o o t l o o s e nature of many producer s e r v i c e s , and d e c r e a s i n g r e l i a n c e upon face to face c o n t a c t f o r a l l p roducer s e r v i c e s , means tha t such s e r v i c e s a re i n c r e a s i n g l y l e s s dependent on l o c a l p r imary and s e r v i c e i n d u s t r i e s . C o n c u r r e n t l y the expor t p r o p e n s i t y of producer s e r v i c e s i s i n c r e a s i n g ; t h i s i n t u r n has p o s i t i v e i m p l i c a t i o n s f o r l o c a l revenues and economic 20 development. Moreover, producer s e r v i c e s tend to r e l y upon l o c a l s e r v i c e inputs i n t h e i r s e r v i c e p r o d u c t i o n , thereby d e c r e a s i n g revenue and job leakages out of the r e g i o n . F i n a l l y , producer s e r v i c e s are expected to p r o v i d e i n c r e a s i n g o p p o r t u n i t i e s f o r p r o f e s s i o n a l , p a r a - p r o f e s s i o n a l and other s k i l l e d employment, which w i l l u l t i m a t e l y e n t a i l b e t t e r wages and i n c r e a s e d job s a t i s f a c t i o n f o r the l o c a l l a b o u r f o r c e . I t f o l l o w s that a number of p l a n n i n g c o n s i d e r a t i o n s a r i s e with a producer s e r v i c e focussed economic development s t r a t e g y . On a pragmatic note, trade i n s e r v i c e s i n v o l v e s c e r t a i n l o g i s t i c a l and c l a s s i f i c a t i o n i s s u e s . I t i s not w i t h i n the scope of t h i s t h e s i s to f i n d s o l u t i o n s to these q u e s t i o n s ; n o netheless, i t i s important to be aware that they e x i s t . For example, measurement can be p r o b l e m a t i c . How can we be c e r t a i n of the r e l a t i v e s i g n i f i c a n c e of s e r v i c e trade and how do we i d e n t i f y dominant s e c t o r s ? There i s great v a r i e t y i n the c l a s s i f i c a t i o n schemes under which natio n s i n c l u d e s e r v i c e s , with the r e s u l t that comparisons are d i f f i c u l t to make. S i m i l a r l y , i t i s d i f f i c u l t to d e f i n e f o r c l a s s i f i c a t i o n and p o l i c y purposes which s e r v i c e s are a c t u a l l y t r a d e a b l e . For example, a number of s e r v i c e s are assumed untradeable, i n c l u d i n g government s e r v i c e s and p e r s o n a l s e r v i c e s r e q u i r i n g p h y s i c a l i n t e r a c t i o n between c l i e n t and vendor. Yet some of these s e r v i c e s can i n f a c t be traded at a l e v e l supplementary to that 21 p r o v i d e d by the .public s e c t o r . An example i s the telecommunications s'ector (see Richardson, 1987. p. 63) or c e r t a i n m u n i c i p a l s e r v i c e s , where s u r p l u s e s are s o l d to other r e g i o n s (and even n a t i o n s ) . T h i r d , imperfect consumer knowledge pr e s e n t s d i f f i c u l t i e s . S i m i l a r s e r v i c e s o f f e r e d by two d i f f e r e n t companies are d i f f i c u l t to compare. Consumer c h o i c e s w i l l o f t e n be based upon i n t a n g i b l e , u n q u a n t i f i a b l e and p e r c e p t u a l f a c t o r s . Thus true c o m p e t i t i o n i n the s e r v i c e s e c t o r i s i m p o s s i b l e , even i f p e r f e c t c o m p e t i t i o n per se were f e a s i b l e (Richardson, pp. 62- 63). Fourth, how does trade i n s e r v i c e s a f f e c t r e c i p i e n t s ? Does i t perpetuate g l o b a l i n e q u a l i t i e s by p r e v e n t i n g r e c i p i e n t s from d e v e l o p i n g t h e i r own e x p e r t i s e i n traded s e r v i c e s ? More i m p o r t a n t l y , are s e r v i c e s developed i n OECD c o u n t r i e s a p p r o p r i a t e f o r poorer c o u n t r i e s ? L o c a l p l a n n i n g concerns are a l s o numerous. These w i l l be addressed more s p e c i f i c a l l y i n the form of recommendations i n Chapter Four. Nonetheless, they merit p o i n t i n g out here as w e l l . Renewed c e n t r a l i z a t i o n of some economic a c t i v i t y has been accompanied by the d e c e n t r a l i z a t i o n of the more l a n d - i n t e n s i v e f u n c t i o n s . T h i s development b r i n g s more people to the c i t y core on the one hand, while i n c r e a s i n g the complexity of commuting p a t t e r n s on the o t h e r . As a r e s u l t , t r a f f i c c o n g e s t i o n and problems of t r a n s p o r t a t i o n access i n t e n s i f y . A d d i t i o n a l l y , the r o l e of technology and knowledge i n 22 producer s e r v i c e p r o v i s i o n e n t a i l s a broadening of our d e f i n i t i o n of i n f r a s t r u c t u r e p l a n n i n g . Planners need to take i n t o account needs f o r high speed data t r a n s m i s s i o n networks, as w e l l as f o r "smart" o f f i c e b u i l d i n g s : U n d e r f l o o r d u c t i n g i s now e s s e n t i a l i n the modern o f f i c e b u i l d i n g because i t all o w s tenants maximum f l e x i b i l i t y when p l a n n i n g the l o c a t i o n and expansion of t h e i r equipment needs. But only the newest o f f i c e b u i l d i n g have these s e r v i c e s b u i l t i n , the remainder are faced with a d a p t a t i o n requirements which, e s p e c i a l l y i n o f f i c e b u i l d i n g s c o n s t r u c t e d between 1960 and 1980, i s d i f f i c u l t because f l o o r - t o - c e i l i n g h e i g h t s do not permit the former to be r a i s e d to accommodate d u c t i n g . . , . [ T ] h i s f a c t o r alone i s c a u s i n g o f f i c e f i r m s to look c l o s e l y at a l t e r n a t i v e s both w i t h i n and o u t s i d e the m e t r o p o l i t a n areas ( D a n i e l s , 1987. p. 286). Moreover, the importance of i n f o r m a t i o n i n p u t s to the l o c a l economy must be r e c o g n i z e d . Information i s as c r u c i a l to the pr o d u c t i o n of s e r v i c e s as p h y s i c a l inputs are to the goods manufacturing pr o c e s s . As with manufacturing, s e r v i c e access to i n f o r m a t i o n resources w i l l p l a y a l a r g e r o l e i n determining the comparative advantage of a f i r m or re g i o n ( D a n i e l s , 1985 and 1990). L o c a l economic development p r o f e s s i o n a l s must be cogn i z a n t of the importance of s t r a t e g i c i n f o r m a t i o n i n s u s t a i n i n g and enhancing r e g i o n a l income. S i m i l a r l y , telecommunications and t r a n s p o r t a t i o n advantages have changed the way we d e f i n e access to both markets and s u p p l i e r s , p a r t i c u l a r l y f o r s e r v i c e i n d u s t r i e s . For example, 23 e n g i n e e r i n g and a r c h i t e c t u r e f i rms are r e l y i n g i n c r e a s i n g l y on f a c s i m i l e machines to t r a n s m i t p o r t i o n s of drawings to c l i e n t s , agent s , or employees l o c a t e d at a c o n s i d e r a b l e d i s t a n c e . Market ing c o n s u l t a n t s are now ab le to tap i n t o g l o b a l i n f o r m a t i o n databases u s i n g t h e i r p e r s o n a l computers and a good te lecommun ica t i ons network. As a r e s u l t , i t becomes p o s s i b l e fo r c i t i e s to d e v e l o p t h e i r own s e r v i c e s p e c i a l i z a t i o n s . F i n a l l y , p o l i c y makers must be aware that economic r e s t r u c t u r i n g a f f e c t s the v a r i o u s s e c t o r s of the p o p u l a t i o n d i f f e r e n t l y . Un le s s such r e c o g n i t i o n i s made, any economic p o l i c y promot ing s e r v i c e s e c t o r growth w i l l e x a c e r b a t e , r a t h e r than m i t i g a t e , the u n d e s i r a b l e t rends p o i n t e d out e a r l i e r in t h i s c h a p t e r . In c o n t r a s t , the optimum p l a n n i n g framework r e c o g n i z e s the need f o r measures which d i r e c t l y address the needs of l o c a l r e s i d e n t s . Robinson (1989) terms t h i s framework an A l t e r n a t i v e Economic Development P o l i c y Approach. (She l a b e l s i t s a n t i t h e s i s the Co rpo ra te Cen t re Approach. ) A l though [ the a l t e r n a t i v e approach] tends to s t r e s s r e a l e s t a t e development, i t ba l ances tha t emphasis w i th a d d i t i o n a l emphases on human re sources development and o ther l abour supp ly and d i s t r i b u t i o n a l c o n s i d e r a t i o n s de s i gned to ensure tha t l o c a l r e s i d e n t s ( e s p e c i a l l y e c o n o m i c a l l y d i s advan taged r e s i d e n t s ) b e n e f i t from economic development a c t i v i t i e s . It i s important f o r c i t y governments to r e c o g n i z e l o c a l needs when promot ing c e r t a i n economic a c t i v i t i e s , and to 24 i n c o r p o r a t e more e lements from the a l t e r n a t i v e approach to economic development. T h i s has been done by a P i t t s b u r g h community group tha t i n v o l v e d i t s e l f i n a h i gh techno logy redevelopment p r o j e c t (Weiss and Metzger , 1987). .The Oakland P l ann ing and Development C o r p o r a t i o n of P i t t s b u r g h had become concerned about i t s e x c l u s i o n from the p r o j e c t , and responded by commiss ion ing i t s own techno logy impact assessment. The r e s u l t i n g s tudy p o i n t e d out tha t most of the jobs c r e a t e d by the p r o j e c t would not be a c c e s s i b l e to the l o c a l b l u e - c o l l a r work fo r ce . A s t r a t e g y was t h e r e f o r e deve loped to m i t i g a t e p o t e n t i a l l y harmfu l e f f e c t s of the redevelopment p r o j e c t . Thus advanced s e r v i c e growth need not be harmfu l to l o c a l r e s i d e n t s p r o v i d e d that the l a t t e r have an input i n t o the p l a n n i n g t h e r e o f . T h i s i s not to advocate cons tan t y i e l d i n g to NIMBY groups ; r a t h e r , the l a t t e r example demonstrates how forward t h i n k i n g economic s t r a t e g i e s can be implemented to the b e n e f i t of a l l . I t i s up to c i t i e s to i n s u r e the presence of mechanisms which a l l o w fo r both a g l o b a l and n e i g h b o u r h o o d - s p e c i f i c under s t and ing of the economic and s o c i a l impacts of h i gh techno logy and o ther s e r v i c e s . 25 3.0 STUDY OF KIS FIRMS' PACIFIC RIM EXPORT PROPENSITIES AND CHARACTERISTICS A two p a r t study of Vancouver's knowledge-intensive s e r v i c e f i r m s was conducted to determine the f o l l o w i n g : Asian export p r o p e n s i t y ; f i r m experience; and the type of a s s i s t a n c e p e r c e i v e d most u s e f u l . The study was conducted by the author i n c o n j u n c t i o n with the C i t y of Vancouver Economic Development O f f i c e and the U n i v e r s i t y of B r i t i s h Columbia School of Community and Regional P l a n n i n g . The purpose of t h i s chapter i s t w o f o l d . F i r s t , i t i s intended to prove the f e a s i b i l i t y of a l o c a l economic development s t r a t e g y promoting the export of s e r v i c e s to the P a c i f i c Rim. Second, the chapter w i l l document the presence, c h a r a c t e r i s t i c s and p o t e n t i a l of Vancouver KIS f i r m s e x p o r t i n g to A s i a as a means of info r m i n g p o l i c y makers of economic p o s s i b i l i t i e s . The term knowledge i n t e n s i v e s e r v i c e r e f e r s l a r g e l y to producer s e r v i c e s p r o v i d i n g a s e r v i c e with a s i g n i f i c a n t r e s e a r c h input or r e q u i r i n g a developed knowledge base. In a d d i t i o n to high technology a c t i v i t i e s , such as e n g i n e e r i n g , t h i s a l s o i n c l u d e s s e r v i c e s l i k e a c c o u n t i n g . Accounting output i s somewhat s t a n d a r d i z e d , but r e q u i r e s nonetheless a h i g h l y developed understanding of p r o f e s s i o n a l p r a c t i c e and c u r r e n t l e g i s l a t i o n i n order to be executed. The term knowledge i n t e n s i v e s e r v i c e as used i n t h i s t h e s i s 26 a l s o i n c l u d e s some a c t i v i t i e s norma l l y c l a s s i f i e d as manu fac tu r i ng . Due "to t e c h n o l o g i c a l advances and o ther changes, i t i s becoming i n c r e a s i n g l y d i f f i c u l t to d i f f e r e n t i a t e between manufac tur ing and s e r v i c e e n t e r p r i s e s . Manu fac tu r i ng f i rms i n c l u d e d in the KIS d e s i g n a t i o n share many common c h a r a c t e r i s t i c s w i th the more s t r i c t l y d e f i n e d knowledge i n t e n s i v e s e r v i c e f i r m s . The former i n c l u d e p roducer s of te lecommun ica t i ons and b r o a d c a s t i n g equipment, computer s o f twa re , and p r o c e s s c o n t r o l equipment. The shared c h a r a c t e r i s t i c s a re as f o l l o w s . Both types of f i r m r e q u i r e knowledge i n p u t s , and thus have backwards l i n k a g e s to o ther k n o w l e d g e - r e l a t e d s e r v i c e s . Employment in these f i rms i s dominated by s e r v i c e o c c u p a t i o n s ( e n g i n e e r s , d r a f t s p e r s o n s , r e s e a r c h e r s , computer programmers, e l e c t r i c i a n s ) . The p r o d u c t i o n proces s i t s e l f i s compr i sed of many knowledge i n t e n s i v e a c t i v i t i e s to the ex ten t tha t the v a l u e of manufactured (and of course s e r v i c e ) output i s l a r g e l y dependent upon i t s knowledge component. Computer so f tware i s an obv ious example of t h i s k ind of manufactured output - - t h e d i s k s t h a t are s o l d to consumers and producers a l i k e a re t a n g i b l e goods but e n t i r e l y u s e l e s s wi thout t h e i r s e r v i c e component (the program) . Another important s i m i l a r i t y i s the h i gh degree of user c u s t o m i z a t i o n i n v o l v e d in knowledge i n t e n s i v e p r o d u c t i o n . Process c o n t r o l i n s t r u m e n t a t i o n , l i k e computer so f tware , i s a 27 t a n g i b l e good. I t i s u s e f u l to the enduser when i t has been i n c o r p o r a t e d i n t o a complete system, or s u b s e c t i o n t h e r e o f . The i n c o r p o r a t i o n of the good i n t o a system i s c l e a r l y a s e r v i c e a c t i v i t y . Yet even more important, t h i s i n c o r p o r a t i o n r e q u i r e s p r i o r understanding on the c r e a t o r ' s p a r t of the enduser's needs and p r o s p e c t i v e output a p p l i c a t i o n s . In essence, t h i s understanding, and consequent i n c o r p o r a t i o n , must be c l i e n t - s p e c i f i c . F i n a l l y , whether output i s t a n g i b l e or i n t a n g i b l e , endusers f o r KIS output are themselves predomininantly producers. They i n t u r n i n c o r p o r a t e the output i n the p r o d u c t i o n of t h e i r own goods and s e r v i c e s . The u n d e r l y i n g assumption i s that r e l e v a n t KIS firms w i l l f a l l i n t o four c a t e g o r i e s : * Current e x p o r t e r s who are r e l a t i v e l y e s t a b l i s h e d i n one or more As i a n markets, * Recent e x p o r t e r s to the r e g i o n , or fi r m s who have had some exposure to the P a c i f i c Rim but have not developed a s u s t a i n e d marketing program f o r the r e g i o n . * Non-exporters who c o u l d become As i a n e x p o r t e r s with some a s s i s t a n c e , * Non-exporters c l e a r l y i n a p p r o p r i a t e f o r the Asian market. I t i s my c o n t e n t i o n that p o l i c i e s c o u l d be e v e n t u a l l y developed f o r the second and t h i r d groups based upon the experiences and 28 e x p e r t i s e of f i rms in the f i r s t g roup. 3.1 STUDY RATIONALE AND ASSUMPTIONS KIS f i r m s were i d e n t i f i e d s p e c i f i c a l l y as a s u b j e c t of study f o r s e v e r a l rea sons . F i r s t , they were assumed to be more l i k e l y to r e q u i r e expo r t s to a ch ieve economies of s c a l e . Because k n o w l e g e - i n t e n s i v e s e r v i c e s a re h i g h l y s p e c i a l i z e d , i t i s o f t e n u n l i k e l y tha t such f i rms can be s u s t a i n e d by l o c a l market demand a l o n e . Second, i t was assumed tha t KIS f i rms would be more l i k e l y to take advantage of te lecommunica t ions techno logy in s e r v i c e p r o d u c t i o n (and p o s s i b l y s e r v i c e e x p o r t s ) . Whereas t r a d i t i o n a l s e r v i c e p r o v i s i o n i n v o l v e s f a c e - t o - f a c e i n t e r a c t i o n between c l i e n t and p roduce r , k n o w l e d g e - i n t e n s i v e s e r v i c e s i n v o l v e the p r o c e s s i n g and t r a n s m i s s i o n of i n f o r m a t i o n . They are consequent l y ab le to s u b s t i t u t e some forms of p e r s o n a l c o n t a c t w i th t e c h n o l o g i e s of e l e c t r o n i c m a i l , t e l e f a c s i m i l e t r a n s m i s s i o n , and v ideo c o n f e r e n c i n g . The d i m i n i s h e d need f o r f a c e - t o - f a c e c o n t a c t i n c r e a s e s s e r v i c e e x p o r t a b i l i t y . T h i r d , i t was assumed tha t the a c t i v i t i e s of t h i s group of s e r v i c e f i r m s would have a more b e n e f i c i a l impact on the l o c a l economy than would l e s s k n o w l e d g e - i n t e n s i v e s e r v i c e s . Employment w i t h i n KIS f i r m s i s more d i f f e r e n t i a t e d and hence l i k e l y to i n c l u d e c e r t a i n p a r a p r o f e s s i o n a l o c c u p a t i o n s a l o n g s i d e 29 p r o f e s s i o n a l occupations (see N o y e l l e , p. 98). Backwards l i n k a g e s with other firms i n the r e g i o n are a l s o assumed to be e x t e n s i v e . The Ley and Hutton study demonstrated that Vancouver producer s e r v i c e firms were very l i k e l y to use l o c a l i n p u t s . E i g h t y percent of firms surveyed o b t a i n e d a s i g n i f i c a n t p o r t i o n of inputs from other firms w i t h i n Vancouver. T h i r t y - s i x percent o b t a i n e d inputs from other l o c a t i o n s i n the m e t r o p o l i t a n area (1987, p. 18). Among the s e r v i c e s c o n t r a c t e d out l o c a l l y by Vancouver producer s e r v i c e firms were: * L e g a l s e r v i c e s - 38% of firms i n t e r v i e w e d * Accounting - 16% of firms i n t e r v i e w e d * Marketing and s a l e s promotion - 12% of firms i n t e r v i e w e d * Data p r o c e s s i n g - 12% of firms i n t e r v i e w e d * M i s c e l l a n e o u s s e r v i c e s - 14% of fi r m s i n t e r v i e w e d Fourth, D a n i e l s (1990) and Ley and Hutton (1987) demonstrated a hig h export p r o p e n s i t y f o r these f i r m s . 3.2 METHODOLOGY The f i r s t p a r t of the study e n t a i l e d a p o s t a l q u e s t i o n n a i r e modeled a f t e r that used i n the Ley and Hutton study. I t a l s o i n c l u d e d s p e c i f i c q u e s t i o n s on: broad export d e s t i n a t i o n s and r e l a t i v e weighting of markets; areas of p o t e n t i a l export expansion; A s i a n marketing approach used; and p e r c e p t i o n s of a p p r o p r i a t e p o l i c i e s f o r encouraging e x p o r t i n g to A s i a (see Appendix A). 30 The q u e s t i o n n a i r e sample was broken down by Standard I n d u s t r i a l C l a s s i f i c a t i o n code ( r e f e r below to c h a r t 2 ) . I t shou ld be noted tha t the Standard I n d u s t r i a l C l a s s i f i c a t i o n system ( h e n c e f o r t h a b b r e v i a t e d as S . I .C. ) i s l e s s than s a t i s f a c t o r y . I t does not a l l ow f o r nuances or o v e r l a p s in the c l a s s i f i c a t i o n of economic a c t i v i t i e s . Consequent ly c l a s s i f i c a t i o n i s at bes t a r b i t r a r y and, at wors t , m i s l e a d i n g . (For example, the c a t e g o r y of te lecommunica t ions i n d u s t r y equipment can i n c l u d e manufac tu rer s of t e l e p h o n e s , but i t can a l s o i n c l u d e f i rms s p e c i a l i z i n g in the development of b r o a d c a s t i n g systems f o r p r i v a t e companies — a n a c t i v i t y which e n t a i l s both p h y s i c a l g o o d s . p r o d u c t i o n and c o n s u l t a t i o n w i th the enduser to determine a p p r o p r i a t e system c o n f i g u r a t i o n . ) The reader i s r e a s s u r e d tha t d u r i n g the m a i l i n g p roces s ca re was taken to a v o i d send ing q u e s t i o n n a i r e s to f i rms who c l e a r l y l a cked any k n o w l e d g e - i n t e n s i v e f u n c t i o n . CHART 2: CODE DESCRIPTION NUMBER OF RESPONSES "3TBT 3352 Te lecommunica t ions equipment Semiconductor s , p roces s c o n t r o l , o ther e l e c t r o n i c equipment Computer s e r v i c e s A d v e r t i s i n g E n g i n e e r i n g and r e l a t e d a c t i v i t i e s ( i n c l u d e s env i r onmenta l c o n s u l t a n t s , p l a n n i n g c o n s u l t a n t s , a r c h i t e c t s , and g e o l o g i c a l su rveyor s ) Labo ra to ry a n a l y s i s and r e s e a r c h (other than market ing ) Management c o n s u l t i n g f i rms 1 6 7721 774 7752 14 8 50 1 55 7759 7771 TOTAL: 5 38 286 31 The main source .of sample f i r m s was the Greater Vancouver Business D i r e c t o r y p u b l i s h e d by Contacts Target Marketing. S i g n i f i c a n t time and budget c o n s t r a i n t s rendered a 100% sample i n f e a s i b l e . Furthermore, the d e s i r a b i l i t y of doing so v a r i e d from s e c t o r to s e c t o r . I t was consequently d e c i d e d that a 100% sample would be used f o r s e c t o r s where numbers p e r m i t t e d . For other s e c t o r s , notably management c o n s u l t a n t s (over 1,000 were l i s t e d i n the business d i r e c t o r y ) , the yellow pages were used as a secondary source to f i l t e r out f i r m s that c o u l d only l o o s e l y be l a b e l l e d marketing c o n s u l t a n t s . Most of the marketing f i r m s that were omitted were s u p p l i e r s of m a i l i n g l i s t s f o r d i r e c t - m a r k e t i n g f i r m s . Twelve hundred q u e s t i o n n a i r e s were sent to e n g i n e e r i n g , environmental c o n s u l t i n g , management c o n s u l t i n g and p u b l i c r e l a t i o n s , a d v e r t i s i n g , telecommunications and e l e c t r o n i c s f i r m s . Two hundred and e i g h t y - n i n e q u e s t i o n n a i r e s were returned; however, three respondants were e l i m i n a t e d from the group as t h e i r f i r m s were not a p p r o p r i a t e to the study (one, f o r example, was a k i t c h e n counter m a n u f a c t u r e r ) . The q u e s t i o n n a i r e s were l a r g e l y intended to g i v e an i n d i c a t i o n of the number of producer s e r v i c e f i r m s c u r r e n t l y e x p o r t i n g to A s i a or hoping to do so i n the near f u t u r e . They were a l s o intended to give us an idea of how A s i a n e x p o r t e r s p e r c e i v e d p o l i c y a s s i s t a n c e e f f e c t i v e n e s s f o r P a c i f i c Rim export promotion. 32 The second p a r t of the survey c o n s i s t e d of a s e r i e s of i n t e r v i e w s w i th s e n i o r o f f i c e r s from companies that a re known e x p o r t e r s to A s i a . I n te rv iews were f o r t y - f i v e minutes to one hour in l e n g t h . A s t andard set of q u e s t i o n s was used; however, s u b j e c t s were g i ven some f l e x i b i l i t y and encouraged to b r i n g up i s s ue s they c o n s i d e r e d r e l e v a n t . Ques t i ons from the p o s t a l q u e s t i o n n a i r e were used as a s t a r t i n g p o i n t . A l s o i n c l u d e d were q u e s t i o n s on the f o l l o w i n g : * Sources of A s i a n market ing i n f o r m a t i o n * Company market n i che * L o c a t i o n a l a t t r i b u t e s * M o t i v a t i o n f o r A s i an market ing e f f o r t * I n t r a - f i r m d e c i s i o n - m a k i n g * R e l a t i v e importance of te lecommun ica t ions and f a c e - t o - f a c e c o n t a c t * I n t e r - f i r m s e r v i c e l i n k a g e s and p e r c e p t i o n of Vancouver as a base f o r a c c e s s i n g A s i an P a c i f i c markets . The i n t e r v i e w sample was segmented and chosen on a non-random b a s i s , as d e s i r e d i n f o r m a t i o n c o u l d on ly be o b t a i n e d from those w i th s t r o n g e x p e r i e n c e i n A s i an markets . In many i n s t a n c e s the names of p r o s p e c t i v e s u b j e c t s and f i r m s were wel l -known in the bu s i ne s s community. Others were chosen from q u e s t i o n n a i r e respondents to meet the s t u d y ' s need f o r a broad r e p r e s e n t a t i o n of p roducer s e r v i c e s . One food p r o c e s s i n g f i r m w i th a s t rong A s i a n market was a l s o chosen. The s e c t o r s and numbers of f i rms a re l i s t e d in Appendix C. 33 3.3 EVIDENCE OF VANCOUVER KIS FIRMS' PACIFIC RIM PRESENCE 3.3.1 EXPORT PROPENSITIES - CURRENT AND POTENTIAL Asi a n and general export p r o p e n s i t i e s were determined from p o s t a l responses to q u e s t i o n s r e g a r d i n g d e s t i n a t i o n s of c u r r e n t s a l e s . R e s u l t s confirmed a hi g h g e n e r a l export p r o p e n s i t y among Greater Vancouver KIS f i r m s . Ninety percent of the 274 f i r m s who completed the export q u e s t i o n exported at l e a s t f i v e percent of t o t a l s a l e s o u t s i d e the Lower Mainland. Over f i f t y percent (n=138) exported f i v e percent or more of t h e i r s e r v i c e s to i n t e r n a t i o n a l d e s t i n a t i o n s . The most important i n t e r n a t i o n a l market f o r KIS firms was the U n i t e d S t a t e s , f o l l o w e d by the P a c i f i c Rim. One hundred and twenty-two f i r m s or 45% of the 274 were c u r r e n t l y e x p o r t i n g at l e a s t 1% of s a l e s to the U.S., while seventy-four firms or 25.8% were c u r r e n t P a c i f i c Rim e x p o r t e r s . By c o n t r a s t , only 8% exported to Europe and 14% to other d e s t i n a t i o n s . T h i s c o n f i r m s the r e s u l t s of e a r l i e r s t u d i e s of producer s e r v i c e export p r o p e n s i t i e s . In 1984 29% of a l l Vancouver s e r v i c e f i r m s a l e s were o u t s i d e of Vancouver, and seven percent of t o t a l s a l e s were to i n t e r n a t i o n a l markets. (Ley and Hutton, 1987. p. 19; see a l s o Davis and Hutton, 1991 pp. 10-12). I t a l s o i l l u s t r a t e s t h a t the P a c i f i c Rim i s an important a l t e r n a t i v e market d e s t i n a t i o n to the U n i t e d S t a t e s . The P a c i f i c Rim's importance as a marketing d e s t i n a t i o n was r e i n f o r c e d by a comparison of (average) s a l e s breakdowns f o r each 34 s e c t o r . While p r o p o r t i o n s given were not percentages of the same s a l e s f i g u r e f o r each f i r m , they p r o v i d e d at l e a s t some i n d i c a t i o n of the importance of markets as compared with one another. As expected, the P a c i f i c Rim was a f a r more important s a l e s d e s t i n a t i o n than Europe: CHART 3: CODE: # OF COs* AVG U.S. % OF AVG SALES PAC % OF AVG % RIM SALES EUROPE OF SALES 3351 14 8.4% 10.8% 2 . 6% 3352 10 22 . 5% 0.2% 0.5% 774 48 4.0% 1.0% 0.3% 7721 8 10.5% 4 . 3% 0.8% 7752 148 19.0% 15.0% 5.0% 7771 35 5.6% 3.6% 0.8% 7759 5 6.2% 18.0% 0.0% SOURCE: Postal Survey of Vancouver's Knowledge-Intensive Service Firms. * Not a l l firms responded to t h i s question. While c u r r e n t s a l e s conveyed something about the number of cu r r e n t e x p o r t e r s to A s i a , i t shed l i t t l e l i g h t on p o t e n t i a l P a c i f i c Rim e x p o r t e r s . Consequently two s p e c i f i c q u e s t i o n s were r e q u i r e d to understand b e t t e r which f i r m s were c o n s i d e r i n g , or c o u l d c o n s i d e r , e n t e r i n g A s i a n markets. We asked f i r m s to i n d i c a t e i f and where they had exported to A s i a i n the pa s t , and to s p e c i f y were they expected f u t u r e s a l e s growth. Responses to the Asi a n export h i s t o r y q u e s t i o n showed a higher number of fi r m s to have s o l d p r e v i o u s l y to the P a c i f i c Rim 35 than at p r e s e n t . A l t o g e t h e r 117 f i r m s or 41% of a l l respondants had P a c i f i c Rim experience ( c u r r e n t or p r e v i o u s ) , as compared with the e a r l i e r c i t e d f i g u r e of 74 c u r r e n t e x p o r t e r s . (Note that 6 c u r r e n t e x p o r t e r s f a i l e d to answer the A s i a s a l e s h i s t o r y q u e s t i o n ) . A few of the f i r m s no longer s e l l i n g s e r v i c e s to the P a c i f i c Rim may have ceased a c t i v i t i e s i n the r e g i o n because i t was an i n a p p r o p r i a t e d e s t i n a t i o n f o r them. However, many en g i n e e r i n g firms with p r e v i o u s e x p e r i e n c e may have strong i n t e n t i o n s of resuming P a c i f i c Rim e x p o r t s . E n g i n e e r i n g f i r m s work on a p r o j e c t b a s i s . Because the q u e s t i o n s p e c i f i c a l l y asked f o r a c u r r e n t s a l e s breakdown, some f i r m s with an e s t a b l i s h e d presence i n A s i a c o u l d have l i s t e d c u r r e n t s a l e s percentages f o r the region as 0%. The m a j o r i t y of p r e v i o u s e x p o r t e r s are l i k e l y to make f u t u r e f o r a y s i n t o the r e g i o n . In some i n s t a n c e s they w i l l r e q u i r e encouragement, b e t t e r c o n t a c t s , or more exposure to A s i a n markets before e s t a b l i s h i n g a s o l i d presence t h e r e . Responses to the f u t u r e growth q u e s t i o n were e q u a l l y e n l i g h t e n i n g . Due to p r o x i m i t y as w e l l as the Canada -U.S. Free Trade Agreement, the U.S. was the most important i n t e r n a t i o n a l growth market f o r f i r m s . Ninety f i r m s or 31.4% of the sample expected the U.S. to be the g r e a t e s t or one of the g r e a t e s t sources of s a l e s i n c r e a s e . In s p i t e of the FTA, 58 or 20.3% of a l l respondants b e l i e v e d that the P a c i f i c Rim would be the most (or one of the most) important growth market(s) f o r them i n the near f u t u r e . By c o n t r a s t , only 14 or 4.9% of respondants 36 c o n s i d e r e d Europe a .major source of. f u t u r e s a l e s i n c r e a s e s . Twenty f i r m s c i t e d o'ther i n t e r n a t i o n a l d e s t i n a t i o n s , i n c l u d i n g Mexico, as a major source of f u t u r e s a l e s i n c r e a s e s . An i n d i r e c t q u e s t i o n p r o v i d e d f u r t h e r i n f o r m a t i o n on the i s s u e of P a c i f i c Rim p o t e n t i a l . A l l firms were asked to s p e c i f y whether they would l i k e to r e c e i v e a summary of q u e s t i o n n a i r e r e s u l t s . I n t e r e s t i n g l y the m a j o r i t y of f i r m s (67% or 29/43) with p r e v i o u s P a c i f i c Rim experience, but no c u r r e n t A s i a s a l e s , requested a summary of f i n d i n g s . T h i s suggested that such respondants c o u l d be i n t e r e s t e d i n f u r t h e r involvement i n the r e g i o n at a l a t e r date. A l a r g e number of i n e x p e r i e n c e d f i r m s were a l s o i n t e r e s t e d i n study r e s u l t s , with 94 of these 169 f i r m s r e q u e s t i n g summaries. A l t o g e t h e r 58% of non-current A s i a e x p o r t e r s wanted to know more about the a c t i v i t i e s of other Vancouver f i r m s who were e x p o r t i n g to that r e g i o n . 3.3.2 IMPORTANCE OF ASIAN MARKET DESTINATIONS TO CURRENT EXPORTERS We have seen above that a f t e r the U.S. the P a c i f i c Rim was the most commonly c i t e d i n t e r n a t i o n a l market d e s t i n a t i o n f o r Vancouver KIS f i r m s . To b e t t e r understand the importance of the P a c i f i c Rim to c u r r e n t e x p o r t e r s , average A s i a s a l e s percentages were compiled fo r those f i r m s alone. Of the 74 r e l e v e n t f i r m s , 14 (or 19%) d i d l e s s than 5% of t h e i r b u s i n e s s t h e r e . By c o n t r a s t , 42 or 57% of those firms had 10% or more of t o t a l 37 c u r r e n t s a l e s i n A s i a , with the remaining 24% doing between f i v e and nine percent of t o t a l b u s i n e s s t h e r e . Thus f o r the m a j o r i t y of f i r m s with c u r r e n t A s i a n involvement (84%) P a c i f i c Rim s a l e s accounted f o r 5% or more of t o t a l revenue. (Refer to c h a r t 4 on the f o l l o w i n g page). F i n d i n g s from i n t e r v i e w p a r t i c i p a n t s c o r r o b o r a t e the importance of the P a c i f i c Rim to KIS f i r m s a l e s . While in t e r v i e w e e s were chosen s p e c i f i c a l l y because of t h e i r e s t a b l i s h e d presence in A s i a n markets, the importance of that p a r t i c i p a t i o n to o v e r a l l business was not known at the time of s e l e c t i o n . A l l f i r m s i n t e r v i e w e d but one (which was phasing out i t s A s i a n a c t i v i t i e s ) had at l e a s t four percent of c u r r e n t s a l e s in A s i a ; i n f a c t , only two d i d l e s s than 5% of c u r r e n t business in the r e g i o n . E x l u d i n g one f i r m unable to g i v e a s a l e s breakdown, and one f i r m p r o v i d i n g data on a p r i v a t e p r a c t i c e b a s i s only, the o v e r a l l average of c u r r e n t s a l e s to A s i a f o r the i n t e r v i e w group was 16.1%. Furthermore, over 60% of the firms had over 10% of t h e i r c u r r e n t s a l e s i n A s i a , two of whom d i d 50% or more of t h e i r business i n A s i a . 3.3.3 MOTIVATION FOR PARTICIPATION IN ASIAN MARKETS Responses to the q u e s t i o n of m o t i v a t i o n f o r P a c i f i c Rim exports helps us to i d e n t i f y whether g e n e r a l trends act as 38 CHART 4 P a c i f i c Rim Exports as a Portion of Total Sales for current P a c i f i c Rim Exporters 1990 # WITH 4% # WITH # WITH 10% TTL ASIA OR LESS 5% to 9% OR MORE SIC CODE EXPORTERS ASIA SALES ASIA SALES ASIA SALES 3351 6 0 2 4 3352 3 2 1 0 7721 2 0 0 2 774 5 1 1 3 7752 48 7 14 27 7759 1 0 0 1 7771 9 2 2 5 TOTAL: 74 12 20 42 Source: Postal Survey of Vancouver Knowledge-Intensive Service Firms 39 c a t a l y s t s f o r the expor t of s e r v i c e s to the P a c i f i c Rim. Due to space c o n s t r a i n t s on the p o s t a l su rvey , on ly i n t e r v i e w p a r t i c i p a n t s were asked to e x p l a i n reasons fo r i n v e s t i g a t i n g A s i a P a c i f i c market s . Because of the sma l l i n t e r v i e w sample and the problems i t posed to c o n f i d e n t i a l i t y i t was i m p o s s i b l e to g i ve a s e c t o r a l breakdown of re sponses . (See Appendix C fo r complete l i s t of i n t e r v i e w q u e s t i o n s ) . F i rms were asked to s e l e c t from a l i s t one or more m o t i v a t i n g f a c t o r s f o r e x p o r t i n g to the P a c i f i c Rim. P o s s i b l e c h o i c e s i n c l u d e d : concerns about l o c a l market s t a b i l i t y ; gene ra l appea l of one or more s p e c i f i c A s i an growth markets ; d e s i r e to i n c r e a s e market d i v e r s i f i c a t i o n ; government encouragement; d e s i r e f o r g r e a t e r s c a l e economies; o p p o r t u n i t y to use s p e c i a l i n -house s t a f f e x p e r t i s e and c o n t a c t s ; or o ther f a c t o r s . The most f r e q u e n t l y c i t e d reason f o r market ing to A s i a was the g e n e r a l appea l of the P a c i f i c Rim (chosen by 14/18 or 77.7% of i n t e r v i e w e e s ) . On the s u r f a c e one might assume that a company s e l e c t i n g on l y the g e n e r a l appea l f a c t o r was not very committed to s u s t a i n e d market p resence in A s i a . Yet s u b j e c t comments proved the c o n t r a r y in many c a s e s . One f i r m w i th a presence in Hong Kong s i n c e the 1960s s e l e c t e d the appea l of the Hong Kong market as i t s s o l e mot ive f o r s o l i c i t i n g bu s i ne s s t h e r e . The respondant e l a b o r a t e d that do ing bus ines s w i th Hong Kong c l i e n t s has become e s s e n t i a l f o r economic s u r v i v a l i n Vancouver . Another 40 f i r m s e l e c t i n g only the general appeal of A s i a was able to c i t e c l e a r l y i d e n t i f i e d market o p p o r t u n i t i e s f o r i t s s e r v i c e s . One-half of i t s c u r r e n t s a l e s are to the P a c i f i c Rim. The frequency with which firms chose t h i s motive c o u l d thus be due p a r t i a l l y to the " c a g i n e s s " of i n t e r v i e w e e s . That i s , i n t e r v i e w e e s were l i k e l y r e l u c t a n t to d i v u l g e too much i n f o r m a t i o n r e g a r d i n g t h e i r f i r m s ' economic h e a l t h . The next most important reason was the o p p o r t u n i t y to take advantage of s p e c i a l in-house e x p e r t i s e (11/18 or 61.1%). I n c r e a s i n g market d i v e r s i f i c a t i o n and the appeal of a s p e c i f i c A sian market were a l s o important f a c t o r s (8/18 or 44.4% f o r each). The importance of the former was e l a b o r a t e d upon by two f i r m s . Both e x p l a i n e d that c y c l i c a l f l u c t u a t i o n s render market expansion c r u c i a l f o r the maintenance of e x i s t i n g economies of s c a l e . S i x or o n e - t h i r d of the companies i d e n t i f i e d government encouragement as an impetus or a i d to e x p o r t i n g to A s i a . F i v e of the e i g h t e e n (27.7%) expressed a d e s i r e f o r g r e a t e r economies of s c a l e ; s i m i l a r l y , f i v e had concerns about l o c a l market s t a b i l i t y . We may conclude that Vancouver companies s u c c e s s f u l i n the P a c i f i c Rim have been motivated by more than j u s t the d e s i r e to f o l l o w o t h e r s . Rather, such f i r m s chose i n i t i a l l y to i n v e s t i g a t e A s i a n market o p p o r t u n i t i e s f o r a combination of three reasons: 41 CHART 5 Motivation for P a c i f i c Rim Market P a r t i c i p a t i o n Factor: Rank: Number: Percentage: General appeal of Asian market 1 13 72.8% Possession of appropriate s t a f f expertise 2 9 50.0% S p e c i f i c Appeal of 1 or more Asian markets 2 9 50.0% Desire to achieve greater market d i v i r s i f i c a t i o n 3 8 44.4% Encouragement from government 4 6 3 3.3% Concerns about domestic market s t a b i l i t y 5 5 27.8% Desire for greater economies of scale 5 5 27.8% Source: Interviews of Vancouver Service firms known to be P a c i f i c Rim Exporters, conducted September 1990 by the author. 42 *Market Appeal • E x i s t i n g s t a f f e x p e r t i s e in one or more A s i an markets * D e s i r e f o r market d i v e r s i f i c a t i o n . Whi le government a s s i s t a n c e p l a y e d a r o l e , i t was never the s o l e reason f o r any to become i n v o l v e d in the P a c i f i c Rim. One p a r t i c i p a n t c l a i m e d to have r e c e i v e d a b s o l u t e l y no government encouragement. On the o ther hand, most p a r t i c i p a n t s d i d take advantage of such a s s i s t a n c e , even i f i t was not a m o t i v a t i n g f a c t o r in market e n t r y . To quote a n o t h e r : " [Canad ian government encouragement] d o e s n ' t make us go out and get work t h e r e , but programs can a f f e c t c o s t s and r i s k s in s p e c i a l c i r c u m s t a n c e s " . (These programs w i l l be d i s c u s s e d in Chapter F o u r ) . 3.4 CHARACTERISTICS'OF ASIA PACIFIC EXPORTERS 3.4.1 SPECIFIC ASIAN DESTINATIONS Surveyed f i rms w i th c u r r e n t and p r e v i o u s e x p e r i e n c e in the a c i f i c Rim s o l d to a broad range of d e s t i n a t i o n s . On average each f i r m had s a l e s to j u s t under th ree P a c i f i c Rim c o u n t r i e s . The most common market d e s t i n a t i o n was A u s t r a l i a , w i th 50 or 42.7% of P a c i f i c Rim e x p e r i e n c e d ( h e n c e f o r t h a b b r e v i a t e d as PRE) f i r m s hav ing s o l d t h e r e . Other popu la r s a l e s d e s t i n a t i o n s i n c l u d e d : •Other ASEAN *P.R. of China - • T h a i l a n d • I n d i a , P a k i s t a n , S r i Lanka > 31 f i rms =26.5% of PRE f i rms > 31 f i r m s =26.5% of PRE f i rms > 30 f i rms =25.6% > 26 f i rms =22.2% 43 Somewhat important were: *Japan *Hong Kong •Taiwan * M a l a y s i a > 24 f i rms =20.5% > 23 f i rms =19.7% > 23 f i rms =19.7% > 20 f i rms =17.1% When on l y c u r r e n t e x p o r t e r s were a n a l y s e d , a more ba l anced d i s t r i b u t i o n of market d e s t i n a t i o n s was found. Less of a d i s c r e p a n c y e x i s t e d among popu la r d e s t i n a t i o n s than w i th the t o t a l group of PRE f i r m s . A u s t r a l i a was aga in the most popu la r d e s t i n a t i o n , w i th 28 or 37.8% of the 74 c u r r e n t e x p o r t e r s market ing h e r e . C l o s e l y beh ind were T h a i l a n d and o ther ASEAN c o u n t r i e s w i th 32.4% r e s p e c t i v e l y ; and Ch ina (31.1%). T h i s suggests tha t companies c u r r e n t l y e x p o r t i n g to the P a c i f i c Rim are l e s s i n c l i n e d to focus on a s i n g l e , t rendy market. They have made a commitment to the reg i on as a whole wh i le t a r g e t t i n g e f f o r t s in markets where c l e a r l y i d e n t i f i e d o p p o r t u n i t i e s e x i s t . On a p o l i c y l e v e l , these f i n d i n g s imply the need f o r government to p r o v i d e a s s i s t a n c e and market ing support f o r a broad range of s u b - r e g i o n s w i t h i n the P a c i f i c Rim, r a t h e r than f o c u s s i n g l a r g e l y on Nor theas t A s i a . At the same t ime , would-be As i an e x p o r t e r s c o u l d b e n e f i t from a s s i s t a n c e i n s o u r c i n g market o p p o r t u n i t i e s . A s e c t o r a l breakdown of P a c i f i c Rim e x p o r t e r s showed g r e a t e r d i f f e r e n c e s among i n d u s t r y g roups . For management c o n s u l t a n t and a d v e r t i s i n g f i r m s w i th e x p e r i e n c e , the most common d e s t i n a t i o n s were r e l a t i v e l y wea l thy P a c i f i c c o u n t r i e s . By c o n t r a s t , the most 44 common d e s t i n a t i o n s f o r e n g i n e e r i n g f i rms were l a r g e l y poorer and newly i n d u s t r i a l i z i n g c o u n t r i e s . I n te rv iewees had a d i f f e r e n t set of p r i o r i t y d e s t i n a t i o n s , a l though they c o n t i n u e d the t r e n d of a broad range of A s i an market s . Ch ina and Japan were the two most common expor t d e s t i n a t i o n s , f o l l o w e d by A u s t r a l i a / New Z e a l a n d , Ta iwan, and o ther ASEAN c o u n t r i e s (see c h a r t 6 ) . Perhaps these changed p r i o r i t i e s are best e x p l a i n e d by d i f f e r e n c e s i n compos i t i on between i n t e r v i e w and q u e s t i o n n a i r e samples. The i n t e r v i e w sample i n c l u d e d r e p r e s e n t a t i v e s from l e g a l and a c c o u n t i n g f i r m s . These groups were not i n c l u d e d in the q u e s t i o n n a i r e sample as they were too numerous and no a p p r o p r i a t e means of reduc ing t h e i r s i z e c o u l d be d e t e r m i n e d . Such groups tended to have a s i m i l a r c l i e n t base to a d v e r t i s i n g and market c o n s u l t a n t s in the q u e s t i o n n a i r e sample. CHART 6: Country # of Co s Japan Ch ina A u s t r a l i a & N.Z. Other ASEAN S.E. A s i a Taiwan Hong Kong I n d i a & P a k i s t a n S ingapore T h a i l a n d South Korea M a l a y s i a Non-ASEAN S.E. A s i a 10 10 9 9 9 8 8 7 6 6 5 0 One company d i d not respond t o the q u e s t i o n Source : S e r i e s of i n t e r v i e w s conducted September, 1990 by the au thor . 45 For both former and c u r r e n t e n g i n e e r i n g exporters,, the above d i s t r i b u t i o n of markets i s l a r g e l y i n f l u e n c e d by the a v a i l a b i l i t y of m u l t i l a t e r a l funding f o r i n f r a s t r u c t u r a l p r o j e c t s . Without such funding the f e a s i b i l i t y of e n g i n e e r i n g exports to most of these c o u n t r i e s would be s e v e r e l y l i m i t e d . T h i s h y p o t h e s i s i s c o r r o b o r a t e d by i n t e r v i e w f i n d i n g s . Nine of the e i g h t e e n firms i n t e r v i e w e d (both e n g i n e e r i n g and non-engineering) had p a r t i c i p a t e d at l e a s t o c c a s i o n a l l y on a p r o p o s a l c a l l , or a c t u a l work on, a m u l t i l a t e r a l l y - f u n d e d p r o j e c t . Firms were not given the o p p o r t u n i t y to i n d i c a t e i n which s p e c i f i c P a c i f i c Rim market(s) they expected to see f u t u r e growth. Nonetheless, i n t e r n a t i o n a l business l i t e r a t u r e suggests a r einforcement of the c u r r e n t d i s t r i b u t i o n of marketing d e s t i n a t i o n s f o r KIS f i r m s i n g e n e r a l . A u s t r a l i a w i l l l i k e l y c o n t i n u e to be an important market f o r KIS f i r m s , p a r t i c u l a r l y given f e d e r a l government changes which i n c r e a s e i t s a c c e s s i b i l i t y . In 1992 g e n e r a l t a r i f f r a t e s are to be cut by 10-15%; c o n c u r r e n t l y , GSP ( p r e f e r e n c e s ) f o r Singapore, Taiwan and South Korea w i l l be phased out by J u l y 1992. Furthermore, environmental e x p e n d i t u r e s made by firms l o c a t e d i n A u s t r a l i a are to be f u l l y tax d e d u c t i b l e over a ten year p e r i o d (CanadExport, May 1, 1991). The l a t t e r development c o u l d enhance o p p o r t u n i t i e s f o r Canadian environmental f i r m s . 46 T h a i l a n d i s another area of f u t u r e o p p o r t u n i t y f o r Canadian KIS f i r m s . While some investment promotion p r i v i l e g e s were c u r t a i l e d there i n 1989, c a p i t a l e x p e n d i t u r e s f o r i n f r a s t r u c t u r a l and e d u c a t i o n a l p r o j e c t s were i n c r e a s e d by 51.5% by the Thai overnment (Business A s i a , J u l y 10, 1989. p. 230). These are s e c t o r s i n which Vancouver and B.C. KIS f i r m s are p a r t i c u l a r l y s t r o n g . Moreover, a Canadian Embassy study confirmed the country's need f o r environmental improvements and equipment. I t noted that T h a i l a n d r e q u i r e s a i r q u a l i t y improvements, f o r e s t r y c o n s u l t i n g , urban sewage treatment f a c i l i t i e s , waste d i s p o s a l f a c i l i t i e s , and f i r e f i g h t i n g equipment. The study a l s o p o i n t e d out that upcoming l e g i s l a t i o n w i l l r e q u i r e that small s c a l e waste water treatment f a c i l i t i e s be b u i l t i n t o a l l h i g h r i s e b u i l d i n g s and major complexes (CanadExport, February 1991). Taiwan as w e l l holds p o t e n t i a l f o r Vancouver KIS e x p o r t e r s . As noted e a r l i e r , f i f t y - t h r e e percent of the i n t e r v i e w sample i s c u r r e n t l y e x p o r t i n g t h e r e , along with j u s t under twenty-percent of c u r r e n t e x p o r t e r s i n the q u e s t i o n n a i r e sample. Because the country has a l a r g e c a p i t a l s u r p l u s , i t w i l l continue to be an a t t r a c t i v e market w i t h i n the P a c i f i c Rim. O p p o r t u n i t i e s f o r Canadian (and other f o r e i g n ) KIS f i r m s were r e c e n t l y i d e n t i f i e d i n Taiwan's S i x Year N a t i o n a l C o n s t r u c t i o n P l a n . P r o j e c t s upon which f o r e i g n f i r m s are i n v i t e d to b i d i n c l u d e the f o l l o w i n g : 47 * Ra i lway C o n s t r u c t i o n (U.S.$16 b i l l i o n a l l o c a t e d ) * Mass Rap id T r a n s i t System (U.S.$10 b i l l i o n ) * Freeways (U.S.$26.6 b i l l i o n ) * A i r p o r t Expans ion (U.S.$963 m i l l i o n ) * Te lecommunica t ions (U.S.$4 b i l l i o n ) * Energy Development (U.S.$38 b i l l i o n * S t e e l I ndus t ry Expans ion (U.S.$1.9 b i l l i o n ) * P e t r o c h e m i c a l s Expans ion (U.S.$62 m i l l i o n ) * Water Resources Development (U.S.$8 b i l l i o n ) ( Source : CanadExport , March 1991) On the o ther hand, the s t r e n g t h of Japan in Southeast A s i an markets c r e a t e s d i f f i c u l t i e s f o r Canadian f i rms hop ing to compete in those markets . Japan has e s t a b l i s h e d an e c o n o m i c a l l y i n te rdependen t r e l a t i o n s h i p w i th the reg ion s i n c e the end of World War II. Japanese war r e p a r a t i o n s were used to e s t a b l i s h a t i g h t l y l i n k e d t r a d i n g r e l a t i o n s h i p between Japan and the Southeast A s i an c o u n t r i e s , w i th Japan p e r m i t t e d to o f f e r l abour and o the r s e r v i c e s to these c o u n t r i e s as pa r t of r e p a r a t i o n s packages . In f a c t the Peace T r e a t y with the U.S. i n f e r r e d tha t Japan was to ma in t a i n i t s "workshop of A s i a " r o l e by add ing l abour v a l ue to Southeast A s i an raw m a t e r i a l s and r e t u r n i n g them as f i n i s h e d goods. (Borden, 1984. p. 203). J a p a n s ' s t r ade l i n k s w i th the reg i on are i n c r e a s i n g , t h i s t ime t i e d i n w i th Japanese f o r e i g n a i d . The Japanese government i s e x p l i c i t about t h i s as a d e s i r e d outcome. [A] 1987-88 White Paper expounds the concept of comprehens ive c o o p e r a t i o n wi th a comb ina t ion of economic a i d , d i r e c t inves tment , and impor t s , aimed at c r e a t i n g a ' h o r i z o n t a l d i v i s i o n of l a b o u r ' 48 wi th d e v e l o p i n g c o u n t r i e s . To that end, Japan p l an s to c r e a t e a P a c i f i c Economic Coopera t i on Zone in the A s i a P a c i f i c r e g i o n , w i t h Japan as the l e a d i n g member. As a f i r s t s t ep towards t h i s g o a l , ' a c r e a t i v e i n t e r n a t i o n a l d i v i s i o n of l a b o u r ' between ASEAN and Japan i s now a c t i v e l y be ing pursued under the New I n d u s t r i a l Development P lan launched by J a p a n ' s M i n i s t r y of I n t e r n a t i o n a l Trade and I ndus t ry (MITI)" (X iaoming, A p r i l 1991. p. 347). It may be tha t i f Canadian f i rms hope to en te r A s i an markets in the f u t u r e they w i l l r e q u i r e c o o p e r a t i o n w i th a Japanese f i r m . 3.4.2 MARKETING APPROACH E x p e r i e n c e d f i r m s were asked to s e l e c t from a l i s t one or more market ing approaches used i n s e l l i n g to the P a c i f i c Rim. The approaches they c o u l d choose from i n c l u d e d : •overseas s a l e s t r i p s *use of d e s i g n a t e d agent abroad *use of t r a d i n g house *government m i s s i o n s *use of c o n s u l t a n t *permanent over seas o f f i c e • A d v e r t i s i n g in A s i an media * o t h e r The most w ide l y used approaches among c u r r e n t e x p o r t e r s were: OVERSEAS SALES TRIPS > 62% USE OF DESIGNATED AGENT > 45% GOVERNMENT MISSION PARTICIPATION > 41% Among e n g i n e e r i n g f i rms the o r d e r v a r i e d s l i g h t l y , w i th government m i s s i o n s a more common t a c t i c than the use of a de s i gna ted agent . I n te rv iew p a r t i c i p a n t s had the same order of 49 Marketing Techniques used by c u r r e n t P a c i f i c Rim e x p o r t e r s »-3 TOTAL OVERSEAS USE OF GOVERN- OWN ASIAN SALES TRADING USE OF ASIAN DESIGNATED MENT OFFICE o SIC CODE EXPORTERS TRIP HOUSE CONSULTANT MEDIA AGENT MISSIONS ABROAD OTHER 3351 6 5 3 2 1 5 1 2 1 3352 3 2 1 0 0 2 2 0 0 7721 2 1 0 0 0 1 1 1 1 774 5 1 0 1 1 1 1 0 2 7752 48 28 5 10 3 19 23 9 6 7759 1 1 1 0 0 0 1 1 0 7771 9 7 1 2 1 5 1 1 1 TOTAL: 74 45 11 15 6 33 30 14 11 Source: P o s t a l Survey of Vancouver 's Knowledge- Intensive S e r v i c e Firms p r e f e r e n c e as e n g i n e e r i n g f i r m s . The only v a r i a t i o n was the extent to which i n t e r v i e w e e s p r e f e r r e d the overseas s a l e s t r i p s as a marketing technique. A l l i n t e r v i e w p a r t i c i p a n t s used s a l e s t r i p s as compared to only nine of 17 p a r t i c i p a t i n g i n government mis s i o n s (see Chart 8) . Most i n t e r v i e w e e s r a t i o n a l i z e d t h e i r r e l i a n c e on v i s i t s to A s i a by c i t i n g the importance of e s t a b l i s h i n g a str o n g p e r s o n a l r e l a t i o n s i p with a c u r r e n t or p o t e n t i a l c l i e n t . Some samples of t h e i r comments: * ... I t takes a long time to get to know one's c l i e n t s * The market i s very c o m p e t i t i v e [ i n A s i a ] , You have to prepare to go over f o r a long term. I t takes s e v e r a l v i s i t s b efore you land a c o n t r a c t . * Face to face communication even at that d i s t a n c e i s important. [Our As i a n c l i e n t s ] c a l l o f t e n a s k i n g us to come over, which i s very expensive. Among f i r m s with P a c i f i c Rim experience but no c u r r e n t exports the p r e f e r e n c e f o r overseas s a l e s t r i p s decreased s u b s t a n t i a l l y . Only 35% of t h i s group used t r i p s as pa r t of t h e i r marketing e f f o r t . T h e i r p r e f e r e n c e s are l i s t e d in c h a r t 9. I n t e r e s t i n g l y , "other" was the most popular marketing technique. For s e v e r a l non-exporting f i r m s with P a c i f i c Rim exposure, t h i s has e n t a i l e d marketing a product or s e r v i c e through another f i r m , g e n e r a l l y i n North America. For some of these f i r m s , as w e l l as f o r one i n the i n t e r v i e w group, t h i s approach has taken the form of a s t r a t e g i c a l l i a n c e . Such an approach i s o f t e n j u s t i f i e d by the economies 51 CHART 8 Marketing Techniques Used by Interviewees Factor: Rank: Number: Percentage Overseas sales t r i p s 1 11 61.1% P a r t i c i p a t i o n i n government missions 2 9 50. 0% Own o f f i c e i n Asia 2 9 50. 0% Designated agent in Asia 3 7 38 . 9% Advertising i n Asian media 4 4 22 . 2% Other 4 4 22 .2% Use of trading house 5 3 16.7% Use of consultant 6 1 5 . 6% Source: Interviews of Vancouver Service firms known to be P a c i f i c Rim Exporters, conducted September 1990 52 Marketing Techniques used by previous P a c i f i c Rim e x p o r t e r s TOTAL OVERSEAS USE OF GOVERN- OWN PREVIOUS SALES TRADING USE OF ASIAN DESIGNATED MENT OFFICE SIC CODE EXPORTERS TRIP HOUSE CONSULTANT MEDIA AGENT MISSIONS ABROAD OTHER 3351 3 1 0 0 0 1 0 0 1 3352 6 0 0 0 0 0 1 0 5 7721 3 1 0 0 1 1 0 0 1 774 2 1 0 1 0 1 0 0 0 7752 20 10 0 4 0 2 7 0 6 7759 4 1 0 0 0. 0 1 1 2 7771 5 1 0 0 0 0 1 1 4 TOTAL: 43 15 0 5 1 5 10 2 19 Source: P o s t a l Survey of Vancouver's Knowledge-Intensive S e r v i c e Firms of s c a l e to be g a i n e d . Moreover , i t i s an e a s i e r and l e s s c o s t l y way to be i n t r o d u c e d to a new market. U n f o r t u n a t e l y , however, i t has the d i sadvantage of d i m i n i s h i n g the company's l i k e l i h o o d of ever e s t a b l i s h i n g an independent p resence in tha t market. As Root (1987) n o t e s : " I n d i r e c t market ing [ r e q u i r e s ] l i t t l e , i f any, f o r e i g n count ry /marke t knowledge on the p a r t of the [ s u p p l i e r ] bu t , fo r the same r e a s o n , i t i n s u l a t e s the [ s u p p l i e r ] from f o r e i g n markets " (p. 57 ) . 3.4.3 SOURCES OF MARKET INFORMATION In te rv iew p a r t i c i p a n t s were asked to comment upon the r e l a t i v e importance of market i n f o r m a t i o n sources s p e c i f i e d by the i n t e r v i e w e r . They had to i n d i c a t e whether they used each source f r e q u e n t l y , o c c a s i o n a l l y , or never to l e a r n about A s i an markets and s a l e s o p p o r t u n i t i e s . The l i s t of i n f o r m a t i o n sources c o n s i s t e d o f : l o c a l newspapers and p e r i o d i c a l s ; i n t e r n a t i o n a l newspapers and p e r i o d i c a l s ; c l i e n t i n t e r v i e w s ; domest ic government r e p r e s e n t a t i v e s ; i n f o r m a l Vancouver c o n t a c t s ; l o c a l t r a d e b i l a t e r a l c o n t a c t s ; i n f o r m a l P a c i f i c Rim c o n t a c t s ; P a c i f i c Rim a g e n t ( s ) ; Vancouver c o l l e g e s and u n i v e r s i t i e s ; and o ther s o u r c e s . The purpose of t h i s q u e s t i o n was to i d e n t i f y important sources as w e l l as c u r r e n t l y u n d e r u t i l i z e d sources which might be imporved or used more e f f e c t i v e l y . It a l s o se rved f o r f u t u r e p o l i c y r e f e r e n c e to i l l u s t r a t e how s u c c e s s f u l P a c i f i c Rim 54 e x p o r t e r s gain market e x p e r t i s e . (The r e s u l t s are shown i n c h a r t 10). O v e r a l l the most important i n f o r m a t i o n sources were p e r s o n a l c o n t a c t s with c l i e n t s and other i n f o r m a l resource persons. These f i n d i n g s do not d i m i n i s h the importance of more formal p e r s o n a l l y - c o n v e y e d i n f o r m a t i o n . Once a f i r m has an e s t a b l i s h e d presence, i t i s i n e v i t a b l e that, i t r e l i e s more h e a v i l y upon e s t a b l i s h e d c o n t a c t s with i n d i v i d u a l s and firms than agents or government r e p r e s e n t a t i v e s . Indeed, government c o n t a c t s were l i k e l y l e s s important as an i n f o r m a t i o n source than as a source of f i n a n c i a l and l o g i s t i c a l a s s i s t a n c e . I t would seem that trade b i l a t e r a l s are an important way of making p e r s o n a l c o n t a c t s of the i n i t i a l marketing stages. While these o r g a n i z a t i o n s were not c o n s i d e r e d a c r u c i a l source of i n f o r m a t i o n , most i n t e r v i e w e e s ' f i r m s belonged to at l e a s t one i n Vancouver. One r e p r e s e n t a t i v e s t a t e d e x p l i c i t l y t h a t b i l a t e r a l s were an important source of i n f o r m a t i o n f o r h i s company i n the p a s t , but were l e s s important now. T h i s would suggest that t r a d e b i l a t e r a l s can be u s e f u l i n b r i n g i n g together i n d i v i d u a l s who may l a t e r come to exchange i n f o r m a t i o n on an i n f o r m a l b a s i s l a t e r on (both i n domestic and i n t e r n a t i o n a l s e t t i n g s ) . 55 CHART 10 Sources of Market E x p e r t i s e - Interviewed Firms SOURCE: USED FREQUENTLY USED OCCASIONALLY USED NEVER NO RESPONSE c l i e n t i n t e r v i e w s 11 5 0 2 i n f o r m a l P a c i f i c Rim c o n t a c t s 7 8 0 3 P a c i f i c Rim agent(s) 7 5 2 4 i n t ' l newspapers and p e r i o d i c a l s 6 8 2 2 i n f o r m a l Vancouver c o n t a c t s 5 11 0 2 Cdn gov't r e p r e s e n - t a t i v e s 4 10 1 3 l o c a l newspapers and p e r i o d i c a l s 4 7 5 2 Other 4 1 2 11 c o n t a c t s through t r a d e b i l a t e r a l s 3 10 2 3 I n t ' l gov't r e p r e s - e n t a t i v e s 1 13 0 4 Vancouver c o l l e g e s , U n i v e r s i t i e s , e t c . 0 2 13 3 Source: Interviews of Vancouver S e r v i c e f i r m s known t o be P a c i f i c Rim Ex p o r t e r s , conducted by the author September 1990. 56 3.5 POLICY RECOMMENDATIONS - A FIRM PERSPECTIVE 3.5.1 QUESTIONNAIRE AND INTERVIEW PARTICIPANTS Both survey respondants and i n t e r v i e w e e s were asked to i n d i c a t e from a l i s t of e i g h t recommendations which a c t i o n s they f e l t would have the g r e a t e s t impact on i n c r e a s i n g V a n c o u v e r ' s p r o f i l e in A s i a n markets . The c h o i c e s c o n s i s t e d o f : 1. More s u s t a i n e d p r i v a t e s e c t o r market ing e f f o r t . 2. More a c c e s s i b l e i n f o r m a t i o n on market ing o p p o r t u n i t i e s . 3. Development of V a n c o u v e r - A s i a network ing o r g a n i z a t i o n s 4 . G r e a t e r c o o p e r a t i o n between u n i v e r s i t i e s and the b u s i n e s s community. 5. Commitment to A s i an programs in B.C. s c h o o l s and u n i v e r s i t i e s . 6. B u i l d i n g on market e x p e r t i s e of recent A s i an immigrants . 7. Expanded government r e p r e s e n t a t i o n o v e r s e a s . 8. More comprehens ive media coverage of A s i an s o c i a l , p o l i t i c a l , and economic i s s u e s . To c u r r e n t e x p o r t e r s the onus was c l e a r l y on the p r i v a t e s e c t o r to s t e p up i t s own market ing e f f o r t s in the P a c i f i c Rim. None the le s s , they a l s o s t r o n g l y suppor ted i n c r e a s i n g a c c e s s i b i l i t y to i n f o r m a t i o n on market o p p o r t u n i t i e s , and the development of V a n c o u v e r - A s i a network ing o r g a n i z a t i o n s . I n te rv iew p a r t i c i p a n t s agreed tha t p r i v a t e s e c t o r e f f o r t was paramount, and that market i n f o r m a t i o n acces s needed improv ing . U n l i k e t h e i r c o h o r t s , however, many a l s o f e l t tha t A s i an e d u c a t i o n a l programs had a very important r o l e to p l a y in t h i s r e g a r d . They a l s o had a number of t h e i r own recommendations: 57 * More comprehensive government support f o r marketing t r i p s . * Expansion of Vancouver's p o r t f a c i l i t i e s . * Increased immigration - we need a much l a r g e r p o p u l a t i o n to compete. * Expansion of the labour f o r c e , e s p e c i a l l y s k i l l e d workers in the l i g h t i n d u s t r i a l s e c t o r . * Greater cohesion between p u b l i c and p r i v a t e s e c t o r s . * Increased understanding of the A s i a n market i n the p r i v a t e s e c t o r . * More e f f e c t i v e government r e p r e s e n t a t i o n overseas. * Education of the business community. P o l i c y recommendations c i t e d most f r e q u e n t l y as somewhat important by q u e s t i o n n a i r e p a r t i c i p a n t s were u t i l i z a t i o n of immigrant e x p e r t i s e , and improved media coverage. Interviewees agreed that the former o p t i o n was somewhat important but f e l t t hat the development of networking o r g a n i z a t i o n s was of g r e a t e r p r i o r i t y than media improvements. Low p r i o r i t y a c t i o n s (those d e c l a r e d unimportant): •Greater u n i v e r s i t y - b u s i n e s s c o o p e r a t i o n --> 39/74 q u e s t i o n n a i r e respondants and 7/17 i n t e r v i e w e e s . *Asian e d u c a t i o n a l programs > 26/74 q u e s t i o n n a i r e respondants. Only 2/17 i n t e r v i e w e e s , however, c o n s i d e r e d t h i s unimportant. 58 CHART 1 1 P o l i c y Recommendations J u l y 15, 1991 of Current E x p o r t e r s A B C G F H E D VERY IMPORTANT 46 30 26 18 10 9 7 3 SOMEWHAT IMPORTANT 13 20 28 24 34 30 28 19 NOT IMPORTANT 2 11 7 19 16 22 26 39 NO RESPONSE 13 13 13 13 13 13 13 13 A = Greater p r i v a t e s e c t o r e f f o r t B = More a c c e s s i b l e i n f o r m a t i o n on marketing o p p o r t u n i t i e s C = Development of Vancouver - A s i a networking o r g a n i z a t i o n s D = Greater c o o p e r a t i o n between u n i v e r s i t i e s and the business community. E = Commitment t o A s i a n programs i n BC s c h o o l s and u n i v e r s i t i e s F = B u i l d i n g on market e x p e r t i s e of r e c e n t A s i a n immigrants G = Expanded government r e p r e s e n t a t i o n overseas H = More comprehensive media coverage of A s i a n s o c i a l , p o l i t i c a l and economic i s s u e s 59 CHART 12 P o l i c y Recommendations of Current E x p o r t e r s (Interviewees) August 6, 1991 A E B F H C G D VERY IMPORTANT 12 5 5 4 4 3 3 0 SOMEWHAT IMPORTANT 1 7 6 10 7 9 8 6 NOT IMPORTANT 0 2 2 0 3 2 2 7 NO RESPONSE 5 4 5 4 4 4 5 5 A = Gr e a t e r p r i v a t e s e c t o r e f f o r t B = More a c c e s s i b l e i n f o r m a t i o n on marketing o p p o r t u n i t i e s C = Development of Vancouver - A s i a networking o r g a n i z a t i o n s D = G r e a t e r c o o p e r a t i o n between u n i v e r s i t i e s and the business community. E = Commitment t o A s i a n programs i n BC s c h o o l s and u n i v e r s i t i e s F = B u i l d i n g on market e x p e r t i s e of r e c e n t A s i a n immigrants G = Expanded government r e p r e s e n t a t i o n overseas H = More comprehensive media coverage of A s i a n s o c i a l , p o l i t i c a l and economic i s s u e s Source: Interviews of Known P a c i f i c Rim S e r v i c e E x p o r t e r s conducted September 1990 by the author. 60 3.5.2 INTERVIEWEES* ASSESSMENT OF VANCOUVER E v a l u a t i o n s of V a n c o u v e r ' s s u i t a b i l i t y as a base fo r P a c i f i c Rim market ing e f f o r t s p r o v i d e d an i n d i c a t i o n of the c i t y ' s s t r e n g t h s and weaknesses f o r an e x p o r t - l e d s t r a t e g y . T h i s i n f o r m a t i o n i s u s e f u l because i t conveys c e r t a i n l o c a l l e v e l needs of P a c i f i c Rim e x p o r t e r s . I n te rv iew p a r t i c i p a n t s were asked to rank t h i r t e e n c h a r a c t e r i s t i c s on a s c a l e from one to f i v e , one meaning very u n s a t i s f a c t o r y and f i v e very s a t i s f a c t o r y ( r e f e r to Chart 13). From t h e i r re sponses , the f o l l o w i n g a s s e t s and l i a b i l i t i e s emerged c l e a r l y : DEFINITE ASSETS DEFINITELY NEEDING 3.6 IMMEDIATE STUDY CONCLUSIONS From a p o l i c y - m a k e r ' s p e r s p e c t i v e these f i n d i n g s l e a d to s e v e r a l broad c o n c l u s i o n s . F i r s t , wh i l e the P a c i f i c Rim i s l e s s v i t a l to KIS f i rms than the U.S. market, i t i s s t i l l an important expor t d e s t i n a t i o n . I t o f f e r s a r e a l i s t i c means of d i v e r s i f y i n g and a v o i d i n g over r e l i a n c e on a s i n g l e market . F i rms a re becoming i n c r e a s i n g l y aware of t h i s o p t i o n . The P a c i f i c Rim p r o v i d e s a number of growth o p p o r t u n i t i e s , and many f i rms a l r e a d y IMPROVEMENT - Q u a l i t y o f . l i f e / r e c - r e a t i o n a l a m e n i t i e s . - Q u a l i t y of s u p p o r t i n g producer s e r v i c e s . -Te lecommunicat i ons i n f r a s t r u c t u r e . -Acce s s to f e d e r a l / p r o v i n c i a l t r ade r e p r e s e n t a t i v e s . - P re sence of key A s i an com- p a n i e s . -Banks and f i n a n c i a l i n s t i t - u t i o n s. _ _ 61 Interviewee R a t i n g of Vancouver as a P a c i f i c Rim Marketing Average score and rank: Average # with no RANK: FACTOR: Score response 1. M. Q u a l i t y of Rec. Amenities/ L i v a b i l i t y 4.53 1 2. D. Q u a l i t y of L o c a l Produ- cer S e r v i c e s 4.12 1 3. E. Telecommuni- c a t i o n s In- f r a s t r u c t u r e 4.06 1 4. G. I n t e r n a t ' l T r a n s p o r t F a c i l i t i e s 4.00 6 5. K. Q u a l i t y of Commercial I n f r a s t r u c t u r e 3.88 1 6. F. A i r Connections 3.82 1 7. H. Vancouver's Image 3.65 1 8. B. Q u a l i t y of Labour 3.63 2 9. C. Quantity/ A v a i l a b i l i t y of Labour 3.56 2 10. A. Banks 3.50 2 11. L. Q u a l i t y of P u b l i c I n f r a s t r u c t u r e 3.41 1 12. J . Presence of Key A s i a n Companies 3.31 5 13. I. Access t o Senior Gov't Represnt. 3.13 3 62 possess personnel with the a p p r o p r i a t e s k i l l s to do bu s i n e s s t h e r e . Second, firms are not t a r g e t t i n g t h e i r e f f o r t s on one or two h i g h p r o f i l e d e s t i n a t i o n s but are l o o k i n g to a broad range of c o u n t r i e s f o r t h e i r c l i e n t s . The c h o i c e of d e s t i n a t i o n s i s determined somewhat by the se c t o r of the e x p o r t i n g f i r m s , as the demand f o r c e r t a i n s e r v i c e s v a r i e s a c c o r d i n g to the c l i e n t c o u ntry's e x i s t i n g s e r v i c e c a p a c i t i e s and income or acc e s s to m u l t i - l a t e r a l funding f o r p r o j e c t s r e q u i r i n g Canadian s e r v i c e s . Government p o l i c i e s w i l l need to a p p r e c i a t e t h i s d i v e r s i t y and to recogn i z e which types of firms w i l l be tending to look to s p e c i f i c r e g i o ns f o r c l i e n t s . An awareness of such c o r r e l a t i o n s w i l l enable p o l i c y makers, trade commissioners, etc to b e t t e r focus a s s i s t a n c e to B.C. fi r m s and to b e t t e r t a r g e t market o p p o r t u n i t i e s . T h i r d , face to face c o n t a c t between f i r m and c l i e n t i s a c r u c i a l p a r t of doing business i n A s i a , a p p a r e n t l y more so than i n other markets. When well-planned, an overseas s a l e s t r i p can go a long way towards ensuring b u s i n e s s f o r B.C. and Canadian f i r m s . Yet t r i p s are extremely c o s t l y . For t h i s reason f i r m s seeking to e s t a b l i s h themselves should f i r s t take advantage of as many o p p o r t u n i t i e s at home as p o s s i b l e . T h i s would i n c l u d e p a r t i c i p a t i n g i n one or more busi n e s s networking a s s o c i a t i o n s . The study a l s o demonstrates a need f o r enhancing and encouraging access to government r e p r e s e n t a t i v e s who may be able to h e l p f i r m s i n i d e n t i f y i n g p o t e n t i a l c l i e n t s and o p p o r t u n i t i e s . 63 S e v e r a l i n t e r v i e w p a r t i c i p a n t s with a w e l l e s t a b l i s h e d presence in a number of Asian markets i n d i c a t e d that they continue to r e l y upon communication with Canadian Trade Commissions abroad as one of t h e i r sources of i n f o r m a t i o n on p r o p o s a l c a l l s and other market o p p o r t u n i t i e s . Another i n t e r v i e w e e ' s f i r m maintains c o n s i s t e n t c o n t a c t with the A s i a Development Bank and World Bank who f i n a n c e many of the l a r g e r s c a l e p r o j e c t s i n A s i a with which B.C. f i r m s hope to become i n v o l v e d . F o u r t h , firms acknowledge that the onus i s on them to improve t h e i r presence i n A s i a n markets. However, many f e e l that t h e i r e f f o r t s c o u l d be enhanced by some a s s i s t a n c e from government and trade a s s o c i a t i o n s . A s t r o n g need f o r b e t t e r i n f o r m a t i o n was apparent, p a r t i c u l a r l y on: s p e c i f i c markets; i n t r o d u c t i o n to new c o n t a c t s ; and A s i a n s o c i e t i e s ' c u l t u r e and p o l i t i c a l and b u s i n e s s c l i m a t e s . At a V a n c o u v e r - s p e c i f i c l e v e l f i r m s advocated b e t t e r access t o , and more e f f e c t i v e d e a l i n g s with, f e d e r a l and p r o v i n c i a l government r e p r e s e n t a t i v e s . They a l s o b e l i e v e d that t h e i r own e f f o r t s c o u l d be complemented by i n c r e a s e d presence of key A s i a n companies here i n Vancouver and, most i m p o r t a n t l y , by improvements in banking and f i n a n c i a l s e r v i c e s here i n Canada. Many in t e r v i e w e e s complained that Vancouver banks' l a c k of decision-making autonomy and f l e x i b i l i t y i n h i b i t s t h e i r a b i l i t y to f i n a n c e market ventures q u i c k l y . 64 4.0 RECOMMENDATIONS Having looked at the P a c i f i c Rim export p r o p e n s i t y , we now turn to c u r r e n t and p r o s p e c t i v e i n i t i a t i v e s designed to f a c i l i t a t e KIS and other exports to A s i a . S e c t i o n 4.1 o u t l i n e s f e d e r a l programs, i n c l u d i n g those e s t a b l i s h e d by E x t e r n a l A f f a i r s and I n t e r n a t i o n a l Trade Canada; the Export Development C o r p o r a t i o n ; and the Canadian I n t e r n a t i o n a l Development Agency. It d i s c u s s e s p r o v i n c i a l a c t i v i t y , namely that undertaken by the M i n i s t r y of Development, Trade and Tourism and the B.C. Trade C o r p o r a t i o n , as w e l l as mu n i c i p a l a c t i v i t i e s . I t a l s o looks at non-governmental o r g a n i z a t i o n s with a r o l e i n t h i s f i e l d , i n c l u d i n g the Vancouver Board of Trade, the A s i a P a c i f i c Foundation, and the I n t e r n a t i o n a l Finance Centre. S e c t i o n 4.2 advocates i n c r e a s e d l o c a l government a c t i o n i n KIS export promotion, p a r t i c u l a r l y to the P a c i f i c Rim. T h e o r e t i c a l and p r a c t i c a l arguments are used to make the case. F i n a l l y , s p e c i f i c areas of p o t e n t i a l l o c a l a c t i v i t y are o u t l i n e d , and a p p r o p r i a t e a c t i o n s suggested. 4.1 CURRENT ASSISTANCE 4.1.1 FEDERAL PROGRAMS The most commonly used sources of f e d e r a l a s s i s t a n c e by KIS firms are o f f e r e d by: • E x t e r n a l A f f a i r s and I n t e r n a t i o n a l Trade Canada; *EDC - the Export Development C o r p o r a t i o n ; and *CIDA - the Canadian I n t e r n a t i o n a l Development Agency. 65 E x t e r n a l A f f a i r s and I n t e r n a t i o n a l Trade p r o v i d e a s s i s t a n c e of an i n f o r m a t i v e nature, with the T r a d i n g Commissioner network p l a y i n g a key r o l e . Trade commissioners in Asian c o u n t r i e s assess export o p p o r t u n i t i e s f o r Canadian firms and the c o n s t a n t l y changing market c h a r a c t e r i s t i c s i n host c o u n t r i e s . They then pass on t h e i r knowledge to Canadian companies d i r e c t l y , through I n t e r n a t i o n a l Trade Centres, or v i a the CanadExport n e w s l e t t e r . Canadian embassies a l s o supply u s e f u l m a t e r i a l by commissioning s e c t o r - s p e c i f i c s t u d i e s w i t h i n host c o u n t r i e s . In a d d i t i o n , a recent workshop was given i n major Canadian c i t i e s by Embassy investment and technology o f f i c e r s to inform f i r m s of overseas investment and t e c h n i c a l c o o p e r a t i o n o p p o r t u n i t i e s (CanadExport, June 3, 1991. p. 2). F i n a l l y , E x t e r n a l A f f a i r s a p p r i s e s companies of export procedures through c o u n s e l l i n g and p u b l i c a t i o n of an export guide. The Export Development c o r p o r a t i o n a i d s s e r v i c e e x p o r t e r s i n two ways. F i r s t , i t p r o v i d e s them with export c r e d i t insurance, i n s u r i n g the r e c e i v a b l e s (up to 90%) of s e r v i c e f i r m s a g a i n s t non-repayment of the c o n t r a c t f o r e i t h e r f i n a n c i a l or p o l i t i c a l reasons. "EDC guarantees the l a r g e s t c r e d i t insurance pool i n Canada [and] ... can i n s u r e almost any type of export" (EDC brochure, Export I n s u r a n c e ) . I t a l s o i n s u r e s f i r m s a g a i n s t the r e c a l l of performance bonds. If a performance bond has been r e q u i r e d by a d e v e l o p i n g country (as a guarantee to the buyer 66 that s e r v i c e s w i l l be provided) and that buyer u n f a i r l y c a l l s i n that bond, the EDC guarantees compensation to the f i r m . R e c e ntly the EDC has begun to o f f e r insurance on Canadian f o r e i g n investment and j o i n t v e n t u r e s . Second, the EDC p r o v i d e s commercial loans to f o r e i g n c o u n t r i e s wishing to buy Canadian s e r v i c e s . The EDC has e s t a b l i s h e d a p a r t i c u l a r l y s t r o n g China c o n n e c t i o n . Since the development of l i n e s of c r e d i t with the Bank of China i n 1979, EDC has concluded over $1 b i l l i o n i n f i n a n c i n g i n China, i n c l u d i n g app- rox i m a t e l y $335 m i l l i o n i n 1989 and $225 m i l l i o n i n 1990" (EDC Today, 1991. p. 14). Canadian f i r m s b i d d i n g on p r o j e c t s that are a d v e r t i s e d as b i d d e r - f i n a n c e d i n q u i r e with the EDC as to the f e a s i b i l i t y of o b t a i n i n g funding f o r the c o u n t r y i n which the p r o j e c t i s o f f e r e d . In d e c i d i n g whether to f i n a n c e the p r o j e c t he EDC w i l l e v a luate the p r o j e c t p a r t i c u l a r s , as w e l l as the country, buyer, and Canadian content (minimum of 60%, but f o r i n d u s t r i e s i n which we are s t r o n g the minimum i n c r e a s e s ) . There are a l s o country l i m i t s on EDC borrowing which are determined by the country's borrowing r e c o r d , economic h e a l t h , and access to f o r e i g n ex- change. The Canadian I n t e r n a t i o n a l Development Agency (CIDA) promotes economic development i n the T h i r d World. Yet CIDA i s 67 i n c r e a s i n g l y becoming .a c r u c i a l source of revenue and f i n a n c i a l a s s i s t a n c e to many * Canadian f i r m s , p a r t i c u l a r l y those i n the s e r v i c e s e c t o r . CIDA performs the l a t t e r f u n c t i o n i n two ways. F i r s t , i t g i v e s procurement p r i o r i t y to Canadian f i r m s on i n f r a s t r u c t u r a l and other development p r o j e c t s funded by CIDA. in d e v e l o p i n g c o u n t r i e s . Second, i t p r o v i d e s i n c e n t i v e s to Canadian p r i v a t e s e c t o r firms to i n i t i a t e t h e i r own development p r o j e c t s abroad. T h i s second method i s becoming i n c r e a s i n g l y important to CIDA. For example, i n 1987 i t was announced that funding f o r p r i v a t e s e c t o r i n i t i a t i v e s was i n c r e a s e d from two to four percent of the Canadian O f f i c i a l Development A s s i s t a n c e (ODA) budget (CIDA, 1987. p. 79). For f i r m s with the d e s i r e and e x p e r t i s e a p p r o p r i a t e and/or adaptable to c o n d i t i o n s i n a d e v e l o p i n g country, non-repayable CIDA grants h e l p s u b s i d i z e some of the c o s t s of i n v e s t i g a t i n g or i n i t i a t i n g p r o j e c t s that e v e n t u a l l y become a good source of revenue and experience f o r the f i r m . For companies experienced in development or a s p e c i f i c d e v e l o p i n g c ountry these grants are a bonus. For those with l i t t l e or no e x p e r i e n c e , however, they are o f t e n the c r i t i c a l f a c t o r i n d e c i d i n g whether a p r o j e c t proceeds. Two programs encouraging p r i v a t e s e c t o r development i n i t i a t i v e s e x i s t : the Canada-China Technology Cooperation Program and the I n d u s t r i a l Cooperation Program. The Canada-China 68 Technology Cooperation Program enables Canadian firms to land c o n t r a c t s f o r p r o j e c t s p r i o r i z e d by the Chinese government. CIDA c o n t r i b u t e s up to $500 ,000 towards a f e a s i b i l i t y study f o r the Canadian f i r m s e l e c t e d by the Chinese c l i e n t on a given p r o j e c t . The f i r m must be approved by CIDA and China's M i n i s t r y of F o r e i g n Economic R e l a t i o n s and Trade (MOFERT). The I n d u s t r i a l C o o p eration Program p r o v i d e s grants f o r f i v e d i f f e r e n t l e v e l s of involvement i n f i r m - i n i t i a t e d development p r o j e c t s . These a r e : The Canadian Technology T r a n s f e r F a c i l i t y Funds are a l l o c a t e d to minimize some of the c o s t s i n c u r r e d by fir m s i n adapting and t e s t i n g t h e i r technology f o r long term p r o j e c t s i n a de v e l o p i n g c o u n t r y . Firms may r e c e i v e a grant of up to $250 ,000 f o r p r e - a u t h o r i z e d expenses such as t r a n s p o r - t a t i o n , l i v i n g c o s t s , personnel c o s t s , and the net co s t of p r o j e c t - r e l a t e d equipment. To be e l i g i b l e the f i r m must have signe d , or be about to s i g n , a p r o j e c t agreement with a dev e l o p i n g country f i r m , agent, or government. Canadian P r o j e c t P r e p a r a t i o n F a c i l i t y The f a c i l i t y p r o v i d e s funding up to $350 ,000 to a s s i s t with p r o j e c t p r e p a r a t i o n s t u d i e s i n de v e l o p i n g c o u n t r i e s . There must be a l i k e l i h o o d o f : p r o j e c t implementation; a v a i l a b l e 69 f i n a n c i n g ; a good developmental impact and a p o t e n t i a l market f o r Canadian goods and s e r v i c e s . The study must be p r o j e c t - s p e c i f i c . The grant i s not a v a i l a b l e to firms responding to an i n t e r n a t i o n a l c o m p e t i t i v e b i d , such as a World Bank p r o j e c t ; nor i s i t a v a i l a b l e to firms competing with another Canadian f i r m f o r the study. E l i g i b l e are those f i r m s having i d e n t i f i e d a p r o j e c t o p p o r t u n i t y f o r themselves with an a l t e r n a t i v e means of f i n a n c i n g . An example would e n t a i l a Canadian f i r m seeking to e s t a b l i s h a manufacturing f a c i l i t y under a j o i n t venture wherein the p r o j e c t would be i n i t i a l l y f i n a n c e d by the Canadian company and u l t i m a t e l y p a i d f o r through the s a l e s of f a c i l i t y output. Canadian P r o j e c t Support F a c i l i t y Up to $250,000 i s a v a i l a b l e to q u a l i f y i n g f i r ms to o f f s e t the s t a r t - u p c o s t s of a long-term o p e r a t i o n i n a d e v e l o p i n g co u n t r y . Allowable expenses i n c l u d e : t e c h n i c a l a s s i s t a n c e p r o v i s i o n and the t r a i n i n g of host country p e r s o n n e l . V i a b i l i t y Study Up to $100,000 f o r pre-approved expenses i s a v a i l a b l e to q u a l i f i e d f i r m s to conduct an in-depth a n a l y s i s of long-term business c o o p e r a t i o n . The a p p l i c a n t must have gone through, or be at a l e v e l beyond, the s t a r t e r study stage. S t a r t e r Study 70 A grant of up to $15,000 i s a v a i l a b l e f o r p r e - a u t h o r i z e d expenses to encourage the p r e l i m i n a r y assessment of f e a s i b i l i t y of b u s i n e s s c o o p e r a t i o n with a d e v e l o p i n g country f i r m . The Canadian f i r m must be a b l e to i d e n t i f y s p e c i f i c o p p o r t u n i t i e s ( p o t e n t i a l p a r t n e r s ) and have a reasonable chance of t u r n i n g the study i n t o a v i a b l e p r o j e c t . R e c e n t l y CIDA announced a new P r i v a t e Sector I n i t i a t i v e s Fund (PSDFUND), aimed at promoting p r i v a t e s e c t o r development p r o j e c t s (CanadExport, June 3, 1991. p. 2). The program r e p r e s e n t s f u r t h e r movement towards a c o n t r a c t i n g out of CIDA development f u n c t i o n s . CIDA l i m i t s e l i g i b i l i t y f o r the fund i n favour of the bu s i n e s s s e c t o r . I t i s intended f o r p r o f i t - m a k i n g o r g a n i z a t i o n s alone (CIDA, March 1991, p. 4). Instead of coming out of the I n d u s t r i a l Cooperation budget, f i n a n c i n g f o r PSDFUND w i l l be obtained from CIDA's b i l a t e r a l country programs: Once in f u l l o p e r a t i o n , PSDFUND w i l l represent at l e a s t 10% of the b i l a t e r a l budget f o r each p a r t i c i p a t i n g c o u n t r y . I t i s a n t i c i p a t e d that the core program w i l l be launched d u r i n g 1994, with a staggered frequency f o r i n v i t a t i o n c a l l s i n a given year (CIDA, March 1991, p.2) . At present the program i s r e s t r i c t e d to p i l o t programs i n four c o u n t r i e s : Colombia, Morocco, P a k i s t a n , and Zimbabwe; however, i t w i l l u l t i m a t e l y be implemented i n as many as twenty c o u n t r i e s . Firms s u c c e s s f u l i n t h e i r b i d s f o r p i l o t p r o j e c t s may be awarded as much as $4.75 m i l l i o n each. CIDA has, however, d e c l a r e d i t s 71 preference for bids in the $1-2 m i l l i o n range (CIDA, p. 3). Whether a business-oriented approach to development i s the most appropriate one for developing countries i s a debatable point. It e n t a i l s further tying of aid to procurement of Canadian services, rather than the untying of ODA, as suggested in the CIDA document Sharing Our Future. The l a t t e r states that from 1988 on only 50% - 66 2/3% of b i l a t e r a l a i d i s to be t i e d (pp. 52-53). Nonetheless, CIDA i s c l e a r l y increasing i t s provisions of assistance and opportunities for members of the Canadian business community involved in developing country markets. This development w i l l prove b e n e f i c i a l for Canadian f irms. In short, there i s a consderable amount of assistance available at the federal l e v e l to firms at the export-ready stage. We must keep in mind, however, that other countries have more extensive systems in place to support t h e i r companies exporting to the P a c i f i c Rim. Japan i s perhaps the strongest in t h i s regard. Since 1971 Japan has spent the equivalent of US $6.17 b i l l i o n (at current exchange rates) on loan packages offered by i t s Overseas Economic Cooperation Fund (Far Eastern Economic Review, May 2, 1991. p. 47). Most of these loans have been t i e d to procurement of Japanese goods and services. Japan has also surpassed the U.S. as the largest donor to the Asian Development Bank, with US$1.3 b i l l i o n offered to the Bank in 72 February of t h i s y e a r . Fu r thermore , o f f i c i a l development a s s i s t a n c e from Japan to d e v e l o p i n g c o u n t r i e s t o t a l l e d US $8.9 b i l l i o n (Far E a s t e r n Economic Review, May 23, 1991). 4.1.2 B.C. PROVINCIAL ASSISTANCE E x p o r t i n g and export promot ion in B.C. i s f a c i l i t a t e d by: the M i n i s t r y of Development, Trade and Tour i sm ( f o r m e r l y I n t e r n a t i o n a l Bus ines s and Immigrat ion) in c o n j u n c t i o n w i th the B.C. Trade C o r p o r a t i o n . The M i n i s t r y of Development, Trade and Tour i sm i s r e s p o n s i b l e f o r investment p romot ion , expor t p romot ion , t r a d e p o l i c y , p r o v i n c i a l r e p r e s e n t a t i o n and o ther a c t i v i t i e s not cove red by the B.C. Trade C o r p o r a t i o n . Overseas the M i n i s t r y ' s o f f i c e s are somewhat independent but , in g e n e r a l , are r e s p o n s i b l e f o r promot ing B.C. as a p l a c e to do b u s i n e s s . They f u l f i l l t h i s task by means of seminars and p r e s e n t a t i o n s . They are a l s o r e s p o n s i b l e f o r promot ing i n d i v i d u a l B.C. companies when approached by f i rms or recommended by the M i n i s t r y . W i th i n B.C. the M i n i s t r y a c t s i d e a l l y as a f i r s t p o i n t of c o n t a c t f o r sma l l and medium-s ized f i rms i n t e r e s t e d in e x p o r t i n g ( i n t e r v i e w wi th John Pyper , MIBI). I n t e r e s t e d f i rms would t a l k w i th an o f f i c e r who would a s se s s the company's e x p e r i e n c e , p r o v i d e the l a t t e r w i th p r o t o c o l and bus ines s p r a c t i c e i n f o r - mat ion , make a p p r o p r i a t e r e f e r r a l s , and c o n t a c t the p r o v i n c i a l o f f i c e in the a p p r o p r i a t e coun t r y to in form them that a B.C. 73 company i s l o o k i n g fo r bu s ine s s o p p o r t u n i t i e s , f i rms r e q u i r i n g a s s i s t a n c e would g e n e r a l l y Trade C o r p o r a t i o n . More e x p e r i e n c e d c o n t a c t the B.C. The B.C. Trade C o r p o r a t i o n i s a crown c o r p o r a t i o n des i gned to enhance B.C. e x p o r t s . I t s a c t i v i t i e s a r e overseen by a Board of D i r e c t o r s l a r g e l y compr i sed of bu s ine s s p e o p l e , but i t a l s o comes under the p o r t f o l i o of the M i n i s t e r of I n t e r n a t i o n a l T rade . The C o r p o r a t i o n ' s mandate i s t h r e e f o l d : 1) P r o v i d i n g a s s i s t a n c e to companies w i sh i n g to i n c r e a s e e x p o r t s ; 2) A s s i s t i n g companies w i sh ing to commence e x p o r t i n g ; and 3) He i gh ten ing companies ' awareness of the importance of e x p o r t i n g in i n d i v i d u a l bus ines s p l a n s . B.C. Trade i s composed of an expor t a d v i s o r y d i v i s i o n and a market ing d i v i s i o n . 74 BC E x p o r t A d v i s o r y D i v i s i o n Export Advisory Serv'ces Export Finance Group Info Business Centre CORP. M a r k e t i n g D i v i s i o n Agriculture, Fisheries and Forests Services Branch General Manufactured Products Natural Resources BC Film Commission High Technology To f u l f i l l i t s mandate the C o r p o r a t i o n undertakes a number of a c t i v i t i e s . Through i t s Export A d v i s o r y D i v i s i o n i t p r o v i d e s i n f o r m a t i o n to e x p o r t e r s and would-be e x p o r t e r s through the B.C. Business Network, the B.C. Business C e n t r e , and export a d v i s o r y s e r v i c e s . I t p u b l i s h e s a monthly n e w s l e t t e r , the B.C. E x p o r t e r , which c a l l s a t t e n t i o n to the endeavours of c u r r e n t e x p o r t e r s and p o t e n t i a l e x p o r t i n g o p p o r t u n i t i e s as w e l l as the v a r i o u s s e r v i c e s o f f e r e d by the Trade C o r p o r a t i o n . Export seminars are given on a s e c t o r a l b a s i s , and a s e r i e s of i n t e r n a t i o n a l business b r e a k f a s t s are o f f e r e d to companies i n t e r e s t e d and w i l l i n g to pay. The t o p i c s f o r t h i s S p r i n g ' s b r e a k f a s t s e r i e s were: 1) I n t r o d u c t i o n to Export and Export Readiness 2) Researching your market - How should I choose? 3) F i n d i n g the r i g h t r e p r e s e n t a t i v e and d i s t r i b u t i o n channels 4) P r i c i n g f o r export 5) G e t t i n g P a i d - l e t t e r s of c r e d i t 6) Trade shows and promotions 7) Export documentation 8) Moving your goods 9) D i r e c t m a i l marketing i n the U.S.A. 10) E f f e c t i v e l y t e s t i n g your export market. B.C. Trade has a l s o developed, i n c o n j u n c t i o n with 76 v a r i o u s B.C. Chambers of Commerce, the CORE program (Companies' Readiness f o r E x p o r t ) . CORE c o n s i s t s of a computerized c o u n s e l l - ing s e s s i o n designed to assess companies' r e a d i n e s s f o r export. P a r t i c i p a n t s are asked a s e r i e s of 64 q u e s t i o n s which are an a l y s e d by computer. The s e s s i o n r e s u l t s i n a' 35 page r e - por t with an e v a l u a t i o n of company s t a t u s , a l i s t of recom- mendations and a l i s t of a p p r o p r i a t e sources of i n f o r - mation on p o t e n t i a l e x p o r t i n g . S e s s i o n r e s u l t s p r o v i d e companies with background m a t e r i a l to b r i n g to i n d i v i d u a l c o u n s e l l i n g s e s s i o n s with Trade Corp. o f f i c e r s . The Trade C o r p o r a t i o n ' s Marketing D i v i s i o n a s s i s t s B.C. companies i n marketing t h e i r e x p o r t s . C o u n s e l l i n g i s pr o v i d e d i n each of i t s s i x branches ( a g r i c u l t u r e , f i s h e r i e s and f o r e s t s ; n a t u r a l r e s o u r c e s ; g e n e r a l manufactured pro d u c t s ; high t e c h n o l - ogy; s e r v i c e s and the B.C. F i l m Commission). A d v i s o r y s e r v i c e s o f f e r e d i n c l u d e : export c o u n s e l l i n g and f i n a n c i n g ; and coun- s e l l i n g on s p e c i a l p r o j e c t s i n c l u d i n g b i d d i n g f o r i n t e r n a t i o n a l development agency p r o j e c t s , c o u n t e r t r a d e , and government procurement (B.C. Trade b r o c h u r e ) . I t has a l s o r e c e n t l y es- t a b l i s h e d the B.C. Trade showcase - a permanent d i s p l a y s e t t i n g with r e n t a b l e space f o r up to 350 companies; a catalogue d i s t r i b u t e d on a n a t i o n a l and i n t e r n a t i o n a l b a s i s ; and l i s t i n g on the Japan E x t e r n a l . Trade O r g a n i z a t i o n database (B.C. Trade News). 77 A c c o r d i n g to G a i l McBride, the d i r e c t o r of the S e r v i c e s Branch, the Services' Branch g e n e r a l l y a s s i s t s those companies at the export-ready stage. The branch has a core c l i e n t group composed of the more a c t i v e e x p o r t e r s i n each s e c t o r . There are approximately 25 key c l i e n t s per s e c t o r group, and the c l i e n t base as a whole i s approximately 600 firms l a r g e . A c t i v i t i e s conducted i n c l u d e : o r g a n i z a t i o n of overseas trade m i s s i o n s ; h o s t i n g in-coming m i s s i o n s ; f a c i l i t a t i n g B.C. company trade show p a r t i c i p a t i o n ; r e s e a r c h on i d e n t i f y i n g p r o j e c t s overseas; and forming marketing groups. Of p a r t i c u l a r i n t e r e s t to t h i s study i s the S e r v i c e s Branch promotion of group export marketing. To date BC Trade has e s t a b l i s h e d four such marketing groups, i n c l u d i n g a group of environmental companies seeking to break i n t o the Taiwan market, and an a d v i s o r y group i n h e a l t h c a r e . The longest e s t a b l i s h e d of these groups (2 years) i s the E n g i n e e r i n g Group, c o n s i s t i n g of 22 f i r m s . Those companies were sourced through the C o n s u l t i n g Engineers A s s o c i a t i o n of B.C. (to which a l l belong) and a l l pay a fee to belong to the marketing group. BC Trade p r o v i d e s some funding to the l a t t e r , but t h i s has d i m i n i - shed over time and w i l l soon be terminated. One of the group's major a c t i v i t i e s has been to h i r e a M a n i l l a r e p r e s e n t a t i v e to get more i n f o r m a t i o n that c o u l d enable f i r m s to land Asian Develop- ment Bank (ADB) p r o j e c t s . The group i s hoping to expand and i n c o r p o r a t e f i r m s from other s e c t o r s as w e l l . 78 E v a l u a t i o n of program successes i n the S e r v i c e s Branch poses some d i f f i c u l t i e s , and i s conducted i n f o r m a l l y . Numbers of companies p a r t i c i p a t i n g i n v a r i o u s i n i t i a t i v e s are compiled, as are s a l e s r e s u l t i n g immediately from trade shows (or w i t h i n s i x months a f t e r w a r d ) . P r o f i l e b u i l d i n g i s p o i n t e d out as an important s p i n o f f from such a c t i v i t i e s . (Companies do not make immediate s a l e s f o l l o w i n g a given a c t i v i t y . However, being seen once again i n the market place may enhance s a l e s i n the f u t u r e ) . T h i s i s c o n s i d e r e d important by the Trade Corp, as they argue that s e r v i c e s are o f t e n purchased on the b a s i s of r e p u t a t i o n . The S e r v i c e s Branch a l s o r e c e i v e s r e g u l a r feedback from c l i e n t s , i n f a c t , weekly c o n t a c t i s maintained with core c l i e n t companies. No e v a l u a t i o n s have been made, however, of how companies a s s i s t e d impact on l o c a l and p r o v i n c i a l economies. Nor are formal e v a l u a t i o n s (eg. d e t a i l e d surveys) made of c l i e n t groups to determine program e f f e c t i v e n e s s . 4.1.3 LOCAL AND PRIVATE SECTOR PROGRAMS A s i a P a c i f i c Foundation The A s i a P a c i f i c Foundation was c r e a t e d i n 1984 by the f e d e r a l government as a non p r o f i t o r g a n i z a t i o n . I t s mandate i s to heighten Canadian awareness of the P a c i f i c Rim. The Foun- d a t i o n i s c u r r e n t l y headquartered in Vancouver with a s t a f f of 79 over twenty people. The Vancouver o f f i c e has a budget of $3 m i l l i o n c o n t r i b u t e d by f e d e r a l and p r o v i n c i a l governments as w e l l as the p r i v a t e s e c t o r ( i n t e r v i e w with Sue Hooper, August 28, 1990). The Foundation a l s o has a l i a i s o n o f f i c e i n Montreal and i s e s t a b l i s h i n g o t h ers i n O n t a r i o , Saskatchewan and A l b e r t a . R e p r e s e n t a t i o n i s a l s o proposed f o r Tokyo and Singapore (Asia P a c i f i c Foundation, i n Hutton and Davis, October 1990, p. 2). To f u l f i l l i t s mandate the Foundation has e s t a b l i s h e d programs i n f i v e a r e a s : b u s i n e s s , c u l t u r e , e d u c a t i o n , i n f o r m a t i o n and media a f f a i r s . S p e c i f i c a c t i v i t i e s of r e l e v a n c e to the Vancouver business community i n c l u d e : * f e l l o w s h i p s to l o c a l j o u r n a l i s t s f o r a sojourn of s e v e r a l months i n A s i a (with the aim that such exposure w i l l u l t i m a t e l y r e s u l t i n i n c r e a s e d media coverage of Asian e v e n t s ) ; * a database on a l l Canadian o r g a n i z a t i o n s with a r o l e i n the A s i a P a c i f i c ; * a database on Canadian f i r m s a c t i v e i n A s i a ; * a database on Asian s p e c i a l i s t s ; * bi-monthly p u b l i c a t i o n of a n e w s l e t t e r ; and * l i a i s o n with the Board of Trade f o r APF r e p r e s e n t a t i o n to the l o c a l business community and a s s i s t a n c e with the Board of Trade's annual trade m i s s i o n to A s i a . Vancouver Board of Trade The Vancouver Board of Trade i s comprised of members of Van- couver's business community who choose to j o i n and pay a fee f o r 80 doing so. The Board of Trade performs networking and lo b b y i n g f u n c t i o n s . I t s i n t e r n a t i o n a l d i v i s i o n , the World Trade Centre, p r o v i d e s c o u n s e l l i n g , education and networking o p p o r t u n i t i e s to members i n t e r e s t e d i n e x p o r t i n g . S p e c i f i c s e r v i c e s i n c l u d e : •Market i n f o r m a t i o n • I n t e r n a t i o n a l country n i g h t s , b r i e f i n g and seminars *Trade missions •Access to NETWORK - an e l e c t r o n i c b u l l e t i n board l i s t i n g trade oppor t u n i t i e s from a l l other World Trade C e n t r e s . • R e c i p r o c a l p r i v i l e g e s at other • O n - s i t e r e p r e s e n t a t i v e World Trade Centres from the A s i a - P a c i f i c Foundation. I n t e r n a t i o n a l Finance Centre The IFC was e s t a b l i s h e d f o r the purpose of d e v e l o p i n g Vancouver as a r e c o g n i s e d c e n t r e f o r i n t e r n a t i o n a l f i n a n c e . IFC makes use of s p e c i a l f e d e r a l and p r o v i n c i a l tax-exempting l e g i s l a t i o n f o r no n - r e s i d e n t s to f u r t h e r i t s aims. S p e c i f i c a l l y the IFC works with r e g i s t r a n t s and other to i n c r e a s e a c t i v i t y with n o n - r e s i - dents, the aim being to c r e a t e a "Geneva of the P a c i f i c " . As of September 1990 the IFC had 44 r e g i s t r a n t s ( i n t e r v i e w w i t h M i c h a e l Goldberg, D i r e c t o r ICF, September 10, 1990). The IFC a l s o serves as a mediator between r e g i s t r a n t s and s e n i o r l e v e l s of govern- ments, attempting to keep the l a t t e r ' s tax l e g i s l a t i o n as f l e x i b l e as p o s s i b l e . F i n a l l y , the IFC p u b l i s h e s r e s e a r c h p i e c e s i d e n t i f y i n g new areas i n f i n a n c e where Vancouver possesses c e r t a i n advantages (eg.: asset management, trade f i n a n c e , c a p t i v e 81 i n su rance management, e t c . ) . C i t y of Vancouver The C i t y of Vancouver a l s o p l a y s a r o l e in enhancing t i e s w i th the A s i a P a c i f i c , l a r g e l y through i t s Economic Development O f f i c e . Trade m i s s i o n s are undertaken and e d u c a t i o n a l exchanges e s t a b l i s h e d wi th " S t r a t e g i c " c i t i e s i n c l u d i n g Hong Kong, S i n g - apore and Bangkok. The C i t y i s r e p r e s e n t e d on the S i s t e r C i t y Commission (Vancouver ' s s i s t e r c i t i e s are Guangzhou, Los Ange le s , Yokohama, Ed inburgh , and Odessa) and on v a r i o u s l o c a l b i l a t e r a l t r a d e a s s o c i a t i o n s . The C i t y has a l s o proposed e s t a b l i s h i n g an ., o r g a n i z a t i o n to d e a l w i th the s o c i a l i s sue s which a r i s e w i th i n c r e a s i n g e t h n i c d i v e r s i t y . The proposed Has t ing s I n s t i t u t e would p r o v i d e t r a i n i n g to s e n s i t i z e peop le to the needs of new Canadians and e t h n i c m i n o r i t i e s ( C i t y of Vancouver, 1989 in Hutton and D a v i s , October 1990. p. 6 ) . F i n a l l y , w i t h i n the Economic Development O f f i c e r e s e a r c h i s c o n t i n u o u s l y conducted on V a n c o u v e r ' s bus ines s and economic t r e n d s . (The p o s t a l q u e s t i o n - n a i r e a d m i n i s t e r e d f o r t h i s t h e s i s was undertaken j o i n t l y w i th the Economic Development O f f i c e and the U n i v e r s i t y of B r i t i s h Schoo l of Community and Reg iona l P l a n n i n g ) . 4.2 LOCAL OPTIONS - SOME RECOMMENDATIONS G iven the p l e t h o r a of programs and exper t adv i ce a v a i l a b l e 82 from the above sources, one c o u l d r e a d i l y assume that no need e x i s t s f o r a d d i t i o n a l export a s s i s t a n c e from the l o c a l government. A f t e r a l l , there are s e v e r a l arguments a g a i n s t the d u p l i c a t i o n of e x i s t i n g programs. I t i s assumed that such redundancy i s i n e f f i c i e n t and a waste of sc a r c e r e s o u r c e s ; s i m i l a r l y , that i t d e t r a c t s r e s o u r c e s from other a c t i v i t i e s which are not r e p l i c a t e d . Redundancy i s a l s o b e l i e v e d to render blame more d i f f i c u l t to p i n p o i n t when e r r o r s occur. (Bendor, 1985. p. 29). On the other hand, redundancy i n c e r t a i n c ircumstances i s more e f f i e n t than using a s i n g l e agency to s o l v e a problem or perform a task. There i s no r e a l evidence t h a t b u r e a u c r a t i c c o m p e t i t i o n i s a c t u a l l y w a s t e f u l . S t u d i e s c o n f i r m i n g that redundancy need not be wa s t e f u l i n c l u d e those conducted by: the U.S. J o i n t Economic Committee (1972); Meier (1980); and H i r s c h (1970). Redundancy i s a c t u a l l y d e s i r a b l e i n the f o l l o w i n g i n s t a n c e s : 1. When f a i l u r e i s more l i k e l y to occur i n a s i n g l e channel of act ion/communicat ion/dec i s i o n ; 2. When a f a i l u r e i s most l i k e l y to be c o s t l y ; 3. When i t i s l i k e l y that a second agency c o u l d f i n d a b e t t e r way of a c h i e v i n g the goal set by the m o n o p o l i s t i c agency; and 4. When redundancy can be implemented i n such a way that i t s i n i t i a l pecuniary c o s t s would not be p r o h i b i t i v e (Bendor, p. 53). Thus while l o c a l governments should not attempt to d u p l i - 83 c a t e a l l the p r o v i n c i a l government ' s e f f o r t s in promot ing P a c i f i c Rim t r a d e , some d u p l i c a t i o n would be h e a l t h y . Moreover c e r t a i n a c t i v i t i e s ( g e n e r a l l y the l e s s c o s t l y ones) c o u l d and shou ld be d e c e n t r a l i z e d , in e s sence, r e a l l o c a t e d to m u n i c i p a l or r e g i o n a l l e v e l s of government. As w i l l be demonstrated i n s e c t i o n 4.2, o ther l o c a l programs c o u l d be des i gned to complement those programs remain ing at p r o v i n c i a l and f e d e r a l l e v e l s . C i t i e s must make an i n c r e a s i n g e f f o r t to rega in c o n t r o l over l o c a l economic development p o l i c y , i n c l u d i n g expor t p romot ion . It i s g e n e r a l l y l e f t to the l o c a l l e v e l to ensure that f i rms and s t r a t e g i e s promoted by f e d e r a l and p r o v i n c i a l governments do not c o n t r a d i c t l o c a l g o a l s . It may be that p r i o r i t i e s and p r o j e c t s i d e n t i f i e d by s e n i o r governments are not the same as those recommended by the C i t y . They c o u l d p o t e n t i a l l y have nega t i ve impacts on c e r t a i n s e c t o r s of the C i t y ' s p o p u l a t i o n - impacts un fo r seen by sen io r governments . 1 To some ex ten t t h i s was the case fo r A u s t i n , Texas . In 1983 the s t a t e government was s u c c e s s f u l in i t s e f f o r t s to make A u s t i n the new l o c a t i o n of MCC, the M i c r o e l e c t r o n i c s and Computer Technology C o r p o r a t i o n . I t was hoped that the c o r p o r a t i o n ' s presence would i n c u r a number of p o s i t i v e economic deve lopments . As i t t u rned o u t , however, the assumption of b e n e f i t s was q u e s t i o n a b l e . The company's t e c h n i c a l s p i n o f f p o t e n t i a l was exaggerated (see F a r l e y and G l i ckman, 1986. p. 414). S i m i l a r l y , an economic impact assessment showed the c o r p o r a t i o n to have r e l a t i v e l y weak employment l i n k a g e s w i th the r e s t of the Texas economy ( F a r l e y and G l i ckman, p. 409). F i n a l l y , many landuse consequences of MCC's a r r i v a l were n e g a t i v e . The company l o c a t e d c l o s e to the watershed f o r the c i t y ' s water supp l y , and when other r e s e a r c h f a c i l i t i e s were set up nearby t h i s c r e a t e d d i f f i c u l t i e s f o r l o c a l p l anner s (p. 413). 84 I t i s thus necessary f o r l o c a l governments to p l a y a major r o l e in determining economic s t r a t e g i e s . L o c a l governments w i l l u l t i m a t e l y be r e s p o n s i b l e f o r accommodating the needs and r e a c t i o n s of l o c a l people. Where necessary they w i l l have to develop p o l i c i e s to m i t i g a t e any p o t e n t i a l c o s t s of a s e r v i c e s e c t o r economic development s t r a t e g y . The need f o r p u b l i c l y accountable decision-making f u r t h e r j u s t i f i e s l o c a l governments' r o l e i n economic development and export promotion. L o c a l governments enjoy a g r e a t e r degree of p u b l i c a c c o u n t a b i l i t y than p r o v i n c i a l or f e d e r a l governments. A c c o u n t a b i l i t y i n a m u n i c i p a l economic development agency i s to the C i t y C o u n c i l as a whole, ra t h e r than a s i n g l e i n d i v i d u a l with a p o l i t i c a l c a r e e r at stake. C i t y c o u n c i l l o r s can act more immediately as checks on each other's a m b i t i o n s . A p r o v i n c i a l m i n i s t e r , however, i s the s o l e r e s p o n s i b l e f o r a c t i o n s taken by her or h i s m i n i s t r y . Consequently, s/he i s more l i k e l y to promote a c t i o n s with h i g h p u b l i c v i s i b i l i t y , but which are not n e c e s s a r i l y i n the best i n t e r e s t s of the p u b l i c over the long term. P u b l i c a c c o u n t a b i l i t y may be j e o p a r d i z e d when a crown c o r p o r a t i o n , such as B.C. Trade, i s used as a v e h i c l e f o r implementing economic p o l i c y . P u b l i c s e c t o r crown c o r p o r a t i o n s have t r a d i t i o n a l l y been j u s t i f i e d f o r the f o l l o w i n g reasons: 85 1. To a l l e v i a t e or prevent b u r e a u c r a t i c i n e r t i a from s e t t l i n g i n ; 2. To encourage s t a f f with scarce or d e s i r a b l e t e c h n i c a l and business e x p e r t i s e to work f o r the agency; and 3. To prevent the short-term p o l i t i c a l i n t e r e s t s of the m i n i s t e r i n charge from impinging on the c o r p o r a t i o n ' s true mandate (Laux and Molot, 1988, p. 67). Yet such c o r p o r a t i o n s have not and do not always act i n the p u b l i c ' s best i n t e r e s t s . Musolf (1959) examined and found wanting t r a d i t i o n a l l i n k s of crown c o r p o r a t i o n a c c o u n t a b i l i t y to the f e d e r a l government. These l i n k s i n c l u d e d : q u e s t i o n s ; par- l i a m e n t a r y debates; and reviews undertaken by v a r i o u s committees. Of p a r t i c u l a r concern was the f a c t t h a t , h i g h l y prominent or c o n t r o v e r s i a l e n t i t i e s excepted, l i t t l e a t t e n t i o n or p u b l i c exposure was given to crown c o r p o r a t i o n s : ... a f a m i l i a r complaint of Members of Parliament has been t h a t those c o r p o r a t i o n s that do not i n c u r d e f i c i t s escape the s c r u t i n y of Parliament. [Yet] the tax- payer's r i s k extends throughout the gamut of c o r p o r a - t i o n s and i s not c o n c e n t r a t e d i n those with a d e f i c i t Musolf, p. 139). A c c o u n t a b i l i t y i s s u e s have not diminished i n recent y e a r s . The Board of Toronto Harbour Commissioners p r e s e n t s us with a contemporary example of a Crown c o r p o r a t i o n which f a i l e d to act i n the p u b l i c i n t e r e s t . The c o r p o r a t i o n was to be f i n a n c i a l l y s e l f - s u f f i c i e n t , and possessed the broad mandate of " . . . a c q u i r - [ i n g ] , e x p r o p r i a t [ i n g ] , h o l d [ i n g ] , s e l l [ i n g ] , l e a s [ i n g ] , and otherwise d i s p o s [ i n g ] of such r e a l e s t a t e ... as i t may deem 86 necessary or d e s i r a b l e f o r the development, improvement, main- tenance and p r o t e c t i o n of the harbour" (Board of Toronto Harbour Commissioners Act, 1911, S t a t u t e s of O n t a r i o ) . T h i s was problem- a t i c . D i r e c t p u b l i c c o n t r o l of the agency through f i n a n c i a l mechanisms was extremely l i m i t e d . To make matters worse, the Board r e s o r t e d to enormous s a l e s of sc a r c e p u b l i c w a t e r f r o n t land to compensate f o r i t s u n p r o f i t a b l e a c t i v i t i e s (see O'Mara, 1984). Some h i g h l y q u e s t i o n a b l e s a l e s f o r l e s s than market value were made as r e c e n t l y as 1986 and 1987 (see the Toronto Star Oct 25, 1986 and June 16, 1987). A Royal Commission i n q u i r y was even- t u a l l y h e l d , but not u n t i l Toronto had l o s t much of i t s v a l u a b l e waterfront r e s o u r c e s . T h i s i s not meant as a case f o r disman- t l i n g a l l crown c o r p o r a t i o n s , but i t underscores the importance of l o c a l governments having the a b i l i t y to act i n the same spheres as p o l i c y - i m p l e m e n t i n g crown c o r p o r a t i o n s . A f u r t h e r advantage to l o c a l economic development agencies i s t h e i r g r e a t e r f l e x i b i l i t y r e l a t i v e to p r o v i n c i a l a g e n c i e s . Feedback from l o c a l program implementation has a b e t t e r chance of being heard and i n c o r p o r a t e d i n t o programs because there are fewer b u r e a u c r a t i c channels through which they must proceed. The l e s s e l a b o r a t e the bureaucracy, the g r e a t e r the l i k e l i h o o d of f l e x i b l e behaviour. The b u r e a u c r a t i c model i s premised on i t s a b i l i t y to i n s u r e r e l i a b i l i t y and d e p e n d a b i l i t y . Yet these 87 macro-goals l e a d to pre o c c u p a t i o n with r u l e s and procedure: In order to assure e f f i c i e n t , a ccountable, and e q u i - t a b l e performance, government o r g a n i z a t i o n s o f t e n p r o l i f e r a t e l a r g e and complex systems of r u l e s . Such o r g a n i z a t i o n s may then become rule-bound - more concerned with being s e l f - p r o t e c t i v e and safe than with c r e a t i n g e f f e c t i v e s o l u t i o n s to problems that a r i s e (Eddy, 1981. p. 4). I n f l e x i b i l i t y i n turn w i l l cause other i n e f f i c i e n c i e s or dysfunc- t i o n s to develop w i t h i n an a d m i n i s t r a t i o n , s p e c i f i c a l l y : d ecreased i n c e n t i v e f o r p e r s o n a l achievement; goal displacement; poor i n t e r n a l and e x t e r n a l communications; and lack of a d a p t i v e c a p a c i t y (Haynes, 1980. p. 17). C i t i e s i n g e n e r a l are i n c r e a s i n g l y r e c o g n i z i n g the need to become more i n v o l v e d i n i n t e r n a t i o n a l r e l a t i o n s and t r a d e . T h i s i s p a r t l y due to the f l e x i b i l i t y c o n s i d e r a t i o n d i s c u s s e d above. But i n a d d i t i o n , ...the s h i f t towards a g l o b a l economy has heightened l o c a l awareness of i n t e r n a t i o n a l economic competi- t i o n , and [ i n t e r - c i t y r e l a t i o n s h i p s ] are p e r c e i v e d as a means of st r e n g t h e n i n g business t i e s and improving market a c c e s s i b i l i t y i n other c o u n t r i e s . . . . C i t i e s are becoming more important i n economic development as they l i n k up with c o u n t e r p a r t s i n other areas of the world" (Report to C o u n c i l , C i t y of Toronto I n t e r n a t i o n a l O f f i c e , March 1990. p. 3). There are a l s o l o c a l l y - s p e c i f i c reasons f o r advocating d e c e n t r a l i z a t i o n of export promotion programs. Vancouver i s 88 well-known to Asian business people and should be able to take advantage of i t s good r e p u t a t i o n . Vancouver i s p e r c e i v e d as a d e s i r a b l e p l a c e to v i s i t , a c l e a n and safe p l a c e to l i v e . I t i s a very a t t r a c t i v e p l a c e i n which to do business and to c o n s i d e r i n v e s t i n g . L o c a l p o l i c i e s can be designed to c a p i - t a l i z e on Vancouver's r e p u t a t i o n and to enhance the c i t y ' s a t t r a c t i v e n e s s to business v i s i t o r s and p o t e n t i a l i n v e s - t o r s . T r a n s p o r t a t i o n f a c i l i t i e s , a good telecommunications i n f r a s t r u c t u r e , and "smart" b u i l d i n g s which accommodate f i r m s ' i n c r e a s i n g r e l i a n c e on e l e c t r o n i c networking are but a few of the c o n s i d e r a t i o n s that can a t t r a c t a f i r m to Vancouver. T h i s can help l o c a l KIS f i r m s , p a r t i c u l a r l y those who wish to i n c r e a s e t i e s with the P a c i f i c Rim. Given that there i s a d e f i n i t e need f o r l o c a l s e r v i c e export promotion a c t i v i t y , I propose t h a t programs be d e v i s e d f o r four c a t e g o r i e s of a c t i v i t y : r e s e a r c h , e d u c a t i o n , networking, and improving the l o c a l business environment. I w i l l d i s c u s s below the scope f o r l o c a l a c t i v i t y i n each of these a r e a s . I d e a l l y the Greater Vancouver Regional D i s t r i c t c o u l d e v e n t u a l l y be i n a p o s i t i o n to i n i t i a t e most of these a c t i v i t i e s , as the m e t r o p o l i - tan government would be the most a p p r o p r i a t e f o r t h i s k i nd of promotion. U n t i l the GVRD possesses an e f f e c t i v e power base, however, these p o l i c i e s would have to be implemented at the c i t y l e v e l , perhaps i n c o n j u n c t i o n with other i n t e r e s t e d m u n i c i p a l - i t i e s . In the examples that f o l l o w , I w i l l be r e f e r r i n g 89 s p e c i f i c a l l y to the C i t y of Vancouver. Nonetheless, the type of a c t i v i t y recommended would be a p p l i c a b l e to many medium and l a r g e - s i z e d metropoles. 4.2.1 RESEARCH In terms of s e r v i c e promotion, there are two types of r e s e a r c h that need to be pursued by the C i t y ' s Economic Development O f f i c e : l o c a l and i n t e r n a t i o n a l . L o c a l r e s e a r c h would i n c l u d e g e n e r a l r e s e a r c h on the c i t y ' s economy, on up-and-coming economic areas, and on companies i n s e c t o r s t a r g e t t e d by the c i t y as i n need of promoting. To some extent t h i s i s being done a l r e a d y ; however, I s h a l l be recommending i n s e c t i o n 4.2.2 that t h i s r e s e a r c h be put to a very s p e c i f i c use. A f u r t h e r m o d i f i c a t i o n on the r e s e a r c h s t r a t e g y c o u l d see the C i t y a c t i n g as a c o n s u l t a n t to the p r o v i n c e . The p r o v i n c i a l government c o u l d c o n t r a c t the c i t y to conduct r e s e a r c h on Vancouver f i r m s i n p r o v i n c i a l s e c t o r s of p r i o r i t y . In t h i s manner the c i t y would r e c e i v e a d d i t i o n a l monies f o r i t s programs as w e l l as b e n e f i t from r e s e a r c h economies of scale". At a ge n e r a l l e v e l , awareness and understanding should be heightened of . d i f f e r e n t types of a s s i s t a n c e ( f i n a n c i a l and c o u n s e l l i n g ) a v a i l a b l e to P a c i f i c Rim e x p o r t e r s at the p r o v i n c i a l and f e d e r a l l e v e l s . T h i s w i l l p r ovide a p o i n t of departure f o r e f f e c t i v e d i s c u s s i o n and c o o r d i n a t i o n 90 with s e n i o r governments in the expor t promot ion a rena . D e t a i l e d a n a l y s i s shou ld be made of the way KIS development a f f e c t s the c i t y as a whole, p a r t i c u l a r l y w i th regard to i t s s p a t i a l , employment and economic development i m p l i c a t i o n s . It i s p a r t i c u l a r l y e s s e n t i a l to be s p e c i f i c about the type of KIS f i rms promoted. " [ H ] i g h t e c h f i rms are not a l l a l i k e and, as a r e s u l t , have d i f f e r e n t l o c a t i o n a l requ i rements and i m p l i c a - t i o n s f o r t h e i r host communi t ies " ( F a r l e y and G l i ckman, 1986. p. 414). Mature t e c h n o l o g y - i n t e n s i v e a c t i v i t i e s such as the p r o d u c t i o n of s i l i c o n c h i p s tend to c r e a t e p o l a r i z e d employment s t r u c t u r e s , to be s u s c e p t i b l e to moving to lower income coun - t r i e s , and even to use some t o x i c m a t e r i a l s (see Applebaum, 1983). S m a l l e r , more i n n o v a t i o n - b a s e d f i r m s ( p a r t i c u l a r l y those which a re l o c a l l y - c o n t r o l l e d ) tend to purchase l o c a l i n p u t s . In t h i s manner they o f t e n c r e a t e demand f o r more s p e c i a l i z e d s e r v i c e s . Research at the i n t e r n a t i o n a l l e v e l would r e q u i r e a s u b s t a n t i a l budgetary i n c r e a s e fo r the economic development 2 o f f i c e (as would s e v e r a l of the recommendations that f o l l o w ) . 2 Budget i n c r e a s e s c o u l d be a c h i e v e d in s e v e r a l ways. F i r s t , C i t y C o u n c i l c o u l d approve measures to a l l o c a t e a c e r t a i n p o r t i o n of development l e v i e s to the EDO. Vancouver i s c u r r e n t l y a t t empt i n g to make d e v e l o p e r s p r o v i d e or pay f o r p u b l i c a r t - why not have them c o n t r i b u t e towards' a c t i o n s tha t would improve the l o c a l bu s i ne s s c l i m a t e as w e l l ? Second, i f many of the f u n c t i o n s c u r r e n t l y undertaken by the B.C. Trade C o r p o r a t i o n were e l i m i n - a ted (at l e a s t in the Vancouver area) the monies used to support these a c t i v i t i e s shou ld be r e a l l o c a t e d to the EDO. F i n a l l y , and 91 However, i f the c i t y i s to p l a y a r o l e i n a s s i s t i n g KIS firms to export to the P a c i f i c Rim, s t a f f must be b e t t e r informed about the r e g i o n as w e l l . S t a f f must understand more about Asian c o u n t r i e s , p a r t i c u l a r l y those where export o p p o r t u n i t i e s are b e l i e v e d to e x i s t . Basic r e s e a r c h c o u l d begin with l o c a l l y a v a i l a b l e r e s o u r c e s . The next s t e p would be to take advantage of r e l a t i o n s h i p s e s t a b l i s h e d through c i t y twinning. Using c o n t a c t s e s t a b l i s h e d i n t h i s manner s t a f f c o u l d f i n d out more about A s i a n companies i n r e l e v a n t enduser s e c t o r s . S t a f f c o u l d a l s o maintain c l o s e c o n t a c t with Canadian Trade Commissioners and Embassies i n the a p p r o p r i a t e c o u n t r i e s . I d e a l l y c i t y s t a f f c o u l d have access to any market r e s e a r c h commissioned by the Trade commissioners and Embassies. In f a c t , by communicating Vancouver p r i o r i t i e s l o c a l s t a f f may p r o v i d e an important input i n t o Trade Commission r e s e a r c h . Moreover, c l o s e r e l a t i o n s h i p s should be e s t a b l i s h e d with c o n s u l a t e s and trade commissions from P a c i f i c Rim p a r t i e s . If these are taken s e r i o u s l y , such r e l a t i o n s h i p s can become an important source of market i n f o r m a t i o n and a u s e f u l networking t o o l . A f t e r these sources have been u t i l i z e d to the f u l l e s t e x t e n t , v i s i t s c o u l d be used to p r o v i d e a d d i t i o n a l i n f o r m a t i o n as r e q u i r e d . more c o n t r o v e r s i a l l y , a small surtax c o u l d be added to a l l p r o p e r t y purchases made i n Vancouver by n o n - r e s i d e n t s r e g a r d l e s s of country of o r i g i n . Revenues r a i s e d by t h i s tax c o u l d fund a number of programs, i n c l u d i n g l o c a l economic development. 92 In a d d i t i o n , Economic Development s t a f f should become b e t t e r informed about i n t e r n a t i o n a l l e n d i n g agencies. Such awareness c o u l d be c u l t i v a t e d i n c o n j u n c t i o n with p r o v i n c i a l government e f f o r t s so as to a v o i d unnecessary cost and e f f o r t . Ongoing co n t a c t with m u l t i l a t e r a l o r g a n i z a t i o n s such as the World Bank and the A s i a n Development Bank i s recommended f o r the purpose of keeping informed about loans being n e g o t i a t e d and p r o j e c t s a v a i l a b l e f o r b i d d i n g . Often such p r o j e c t s c o n s t i t u t e o p p o r t u n i t i e s f o r l o c a l f i r m s , and i f the c i t y i s to p l a y a r o l e i n encouraging s e r v i c e e x p o r t s , i t should be cog- n i z a n t of as many o p p o r t u n i t i e s as p o s s i b l e . F i n a l l y , s t a f f should seek to be aware of c u r r e n t and p o t e n t i a l A s i a n i n v e s t o r s i n Vancouver-based f i r m s . T h i s investment can h e l p promote Vancouver exports to the P a c i f i c Rim, both d i r e c t l y and i n d i r e c t l y . As Hutton and Davis (1989) note: [Asian] immigrants b r i n g with them an accumulated knowledge of the language and c u l t u r e of t h e i r coun- t r i e s of o r i g i n . Many of these immigrants b r i n g as w e l l e x t e n s i v e knowlege of the business c o n d i t i o n s and p r a c t i c e s of t h e i r former homelands and begin to add to t h i s base an expanding f a m i l i a r i t y with market c o n d i - t i o n s of the new homelands ....Many ... choose to c a p i t a l i z e on t h e i r experience to expand markets both l o c a l l y and abroad. T h e i r a c t i v i t i e s promote i n c r e a s e d i n t e r n a t i o n a l t r a de and thus b e n e f i t l o c a l consumers through new and cheaper products, l o c a l business people through expanded business o p p o r t u n i t i e s , and l o c a l labour through i n c r e a s e d employment o p p o r t u n i t i e s (Hutton and Davis, p. 27). 93 At l e a s t two of the f i r m s i n t e r v i e w e d f o r the study ex- pressed the view that g r e a t e r knowledge of l o c a l economic s e c t o r s favoured or i n v e s t i g a t e d by Asian i n v e s t o r s would be good fo r t h e i r b u s i n e s s . Moreover, sma l l e r l o c a l l y c o n t r o l l e d f i r m s r e q u i r e a d d i t i o n a l investment to enable them to expand t h e i r o p e r a t i o n s . Other c i t i e s have reco g n i z e d t h i s need and attempted to address i t . For example, Metro Toronto hosted a Japanese mi s s i o n to Toronto with the e x p l i c i t goal of promoting Japanese investment i n l o c a l p h armaceutical r e s e a r c h f i r m s . Edgington and Goldberg's (1989) o b s e r v a t i o n s of e t h n i c Chinese investment imply that t h i s c o u l d be f e a s i b l e i n Vancouver as w e l l . They argue that Vancouver and B.C.'s strong economic growth i n 1989 and 1990, i n c o n j u n c t i o n with s i g n i f i c a n t i n - m i g r a t i o n to the c i t y , has g r e a t l y f a c i l i t a t e d l o c a l investment by t h i s group: ... B.C. i s a t t r a c t i n g s e r i o u s e t h n i c Chinese business i n v e s t o r s , whereas most of these people focussed on Toronto and Southwestern O n t a r i o p r e v i o u s l y . .,.[T]hese [are] a c t i v e i n v e s t o r s i n s t e a d of the r e t i r e d e n t r e p r e - neurs... Moreover, there i s evidence of s i m i l a r i n t e r e s t emerging up from e t h n i c Chinese i n v e s t o r s i n M a l a y s i a , Singapore, and even T h a i l a n d . Thus, the investment p i c t u r e appears to be very s t r o n g o v e r a l l , i s proceeding broadly on a number of f r o n t s , and i s overwhelmingly made up of numerous ( i n i t i a l l y at l e a s t ) small s c a l e investments (p. 1 1 ) . 94 4.2.2 NETWORKING Much of the networking c u r r e n t l y underway i n Vancouver occurs w i t h i n the p r i v a t e s e c t o r and p r i v a t e s e c t o r i n s t i t u t i o n s . The C i t y ' s Economic Development O f f i c e p a r t i c i p a t e s i n t h i s to some ext e n t . I t sends a r e p r e s e n t a t i v e to b i l a t e r a l o r g a n i z a t i o n s ' a c t i v i t i e s , e v i d e n t l y as a means of l e a r n i n g more about l o c a l f i r m s and t h e i r a c t i v i t i e s at home and abroad. I t i s my c o n t e n t i o n , however, that the c i t y has a r o l e to p l a y i n some more focussed networking a c t i v i t i e s . The number and p r o p o r t i o n of small and medium s i z e d f i r m s i n the l o c a l economy are i n c r e a s i n g , p a r t i c u l a r l y i n the s e r v i c e s e c t o r . Smaller f i r m s are not incapable of e x p o r t i n g . Nonetheless, many with otherwise c o m p e t i t i v e s e r v i c e s f i n d the task of e x p l o r i n g new markets d i f f i c u l t or i n f e a s i b l e because of the time and r e s o u r c e s r e q u i r e d . For such firms the most e f f i c i e n t way of g e t t i n g acquainted with a new export market may be i n c o n j u n c t i o n with one or more experienced f i r m s by marketing the s e r v i c e i n a consortium approach. In f a c t , i t was d i s c o v e r e d a f t e r i n t e r v i e w s ( d e s c r i b e d i n Chapter Three) had taken p l a c e that two i n t e r v i e w e e s had a l r e a d y teamed up to work on a p r o j e c t i n Southeast A s i a . L o c a l governments c o u l d a s s i s t s m a l l e r s e r v i c e f i r m s whose s e r v i c e s are export-ready by l i n k i n g them up with other firms whose products and or s e r v i c e s c o u l d be complementary. Linkage c o u l d focus upon an 95 o p p o r t u n i t y i d e n t i f i e d by one of Vancouver's s i s t e r c i t i e s i n the P a c i f i c Rim; by the Canadian Trade Commission Network overseas, or by a p r o v i n c i a l o f f i c e abroad. As noted i n s e c t i o n 4.1.2, BC Trade C o r p o r a t i o n ' s S e r v i c e s Branch has i n i t i a t e d a s i m i l a r networking s t r a t e g y . However, t h i s s t r a t e g y has been i n f l u e n c e d by p r o v i n c i a l p r i o r i t i e s , not n e c e s s a r i l y c i t y ones. There i s no attempt to assess these companies a s s i s t e d by the c o r p o r a t i o n i n terms of t h e i r economic l i n k a g e s and impacts. In f a c t , the approach used i n company s o u r c i n g i s unsystematic. I t i s designed f o r those who are a l r e a d y export ready. I t makes no attempt to l i n k stronger firms with s m a l l e r , newer f i r m s . By c o n t r a s t , the C i t y Economic Development O f f i c e c o u l d t a r g e t s e v e r a l s p e c i f i c KIS s e c t o r s demonstrated worthy of encouraging. The c i t y would have to source i n t e r e s t e d firms with a p p r o p r i a t e c h a r a c t e r i s t i c s and s i m i l a r geographic i n t e r e s t s . Surveys such as the one used i n t h i s study c o u l d be one way of doing so. The c i t y c o u l d s e l e c t f i r m s based upon some p r e - e s t a b l i s h e d c r i t e r i a c o n s i d e r e d important from i t s p o i n t of view. The c i t y would then c o n t a c t s e l e c t e d f i r m s and i n v i t e them to a seminar, or s e r i e s t h e r e o f , concerning e x p o r t i n g s e r v i c e s with an emphasis on the consortium approach. Not only would firms have an o p p o r t u n i t y to l e a r n more about e x p o r t i n g o p p o r t u n i t i e s , they would a l s o be put i n c o n t a c t 96 with one a n o t h e r . The C i t y c o u l d coopera te w i th the P rov ince once i t had sourced companies of l o c a l importance on a s y s temat i c b a s i s . It c o u l d a l s o c o l l a b o r a t e w i th the Board of T r a d e , once ap - p r o p r i a t e f i r m s in d e s i r a b l e s e c t o r s had been t a r g e t t e d . In t h i s manner some of the c o s t s of the endeavour would be reduced as w e l l . A v a r i a t i o n of the network ing approach, i n v o l v i n g s t r a t e g i c a l l i a n c e s , has been used w i th success by the M e t r o p o l i t a n Toronto Economic D i v i s i o n . Recen t l y the agency o r g a n i z e d a m i s s i on to France composed of twelve companies in the te lecommun ica t ions s e c t o r . Companies had been s e l e c t e d from respondants to a c i t y survey on expor t a c t i v i t y and export r e a d i n e s s . Economic Development s t a f f matched these companies w i th a p p r o p r i a t e F rench companies w i th a view to promot ing s t r a t e g i c a l l i a n c e s between them. A c c o r d i n g to one of M e t r o ' s Sen io r Development o f f i c e r s , r e s e a r c h and t a r g e t t i n g were the keys to s u c c e s s f u l c i t y i nvo l vement : Our r e s u l t s a re a c h i e v e d by do ing very deep homework on our companies be fo re we s t a r t the a c t i v i t y . We d o n ' t do a g e n e r a l program but sc reen companies a f t e r hav ing t a r g e t t e d a s p e c i f i c o p p o r t u n i t y . Then we do expor t r e a d i n e s s t r a i n i n g . " ( te lephone i n t e r v i e w wi th B r i a n F r e n c h , J u l y 5, 1991). 97 Another s u c c e s s f u l type of networking occurs through c i t y twinning. Many of " the Vancouver f i r m s i n t e r v i e w e d appeared s k e p t i c a l about s p i n o f f s from s i s t e r c i t y r e l a t i o n s h i p s . Nonetheless, the r e s u l t s are o f t e n g r e a t e r than p e r c e i v e d . A r e l a t i o n s h i p with an As i a n business p a r t n e r i s o f t e n i n d i r e c t l y enhanced by formal b u r e a u c r a t i c c o n t a c t s , and e x t r a credence l e n t to missions and other a c t i v i t i e s i n v o l v i n g companies from twinned c i t i e s . If p a r t i c i p a t i n g c i t i e s take the twinning r e l a t i o n s h i p s e r i o u s l y enough genuine c o o p e r a t i o n between A s i a n and Canadian firms can ensue d i r e c t l y . Such has been the case with Calgary and Daqing, China: T h i s twinning r e l a t i o n s h i p has r e s u l t e d i n m i l l i o n s of d o l l a r s of business being conducted between the [Calgary] p r i v a t e s e c t o r and Daqqing's o i l i n d u s t r y . A new Daqing i n i t i a t i v e i s being spearheaded by the [Calgary Economic Development] A u t h o r i t y i n the area of waste water and potable water treatment, a p i l o t p r o j e c t t h at c o u l d r e s u l t i n g r e a t e r a c t i v i t y throughout the P.R.C. by p r i v a t e s e c t o r en- g i n e e r i n g f i r m s along with the A u t h o r i t y (Calgary Economic Development A u t h o r i t y O r g a n i z a t i o n a l P r o f i l e . A p r i l 1990, p. 11). Toronto has a l s o used c i t y c o n t a c t s as a means of c r e a t i n g export business f o r l o c a l p r i v a t e s e c t o r f i r m s : Toronto C i t y H a l l ... p r o v i d e d t r a i n i n g f o r a fireman i n China, town pla n n e r s from Mexico and Kenya, and p u b l i c h e a l t h o f f i c i a l s from L a t i n America. In a d d i t i o n to what they l e a r n e d at C i t y H a l l , these i n t e r n a t i o n a l v i s i t o r s made c o n t a c t with a wide range of Canadian i n s t i t u t i o n s and b u s i n e s s e s " ( C i t y P l anning, Summer 1987). The I n t e r n a t i o n a l O f f i c e has e s t a b l i s h e d and/or supported e x i s t i n g programs i n the areas of S i s t e r C i t y programs, h o s t i n g v i s i t i n g d e l e g a t i o n s , i n t e r n a t i o n a l s t a f f exchanges, and 98 l i a s o n with e x t e r n a l groups pursuing t h e i r own i n t e r n a t i o n a l p r o j e c t s (Report to C o u n c i l , p. 4). In China alone, the I n t e r n a t i o n a l O f f i c e a s s i s t a n c e c l a i m s to have f a c i l i t a t e d the f o l l o w i n g business s u c c e s s e s : •Northern Teleacom's b i d f o r a c o n t r a c t to supply the DMS switch (a multi-mi 11 ion d o l l a r p r o j e c t with p o t e n t i a l f o r a d d i t i o n a l c o n t r a c t s i n other Sichuan c i t i e s ) . •Armand A s s o c i a t e s ' p r o p o s a l r e g a r d i n g a f e r t i l i z e r c o n v e r s i o n p r o j e c t . A f e a s i b i l i t y study was completed i n 1989; work i s now i n progress on the e n g i n e e r i n g d e s i g n f o r a manufacturing p l a n t . *X-Rad I n t e r n a t i o n a l signed a t e c h n i c a l agreement with a Chongqing f a c t o r y f o r a technology t r a n s f e r i n March 1989. *The Urban T r a n s i t Development C o r p o r a t i o n conducted a p r e l i m i n a r y study of the urban t r a n s i t needs of Chongqing in 1986. *A number of p o t e n t i a l j o i n t venture p r o j e c t s were under d i s c u s s i o n i n e a r l y 1989, but f u r t h e r p r o g r e s s was h a l t e d f o l l o w i n g the events i n June. (Report to C o u n c i l , p. 8) . 4.2.3 EDUCATION Educati o n i s an e s s e n t i a l component of any export s t r a t e g y . In the f i r s t s e c t i o n of t h i s chapter we d e s c r i b e d some of the e d u c a t i o n a l a c t i v i t i e s , n otably seminars and business b r e a k f a s t s , undertaken by the B.C. Trade C o r p o r a t i o n and the Vancouver Board of Trade. Many seminars given by these agencies c o n s i s t of g e n e r a l i z e d i n f o r m a t i o n on export procedure; l e g a l a s p e c t s to business i n P a c i f i c Rim c o u n t r i e s ; t i p s on e t i q u e t t e 99 and indigenous s o c i a l and b u s i n e s s c u l t u r e . While such seminars are frequented, i t i s d o u b t f u l that they are of great value in a c t u a l l y promoting e x p o r t s . Such i n f o r m a t i o n i s a l r e a d y c u r r e n t l y a v a i l a b l e from a wide v a r i e t y of sources i n c l u d i n g popular business l i t e r a t u r e . Moreover, i t o f t e n f a i l s to meet the needs of p a r t i c i p a n t s and there are no e f f e c t i v e channels f o r communicating those needs. One interviewee c r i t i c i z e d p r o v i n c i a l l y - a d m i n i s t e r e d seminars because they f a i l e d to recognize that many p o t e n t i a l e x p o r t e r s were new Canadians or Asian i n v e s t o r s . If such r e c o g n i t i o n had been made, seminars would have been o f f e r e d i n Cantonese or Mandarin; at minimum t r a n s l a t o r s c o u l d have been o n - s i t e d u r i n g the seminars. A more a p p r o p r i a t e use of some of these e d u c a t i o n a l resources would be to focus upon a s s i s t i n g companies to become export ready. Through the B.C. Trade C o r p o r a t i o n ' s CORE program the p r o v i n c e has begun to i n v e s t i g a t e t h i s s t r a t e g y . As noted e a r l i e r , however, CORE i s mainly an assessment program and s t i l l very g e n e r a l i z e d . If the C i t y were to a d m i n i s t e r i t s own program of CORE assessment and t r a i n i n g as a l o c a l a l t e r n a t i v e to that of BC Trade, i t c o u l d b e t t e r meet the needs of s p e c i f i c s e c t o r s . Indeed, as the Economic Development O f f i c e i s o f t e n the f i r s t p o i n t of c o n t a c t f o r many small b u s i n e s s e s s e t t i n g up or expanding o p e r a t i o n s , i t would be i n a p o s i t i o n to b e t t e r 100 unders tand the needs and c o n s t r a i n t s of s m a l l e r companies. E d u c a t i o n a l programs shou ld a l s o be deve loped to meet the needs of the l o c a l work fo rce . If KISs and t h e i r expo r t s a re to be promoted, we must be sure that l o c a l l abour can b e n e f i t . Such programs c o u l d aim at c r e a t i n g p r o f e s s i o n a l s and p a r a - p r o f e s s i o n a l s , and shou ld f a c i l i t a t e s k i l l s upgrad ing of workers who are or w i l l be d i s p l a c e d by d e c l i n e s i n re source and r e s o u r c e - p r o c e s s i n g i n d u s t r i e s . In f a c t , e d u c a t i o n of l abour i s c r u c i a l i f KIS export promot ion i s to be a v i a b l e economic development s t r a t e g y . Yet Vancouver and B.C. as a whole a re in danger of f a i l i n g to address the e d u c a t i o n i s s u e : B.C. now has the lowest u n i v e r s i t y enrolment r a t e in Canada -40% below the n a t i o n a l average . We a l s o have the lowest l e v e l of p r o v i n i c a l o p e r a t i n g g ran t s and the lowest l e v e l of s tudent a i d per c a p i t a . Our l e v e l of o p e r a t i n g g ran t s to u n i v e r s i t i e s per f u l l - t i m e s tudent ranks on ly ahead of O n t a r i o and P .E . I . ( S e e l i g and A r t i b i s e , January 1991, p. 78) . E d u c a t i o n a l programming can a l s o be conducted in a much broader sense . I t can be used to promote more pro found c o n t a c t s . For example, the c i t y may wish to fund s e v e r a l s c h o l a r s h i p s f o r s tudent s i n P a c i f i c Rim c o u n t r i e s ( p a r t i c u l a r l y f o r s tudent s from s i s t e r c i t i e s i n those c o u n t r i e s ) to s tudy in Vancouver . Not on l y would t h i s promote good r e l a t i o n s between Vancouver and the r e c i p i e n t s ' c i t i e s i t would a l s o enab le r e c i p i e n t s to become f a m i l i a r w i th Vancouver and to deve lop a sense of comfort i n the 101 c i t y . T h i s would be of p a r t i c u l a r b e n e f i t should these i n d i v i d u a l s e v e n t u a l l y become i n v o l v e d i n t h e i r c o u n t r i e s ' b u s i n e s s or government s e c t o r s . While a s i m i l a r program e x i s t s at the s e n i o r l e v e l (see Hutton and Davis 1990), i t would be d e s i r a b l e f o r the C i t y to t a i l o r i t s own program, perhaps using p r o v i n c i a l funding. E d u c a t i o n at the p r o f e s s i o n a l l e v e l i s a l s o important. P r o f e s s i o n a l s coming to Vancouver on an exchange or t r a i n i n g m i s s i o n gain exposure to l o c a l c o n d i t i o n s , but they are i n e v i t a b l y exposed to l o c a l producer s e r v i c e s as w e l l . In many in s t a n c e s they w i l l have a market f o r some of those s e r v i c e s i n t h e i r home country. I t seems i r o n i c , however, that the UBC Centre f o r Human Settlements has launched a program f o r t r a i n i n g p l a n n e r s i n developing c o u n t r i e s without meaningful c o o p e r a t i o n with the C i t y of Vancouver. Both the C i t y and CHS c o u l d have b e n e f i t t e d from c l o s e r t i e s : d e v e l o p i n g country planners and Vancouver planners c o u l d have made some u s e f u l c o n t a c t s and gained some p r a c t i c a l knowledge about the way p l a n n i n g i s done here on a day-to-day b a s i s . F i n a l l y , education has a p u b l i c dimension; s p e c i f i c a l l y , i n f o r m a t i o n conveyed to the p u b l i c at l a r g e and to Vancouver fi r m s through the l o c a l news media. As noted i n Chapter Three, many i n t e r v i e w e e s f e l t that media coverage of Asian events and trends c o u l d only enhance Vancouver f i r m s ' understanding of, and 102 a b i l i t y to compete in, . P a c i f i c Rim market s . The A s i a P a c i f i c Foundat ion c u r r e n t l y o f f e r s a p r i z e f o r l o c a l media to v i s i t A s i a , w i th the aim of promot ing g r e a t e r A s i an cove rage . The C i t y c o u l d l aunch a s i m i l a r i n i t i a t i v e . 4.2.4 IMPROVING THE LOCAL BUSINESS ENVIRONMENT To some e x t e n t , l o c a l bu s ine s s environment i s a f u n c t i o n of a complex set of f a c t o r s , many beyond the c o n t r o l of governments. N o n e t h e l e s s , t he re are a c t i o n s which c o u l d be taken by the l o c a l government that c o u l d h e l p in t h i s r e g a r d . P l anner s shou ld do t h e i r utmost to ma in ta in V a n c o u v e r ' s s t a t u s as a h i g h l y l i v a b l e c i t y . As noted in Chapter Two, i n c r e a s e d predominance of s e r v i c e i n d u s t r i e s w i t h i n the c i t y has s p a t i a l r a m i f i c a t i o n s . These i s s u e s w i l l need to be addres sed through government a c t i o n . Whi le i t i s o u t s i d e the scope of the t h e s i s to e x p l o r e s p e c i f i c p o l i c i e s in d e t a i l , some a p p r o p r i a t e p h y s i c a l p l a n n i n g a c t i o n s c o u l d i n c l u d e : * promot ing i n c r e a s e d use of p u b l i c t r a n s i t to d i s c o u r a g e g r i d l o c k on the m e t r o p o l i t a n r e g i o n ' s s t r e e t s and highways; * l o b b y i n g the p r o v i n c i a l government to improve t r a n s i t p r o v i s i o n in o u t l y i n g suburban a r e a s ; * encourag ing i n n o v a t i v e medium d e n s i t y r e s i d e n t i a l development in r e l a t i v e l y underdeve loped ( e x i s t i n g ) neighbourhoods to h e l p a l l e v i a t e hous ing shor tages ; * p r o t e c t i n g urban w i l d e r n e s s a r e a s ; d e v e l o p i n g new park space; and 103 * promoting a v a r i e t y of c u l t u r a l a c t i v i t i e s and am e n i t i e s . To encourage t e r t i a r y i n d u s t r i e s w i t h i n a m e t r o p o l i t a n area l i k e Vancouver, the f o l l o w i n g i n i t i a t i v e s (recommended by D a n i e l s , 1990) would be u s e f u l : * where agglomeration economies are necessary f o r d e s i r e d t e r t i a r y a c t i v i t i e s , d i s c o u r a g i n g the d e c e n t r a l i s a t i o n of producer s e r v i c e s from the C e n t r a l Business D i s t r i c t ; * making i n f r a s t r u c t u r a l investments r e l e v a n t to t e r t i a r y i n d u s t r y needs, accommodating i n p a r t i c u l a r those of s e r v i c e s which export s e r v i c e s o u t s i d e the r e g i o n ; * e d u c a t i n g the l o c a l business community about the importance of producer s e r v i c e s as l o c a l b usiness inputs and to the economy as a whole; * marketing the c i t y to a p p r o p r i a t e f o o t l o o s e t e r t i a r y i n d u s t r y ( D a n i e l s , pp. 42-43). F i n a l l y , the l o c a l government c o u l d continue and enhance i t s r o l e i n l o b b y i n g other l e v e l s of government f o r a c t i o n s of b e n e f i t to l o c a l f i r m s i n g e n e r a l , and e x p o r t i n g KIS fi r m s s p e c i f i c a l l y . Such l o b b y i n g c o u l d encourage: * i n c r e a s e d a c c e s s i b i l i t y f o r l o c a l f i r m s to s e r v i c e s p r o v i d e d by s e n i o r l e v e l s of government. In Chapter Three i t was noted that many i n t e r v i e w e e s complained of d i f f i c u l t access to f e d e r a l government r e p r e s e n t a t i v e s . While some important s e r v i c e s have r e g i o n a l o f f i c e s i n Vancouver (such as the Canadian I n t e r n a t i o n a l Development Agency and the Export Development C o r p o r a t i o n ) , these o f f i c e s are s p a r s e l y s t a f f e d . Moreover, l i t t l e d e c i s i o n making powers are vested i n s t a f f at these o f f i c e s . * major t r a n s p o r t a t i o n improvements that would improve acces- s i b i l i t y to P a c i f i c Rim markets f o r e x p o r t i n g f i r m s . 1 04 * p o l i c i e s and programs to maximise the advantages of Van- couver's d e s i g n a t i o n as a Canadian I n t e r n a t i o n a l Finance Centre. * p r o v i n c i a l government support f o r education and t r a i n i n g programs that would enhance l o c a l labour f o r c e e m p l o y a b i 1 i t y i n the eyes of the KIS f i r m s the c i t y wants to a t t r a c t and m a i n t a i n . * enhanced c o o p e r a t i o n and d i a l o g u e with Vancouver's Economic Development O f f i c e on the p a r t of f e d e r a l and p r o v i n c i a l governments. * a c c o r d i n g p r e f e r e n c e to those Asian (and other) immigrant i n v e s t o r s i n t e n d i n g to make a c t i v e investments i n p r i o r i t y (namely KIS) s e c t o r s of the Vancouver economy. 4 . 3 CHAPTER SUMMARY We have seen that a number of s e n i o r l e v e l programs, with impressive budgets, e x i s t to f a c i l i t a t e KIS exports to the P a c i f i c Rim. At present, the l o c a l government i m p l i c i t l y recog- n i z e s the importance of KIS export promotion, but has l i t t l e power and few e f f e c t i v e programs f o r doing so. Such r e l a t i v e i n a c t i o n should change, to improve e f f i c i e n c y and a c c o u n t a b i l i t y i n export promotion, and to ensure r e a l i z a t i o n of l o c a l g o a l s . L o c a l government a c t i o n would be e s p e c i a l l y u s e f u l i n h e l p i n g s m a l l e r and medium s i z e d f i r m s become a c t i v e i n P a c i f i c Rim markets, as s e n i o r i n i t i a t i v e s tend to favour the l a r g e r f i r m s . L o c a l p o l i c i e s c o u l d be developed i n four spheres: r e s e a r c h , e d u c a t i o n , networking and improving the l o c a l b u s i n e s s e n v i r o n - ment. P o l i c i e s c o u l d encourage c o o p e r a t i o n with other a c t o r s , 105 notably l o c a l NGOs such as the Vancouver Board of Trade, the A s i a P a c i f i c Foundation, and v a r i o u s trade b i l a t e r a l o r g a n i z a t i o n s . Such c o o p e r a t i o n would be e f f i c i e n t and c o s t - e f f e c t i v e ; however, the important t h i n g i s f o r the C i t y to be i n c o n t r o l of the process of c o o p e r a t i n g with these NGOs. To t h i s end, the C i t y must have c l e a r l y a r t i c u l a t e d g o a l s . One example i s to aim at i n c r e a s i n g the P a c i f i c Rim export a b i l i t i e s of l o c a l l y owned, and/or smaller KIS f i r m s . S i m i l a r l y , the C i t y c o u l d look at forms of c o o p e r a t i o n which f a c i l i t a t e the p r o v i s i o n of e d u c a t i o n a l o p p o r t u n i t i e s to enable l o c a l r e s i d e n t s to b e n e f i t from enhanced employment o p p o r t u n i t i e s ( p r o v i d e d by KIS f i r m s ' export a c t i v i t i e s ) . E q u a l l y important, c i t y p l a n n e r s must understand t h a t the growth of s e r v i c e a c t i v i t i e s i n the l o c a l economy has s p a t i a l consequences that c o u l d have a d e l e - t e r i o u s r e s u l t s f o r many segments of the p o p u l a t i o n , and the c i t y as a whole, i f not addressed. 106 5 . 0 CONCLUSION T h i s t h e s i s has demonstrated the f e a s i b i l i t y of a l o c a l economic s t r a t e g y promoting, knowledge i n t e n s i v e s e r v i c e exports to the P a c i f i c Rim. The l i t e r a t u r e review i n Chapter Two pro v i d e d important background m a t e r i a l on economic r e s t r u c t u r i n g : g e n e r a l economic, employment and s p a t i a l i m p l i c a t i o n s as w e l l as s p e c i f i c examples of t h e i r m a n i f e s t a t i o n i n Vancouver. I t pro v i d e d a case f o r f o c u s s i n g upon knowledge i n t e n s i v e s e r v i c e s as opposed to s e r v i c e s with r e l a t i v e l y few i n f o r m a t i o n i n p u t s . I t a l s o d i s c u s s e d an important study of Vancouver producer s e r v i c e s (many of them KIS fir m s ) completed i n 1984. In Chapter Three, r e s u l t s of the study of Vancouver KIS firms were summarized. The study proved that the P a c i f i c Rim i s second only to the U.S. i n importance as an i n t e r n a t i o n a l market f o r Vancouver KIS f i r m s . In f a c t , over one-half of q u e s t i o n n a i r e respondants with A s i a n e x p o r t s , and 6 0 % of the int e r v i e w e e group, s o l d at l e a s t 1 0 % of t o t a l f i r m s e r v i c e s to As i a n markets. In a d d i t i o n , many fi r m s not c u r r e n t l y e x p o r t i n g to A s i a have had pre v i o u s s a l e s there and have the p o t e n t i a l to export there again i n the f u t u r e . The study a l s o o u t l i n e d c h a r a c t e r i s t i c s of KIS fi r m s with an Asian presence. These c h a r a c t e r i s t i c s i n c l u d e d : i n d i v i d u a l A s i a n market d e s t i n a t i o n s , marketing techniques, i n f o r m a t i o n sources 1 0 7 and p o l i c y measures, favoured by Vancouver KIS f i r m s . Firm p e r c e p t i o n s of a p p r o p r i a t e measures to i n c r e a s e Vancouver KIS s a l e s i n the P a c i f i c Rim were analyzed. Other than i n c r e a s i n g p r i v a t e s e c t o r i n i t i a t i v e , q u e s t i o n n a i r e respondants ( a c t i v e i n A s i a ) favoured i n c r e a s i n g a c c e s s i b i l i t y to i n f o r m a t i o n on market o p p o r t u n i t i e s and the development of Vancouver-Asia networking a s s o c i a t i o n s . Interviewees agreed that p r i v a t e s e c t o r e f f o r t and enhanced i n f o r m a t i o n access were important, but a l s o f e l t that more A s i a n e d u c a t i o n a l programs were needed. Furthermore, i n t e r v i e w e e s o u t l i n e d the advantages and d i s a d - vantages of lau n c h i n g a P a c i f i c Rim marketing campaign from Vancouver. Disadvantages were: i n s u f f i c i e n t access to Canadian government trade r e p r e s e n t a t i v e s ; few major A s i a n companies in the c i t y ; and i n s u f f i c i e n t d e c i s i o n making power at l o c a l banks and f i n a n c i a l i n s t i t u t i o n s . Vancouver a s s e t s i n c l u d e d : q u a l i t y of l i f e ; q u a l i t y of s u p p o r t i n g producer s e r v i c e s ; and a good telecommunications i n f r a s t r u c t u r e . Chapter Four o u t l i n e d v a r i o u s i n i t i a t i v e s and i n s t i t u t i o n s with a r o l e i n promoting Asia-bound e x p o r t s . I t h i g h l i g h t e d the need f o r l o c a l a c t i o n i n t h i s sphere, f o r s e v e r a l reasons. From an o r g a n i z a t i o n a l behaviour p e r s p e c t i v e , l o c a l a c t i o n s may be more e f f i c i e n t . Even i f l o c a l governments end up r e p l i c a t i n g some s e n i o r l e v e l programming, t h i s redundancy need not be w a s t e f u l . In f a c t , i t c o u l d i n c r e a s e e f f i c i e n c y by h e i g h t e n i n g 108 the l i k e l i h o o d of goa l f u l f i l l m e n t . L o c a l economic development agenc ie s are a l s o assumed to have g r e a t e r f l e x i b i l i t y than l a r g e r o r g a n i z a t i o n s , and to be more a c c o u n t a b l e to the p u b l i c . L o c a l a c t i o n s c o u l d a l s o h e l p m i t i g a t e a c t i o n s of s e n i o r governments which are based upon c o n f l i c t i n g a ims, or which f a i l to adequate - l y c o n s i d e r l o c a l impact s . Chapter Four conc luded by sugges t ing s e v e r a l d imens ions in which l o c a l a c t i o n c o u l d be wor thwh i l e : r e s e a r c h , e d u c a t i o n , network ing , and improv ing the l o c a l bu s ine s s env i ronment. U n f o r t u n a t e l y , however, the l i k e l i h o o d of these recommenda- t i o n s be ing implemented i s s l i m . At p re sen t l i t t l e support i s g i ven by C i t y C o u n c i l or the Mayor to i n i t i a t i v e s a c t i v e l y promot ing l i n k s w i th the P a c i f i c Rim. In f a c t , economic d e v e l o p - ment programs on the whole are a cco rded w i th l i t t l e impor tance, as shown by recent s t a f f c u t b a c k s . Whi le Vancouver has enormous p o t e n t i a l as a P a c i f i c Rim c i t y , t h i s c o n t i n u e d l a ck of v i s i o n w i l l cause much of i t s p o t e n t i a l to remain untapped. Fu ture r e s e a r c h must f i n d a way to c o n v i n c e the c i t y government that expor t promot ion and o ther t r ade programs need to be implemented. The t h e s i s has o ther l i m i t a t i o n s . A number of i n t e r e s t i n g and important i s s u e s were not c o v e r e d , as they were o u t s i d e the scope of the t h e s i s and would have d e t r a c t e d from the r e s e a r c h q u e s t i o n . For example, the a p p r o p r i a t e n e s s of knowledge i n t e n - s i v e s e r v i c e s deve loped in Vancouver (and o ther OECD c o u n t r i e s ) 109 f o r A s i a n r e c i p i e n t s — p a r t i c u l a r those i n poorer c o u n t r i e s - - i s a s u b j e c t of constant debate. The A p p r o p r i a t e Technology school has c r i t i c i z e d the a p p l i c a t i o n to the T h i r d World of F i r s t World t e c h n o l o g i e s f o r having f a i l e d to demonstrate s i g n i f i c a n t m o d i f i c a t i o n s and a p p r e c i a t i o n of the d i f f e r e n t needs, e n v i r o n - mental, economic and s o c i a l c o n d i t i o n s that p r e v a i l . I ac- knowledge these c r i t i c i s m s , but stand by my i n i t i a l g o a l . S e r v i c e f i r m s with experience i n d e v e l o p i n g c o u n t r i e s have s u c c e s s f u l l y m o d i f i e d t h e i r t e c h n o l o g i e s so as to meet l o c a l c o n d i t i o n s . Many c o n s u l t i n g firms w i l l cooperate with indigenous A s i a n f i r m s d u r i n g p r o j e c t s . They thus p r o v i d e the l a t t e r with exposure to new t e c h n o l o g i e s while e n a b l i n g themselves to l e a r n about l o c a l p r a c t i c e s and c o n s t r a i n t s . There are other i s s u e s p e r t i n a n t to the t h e s i s which are worthy of f u r t h e r i n v e s t i g a t i o n . While some important r e s e a r c h has been done on s e r v i c e s e c t o r l i n k a g e s i n the Vancouver economy (see Ley and Hutton, 1987) i t would be i n t e r e s t i n g to see how the l o c a l i n p u t s of KIS f i r m s with P a c i f i c Rim markets d i f f e r from those not e x p o r t i n g to A s i a . My i n c l i n a t i o n i s that P a c i f i c Rim e x p o r t i n g f i r m s have a p o t e n t i a l l y g r e a t e r need f o r l o c a l i n p uts not r e q u i r e d by other KIS f i r m s with more f a m i l i a r markets (eg. the U.S. and the r e s t of Canada). These would i n c l u d e : * t r a n s l a t i o n and s p e c i a l p r i n t i n g s e r v i c e s (eg. firms capable of t y p e s e t t i n g with Chinese c h a r a c t e r s ) . * seminars, courses and other t r a i n i n g on Asian business 1 10 p r a c t i c e s , law and c u l t u r e . * language t r a i n i n g . * government s e r v i c e s ( E x t e r n a l A f f a i r s , the EDC, CIDA, M i n i s t r y of Trade, Tourism, and Economic Development, BC Trade Corp). * c o n s u l t i n g f i r m s with e x p e r t i s e i n Asi a n markets. * advanced telecommunications s e r v i c e s . Other r e s e a r c h c o u l d focus on the s t a f f i n g and e d u c a t i o n a l requirements of these f i r m s . I f KIS export promotion i s adopted as part of an economic development s t r a t e g y , p o l i c y makers w i l l need to be informed of o p p o r t u n i t i e s f o r the l o c a l labour f o r c e . In t h i s mannner, a p p r o p r i a t e t r a i n i n g programs can be designed- programs which w i l l g e nuinely b e n e f i t employers and persons seeking employment. A d d i t i o n a l l y , i t would be i n t e r e s t i n g to make a comprehen- s i v e study of other North American c i t i e s whose s e r v i c e s e c t o r i s a c t i v e i n P a c i f i c Rim markets (eg: S e a t t l e , Los Angeles, and San F r a n c i s c o ) . I t would be u s e f u l to understant the extent to which A s i a c o n s t i t u t e s an important market f o r the KIS fi r m s of these c i t i e s . I t would a l s o be i n t e r e s t i n g to f i n d out what government and p r i v a t e s e c t o r i n i t i a t i v e s have been taken, and to what degree these have been s u c c e s s f u l . F i n a l l y , i t would be e n l i g h t e n i n g to focus upon the issue of Asian investment i n knowledge i n t e n s i v e s e c t o r s . Some general 111 s t u d i e s of A s i a n investment i n Vancouver and elsewhere have been conducted. I t would be u s e f u l , however, to do a s e c t o r - s p e c i f i c study of t h i s investment f o r two reasons. I t would h e l p us see i f a r e l a t i o n s h i p e x i s t s between Asian investment and P a c i f i c Rim export p r o p e n s i t y . More i m p o r t a n t l y , however, t h i s i n f o r m a t i o n c o u l d p r o v i d e us with a b a s i s f o r p o l i c y i n i t i a t i v e s encouraging investment i n a s e c t o r with growing importance to the l o c a l economy. Such investment c o u l d u l t i m a t e l y enhance P a c i f i c Rim exports and l o c a l economic development. See f o r example Edgington and Goldberg, 1989. 1 1 2 Append ices 1 1 3 A P P E N D I X A City of Vancouver Economic Development Office: Sle. 721.601 West Broadway. Vancouver. British Columbia. Canaoa V5Z 4C2. Sid Fancy. Ec.O.. C I O Manager ol Economic Development 1. Name of f i r m 2. Address 3. P r i n c i p a l business of f i r m 4. Market O r i e n t a t i o n . Please designate approximate percentage of s a l e s to each of the f o l l o w i n g major groups: Business s e c t o r % P r i v a t e household s e c t o r % Gov. & n o n - p r o f i t 3ector % (100%) 5. Geographic D i s t r i b u t i o n o£ S a l e s . Please estimate the approximate percentage of your c u r r e n t s a l e s to c l i e n t s l o c a t e d In: % Vancouver-Lower Mainland % United States % v i c t o r i a % U.K. / Western Europe % Elsewhere In B.C. % A s i a - P a c i f i c % Elsewhere i n Canada % Other % Mexico 6. In which of the above re g i o n s do you expect the g r e a t e s t Increase In s a l e s over the next f i v e to ten years? 7. A s i a - P a c i f i c Market A c t i v i t y . Have you had s a l e s in any of the f o l l o w i n g markets over the past few years? (Please c i r c l e number(s)l 1 Japan 7 Malaysia/Brunei 2 South Korea 8 T h a i l a n d 3 China (P.R.C.) 9 Other ASEAN (Indonesia, P h i l i p p i n e s ) 4 Hong Kong 10 Non-ASEAN South-east A s i a (Vietnam, e t c . ) 5 Taiwan 11 I n d i a / P a k i s t a n / S r i Lanka 6 S ingapore 12 A u s t r a l i a / New Zealand 114 8. I f a c t i v e In one or more A s i a n - P a c i f i c markets, which of the f o l l o w i n g marketing and s a l e s approaches does your f i r m employ? (Please c i r c l e number ( 3)l 1 Overseas s a l e s t r i p 3 2 Use of t r a d i n g house 3 Use of c o n s u l t a n t s 4 A d v e r t i s i n g in Asian ™aqaz!p.e TV or other media Designated agent i n one or more As i a n business centres P a r t i c i p a t i o n i n government missions Maintenance of permanent o f f i c e in one or more Asian centres; i f so, please i n d i c a t e 9. In your view, what a c t i o n s are r e q u i r e d to expand Vancouver's and B r i t i s h Columbia's presence i n A s i a - P a c i f i c markets? [Please a s s i g n to each o p t i o n below a r a t i n g of '1' f o r very- important, ' 2 ' f o r important, or *3' f o r not important.] More s u s t a i n e d p r i v a t e s e c t o r marketing e f f o r t More a c c e s s i b l e Information on market o p p o r t u n i t i e s Development of Vancouver- Asia networking organ i zat ion3 Greater c o o p e r a t i o n between u n i v e r s i t i e s and the business community Commitment to A3ian programs in B.C. s c h o o l s and u n i v e r s i t i e s B u i l d i n g on market ex p e r t i s e of r e c e n t A s i a n immigrants Expanded government r e p r e s e n t a t i o n overseas (e.g., p r o v i n c i a l , f e d e r a l o f f i c e s ) More comprehensive media coverage of A s i a n s o c i a l , p o l i t i c a l and economic Issues Other ( p l e a s e s t a t e ) Thank you for the time taken to complete t h i s q u e s t i o n n a i r e . I f you would l i k e a summary of the responses, please enter your FAX number below (or e n c l o s e your b u s i n e s s c a r d ) : 115 APPENDIX B Interviewees by Sector L e g a l Firms 2 (7752) E n g i n e e r i n g Firms 4 Environmental C o n s u l t a n t s 2 A r c h i t e c t u r e Firms 2 (7759) Research and Development (pharmaceutical) 1* (3352) E l e c t r o n i c Equipment and Systems 2 (335) Telecommunications Industry 1 (7771) Management C o n s u l t i n g Firms 2 Accounting Firms 1 Food P r o c e s s i n g 1 Real E s t a t e 1 TOTAL: 19* * The pharmaceutical f i r m f a i l e d to answer most of the i n t e r v i e w q u e s t i o n s due to time c o n s t r a i n t s . Consequently, response r a t i o s were g e n e r a l l y c a l c u l a t e d out of 18 (or 17 when another f i r m f a i l e d to answer a q u e s t i o n ) . 1 16 1. 2. Name of Addr ess firm APPENDIX C 3. Is your firm a head office? Yes No 4. If not, where is your head office located? 5. When was your firm established in Vancouver? 6. Please state the principal business of your firm 7. Locational Attributes: please rank the principal advantages and disadvantages of your present location in Vancouver (with "1" representing the greatest advantage/disadvantage; "2" being the second greatest, and so on). (ranking) Advantages Pi sadvantaqes (ranking) (a) proximity to clients (a) cost of premises (b) proximity to suppliers (b) commuting pressures (c) labour force access- (c) distance from markets i bi 1 i ty (d) downtown amenities (d) congested local area (e) accessibility to mar- (e) lack of amenities ket intelligence (f) downtown prestige (f) other (please state) (g) other (please state) 8. Market orientation. Please designate approximate percentage of sales to each of the folowing major groups: Business sector '/. Private household sector 7. Gov. & non-profit sector 7. 9. Geographic distribution of sales. Please estimate the approximate percentage of your current sales to clients located in: 7. Vancouver-Lower Mainland 7. Victoria V. Elsewhere in B.C. 7. Mexico 7. United States 7. U.K. / Western Europe 7. Asi a-Pac i f i c 7. Other 1 17 10. In which o f t h e above r e g i o n s do you e x p e c t t h e g r e a t e s t i n c r e a s e i n s a l e s over t h e next f i v e t o t e n y e a r s ? 11. A s i a - P a c i f i c market a c t i v i t y . Have you had s a l e s i n any o f t h e f o l l o w i n g marke t s o v e r t h e p a s t few y e a r s ? C P l e a s e c i r c l e n u m b e r ( s ) ] 12. M o t i v a t i o n f o r A s i a n - P a c i f i c m a r k e t i n g e f f o r t : wh ich o f t h e f o l l o w i n g f a c t o r s were s i g n i f i c a n t i n your d e c i s i o n t o i n i t i a t e marke t i n g i n t h e A s i a n - P a c i f i c ? <If p o s s i b l e , p l e a s e rank i n o r d e r o f i mportance) (a) c o n c e r n s about s t a b i l i t y o f / p r o s p e c t s f o r l o c a l and or domes t i c market (b) g e n e r a l a p p e a l o f t h e A s i a n - P a c i f i c a s a growth market (c ) s p e c i f i c a p p e a l o f one (or more) A s i a n - P a c i f i c m a r k e t s ( P l e a s e i d e n t i f y ) (d) d e s i r e t o a c h i e v e g r e a t e r l e v e l o f market d i v e r s i f i c a t i o n (e) encouragement f rom ( f e d e r a l / p r o v i n c i a l / m u n i c i p a l ) government ( p l e a s e i d e n t i f y ) ( f ) d e s i r e t o a c h i e v e g r e a t e r s c a l e economies f o r more e f f i c i e n t p r o d u c t i o n o f goods and / or s e r v i c e s (g) o p p o r t u n i t y t o t a k e advantage o f s p e c i a l i n—house s t a f f e x p e r t i s e and / o r c o n t a c t s and n e t w o r k s <h) o t h e r ( p l e a s e s t a t e ) 13. Which o f t h e f o l l o w i n g m a r k e t i n g and s a l e s a p p r o a c h e s does your f i r m employ i n t h e A s i a n — P a c i f i c r e g i o n C P l e a s e c i r c l e number(s )D 1 Japan 2 South K o r e a 3 C h i n a ( P . R . C . ) 4 Hong Kong 5 Taiwan 6 S i n g a p o r e 7 M a l a y s i a / B r u n e i 8 T h a i l a n d , 9 O ther ASEAN ( I N d o n e s i a , P h i l i p p i n e s ) 10 Non—ASEAN S o u t h e a s t A s i a ( V i e t n a m , e t c ) 11 I n d i a / P a k i s t a n / S r i Lanka 12 A u s t r a l i a / New Z e a l a n d 1 O v e r s e a s s a l e s t r i p s 5 D e s i g n a t e d agent i n one or more A s i a n c e n t r e s 2 Use o f t r a d i n g h o u s e 6 P a r t i c i p a t i o n i n government mi s s i ons 3 Use o f c o n s u l t a n t s 4 A d v e r t i s i n g i n A s i a n .7 M a i n t e n a n c e o f permanent o f f i c e i n one or more 118 14. Over t he p a s t 2 -3 y e a r s , has your f i r m p a r t i c i p a t e d i n t h e A s i a n - P a c i f i c ma rke t , i n t e rms o f : f r e q u e n t l y o c c a s i o n a l l y never (a) r e s p o n s e t o p r o p o s a l ( > c a l l f o r m u l t i l a t e r a l funded p r o j e c t s (b) f e a s i b i l i t y s t u d y f o r < ) m u l t i — l a t e r a l funded p r o j e c t s (c) i n d e p e n d e n t p r o p o s a l c a l l < ) (d) i n d e p e n d e n t f e a s i b i l i t y ( ) s t u d y ( ( ) < ) < ) < ) 15. I f most or some o f you r A s i a n market r e s e a r c h i s c o n d u c t e d i n - h o u s e , what a r e your i n f o r m a t i o n s o u r c e s ? (Check as many as a p p l y ) . A l s o , i f d i s c e r n i b l e , p l e a s e i n d i c a t e on ave rage how o f t e n you c o n s u l t t h e s e s o u r c e s : f r e q u e n t l y o c c a s i o t (a) l o c a l newspaper s ( and p e r i o d i c a l s (b) i n t e r n a t i o n a l newspapers ( and p e r i o d i c a l s (c) c l i e n t i n t e r v i e w s ( (d) government r e p r e s e n t a t i v e s ( (Canada, B . C . , V a n c o u v e r ) (e) government r e p r e s e n t a t i v e s < ( I n t e r n a t i o n a l ) ( f ) i n f o r m a l Vancouve r c o n t a c t s ( (g) c o n t a c t s t h r o u g h l o c a l ( b u s i n e s s a s s o c i a t i o n s and t r a d e b i l a t e r a l s (h) i n f o r m a l P a c i f i c Rim c o n t a c t s C ( i ) P a c i f i c Rim a g e n t ( s ) C ( j ) Vancouver c o l l e g e s , u n i v e r — < s i t i e s , e t c . (k) O ther ( s p e c i f y ) ( a l l y neve r 16. <a) P l e a s e i n d i c a t e t h e number o f employees i n your f i r m w i t h A s i a n l anguage c a p a b i l i t i e s . <b) P l e a s e i n d i c a t e t h e number o f memberships your f i r m h o l d s i n v a r i o u s P a c i f i c Rim t r a d e and b e n e v o l e n t a s s o c i a t i o n s . 17. Has your f i r m ever o r g a n i z e d , s pon so red or o t h e r w i s e p a r t i c i p a t e d i n c u l t u r a l or p r o m o t i o n a l a c t i v i t i e s w i th an A s i a n theme h e r e i n Vancouver? (Such a c t i v i t i e s c o u l d i n c l u d e C h i n e s e New Year c e l e b r a t i o n s , Dragon Boat r a c i n g , t h e Powel l S t r e e t F e s t i v a l and o t h e r forms of e n t e r t a i n m e n t ) . I f y e s , p l e a s e d e s c r i b e t he a c t i v i t y ( i e s ) and l e v e l o f p a r t i c i p a t i o n : 18. How does your f i r m d i f f e r f rom i t s c o m p e t i t o r s i n te rms o f t h e s e r v i c e s i t p r o v i d e s t o c l i e n t s ? 19. How o f t e n do you meet w i t h c o m p e t i t o r s and o t h e r c o l l e a g u e s t o exchange i n f o r m a t i o n ? Where would such exchanges g e n e r a l l y t a k e p l a c e and how formal would t h e y be? 20. What i s t h e r a t i o o f d e c i s i o n makers t o ( n o n — c 1 e r i c a l ) s t a f f i n your f i r m ? 21 . How would you d e s c r i b e t h e commun ica t ion p r o c e s s i n your f i r m ? Is i t : V e r y Formal Somewhat Forma l L e s s Formal I n forma l F a m i l y b u r e a u c r a t i c / l i m i t e d t o 1—way i n f o r - mat ion f l ows s c h e d u l e d mtgs but some o p p o r - t u n i t y f o r i n - fo rma l c o n v e r - s a t i on and 2—way i n f o f l o w s some mtgs v e r y f l e x i b l e c ommun i c at i o n c h a n n e l s , more 2—way i n f o f l o w s con sensu s O r i e n t e d d e c ' n mkg mult i — d i r e c t i o n a l i n f o f1ows 22. How o f t e n does f a c e — t o — f a c e c o n t a c t o c c u r between s t a f f , managers, and d e c i s i o n makers? _ 23. What t y p e s o f s e r v i c e s do you o b t a i n from o u t s i d e t h e f i r m ? Where a r e your s u p p l i e r s l o c a t e d ? 24. Over t h e l a s t 5 y e a r s ha s t h e p r o p o r t i o n o f s e r v i c e i n p u t s u sed from o t h e r f i r m s changed r e l a t i v e t o t h o s e p r o v i d e d i n - h o u s e i n c r e a t i n g f i n a l s e r v i c e s f o r your c l i e n t s ? I f s o , t o what e x t e n t ? 25. What s p e c i a l i s t s do you b r i n g t o g e t h e r i n s e r v i c e c r e a t i o n f o r your c l i e n t s ( i n s i d e and o u t s i d e t h e f i r m ) ? • > 26. C o u l d t e l e c o m m u n i c a t i o n s improvements a l l e v i a t e some o f t h e need fo r f ace t o f a c e c o n t a c t w i t h c l i e n t s and / or o t h e r s p e c i a l i s t s ? 27. How i m p o r t a n t a r e f a c e - t o - f a c e mee t i n g s w i th c l i e n t s t o t h e p r o d u c t i o n o f t h a t s e r v i c e ? 28. How o f t e n do you e n t e r t a i n c l i e n t s from A s i a ? Where i n Vancouver do they u s u a l l y s t a y ? 29. D e s c r i b e an a v e r a g e day w i t h a c l i e n t from abroad ( l e n g t h o f t i m e spent c o n s u l t i n g , t o u r i n g t h e c i t y , e a t i n g , e t c . ) 29. Vancouver a s a b a s e f o r a c c e s s i n g A s i a n - P a c i f i c M a r k e t s : P l e a s e i n d i c a t e be low your p e r c e p t i o n o f V a n c o u v e r ' s adequacy as a base f o r m a r k e t i n g i n t h e A s i a n - P a c i f i c i n t h e f o l l o w i n g a r e a s ( P l e a s e c i r c l e t h e a p p r o p r i a t e number, w i t h " 1 " b e i n g ' v e r y u n s a t i s f a c t o r y ' and "5" ' v e r y s a t i s f a c t o r y ' ) : (a) Banks and o t h e r f i n a n c i a l i n s t i t u t i o n s 121 1 2 3 4 5 (tO Q u a l i t y o f l a b o u r and 'human c a p i t a l ' ( a p p r o p r i a t e s k i l l s , e x p e r t i s e ) 1 2 3 4 5 (c) Q u a n t i t y / a v a i l a b i l i t y o f a p p r o p r i a t e l y s k i l l e d l a b o u r 1 2 3 4 5 (d) Q u a l i t y o f s u p p o r t i n g p r o d u c e r s e r v i c e s ( l e g a l , a c c o u n t i n g , e t c ) 1 2 3 4 5 (e) T e l e c o m m u n i c a t i o n s i n f r a s t r u c t u r e and sys tems 1 2 3 4 5 ( f ) A i r c o n n e c t i o n s w i t h key A s i a n — P a c i f i c b u s i n e s s c e n t r e s 1 2 3 4 5 (g) I n t e r n a t i o n a l t r a n s p o r t a t i o n and s h i p p i n g f a c i l i t i e s 1 2 3 4 5 (h) V a n c o u v e r ' s p r o f i l e o r image as a P a c i f i c Rim b u s i n e s s c e n t r e 1 2 3 4 5 ( i ) A c c e s s t o key F e d e r a l / P r o v i n c i a l r e p r e s e n t a t i v e s 1 2 3 4 5 ( j ) P r e s e n c e o f key A s i a n — P a c i f i c compan ies ( t r a d i n g h o u s e s , e t c ) 1 2 3 4 5 (k) Q u a l i t y o f t h e c o m m e r c i a l i n f r a s t r u c t u r e ( o f f i c e s and h o t e l s ) 1 2 3 4 5 (1) Q u a l i t y o f p u b l i c i n f r a s t r u c t u r e ( r o a d s , a i r p o r t s , e t c ) 1 2 3 4 5 (m) Q u a l i t y o f u r b a n and r e c r e a t i o n a l a m e n i t i e s / l i v a b i l i t y 1 2 3 4 5 2 9 . (a) O p t i o n a l q u e s t i o n : Vancouver as a b a s e f o r m a r k e t i n g i n t h e A s i a n - P a c i f i c r e l a t i v e t o o t h e r N o r t h A m e r i c a n c e n t r e s . T a k i n g i n t o c o n s i d e r a t i o n t h e a f o r e m e n t i o n e d a t t r i b u t e s , would you say tha t Vancouver i s (a) c l e a r l y , u p e r i o r , (b) about e q u a l , or Cc) c l e a r l y i n f e r i o r t o any o f the f o l l o w i n g for which you have some e x p e r i e n c e : (a) (b) (c) C l e a r l y S u p e r i o r .Equal C l e a r l y I n f e r i o r 1 C a l g a r y ( ) ( ) ( ) 2 Toronto ( ) ( ) ( ) 3 Montrea l ( ) ( ) ( ) 4 S e a t t l e ( ) ( ) < ) 5 San F r a n c i s c o ( ) ( ) ( ) 6 Los Ange les ( ) < ) ( ) 30. In your v iew, what a c t i o n s a r e r e q u i r e d t o expand V a n c o u v e r ' s and B r i t i s h Co lumb i a ' s p r e s e n c e i n A s i a - P a c i f i c markets? CP lease a s s i g n t o each o p t i o n below a r a t i n g o f "1" f o r ' v e r y i m p o r t a n t ' , " 2 " fo r ' i m p o r t a n t ' or " 3 " for not i m p o r t a n t ! . More s u s t a i n e d p r i v a t e Commitment t o A s i a n s e c t o r marke t ing e f f o r t programs i n B.C. s c h o o l s and u n i v e r s i t i e s More a c c e s s i b l e i n f o r m a t i o n on market o p p o r t u n i t i e s Development o f Vancouver— A s i a network ing o r g a n i z a t i o n ' B u i l d i n g on market e x p e r t i s e of r e c e n t A s i a n immigrants Expanded government r e p r e s e n t a t i o n o v e r s e a s (eg p r o v i n c i a l , f e d e r a l o f f i c e s ) G rea te r c o o p e r a t i o n between U n i v e r s i t i e s and t h e b u s i n e s s community More comprehens ive media coverage of A s i a n s o c i a l , p o l i t i c a l and economic i s s u e s Other ( p l e a s e s t a t e ) U 3 Re fe rences Applebaum, E i l e e n . September - October 1983. Winners and Loser s in the High Tech Workp lace , pp. 52-55 in C h a l l e n g e . A s i a P a c i f i c F o u n d a t i o n . 1988. Expor t Market C a p a b i l i t i e s of the B.C. Env i ronmenta l I n d u s t r y . Vancouver : A s i a P a c i f i c Foun- d a t i o n . B e l l , D a n i e l . 1973. The Coming of P o s t - I n d u s t r i a l S o c i e t y . New York : Ba s i c Books. Bendor, Jona than . 1985. P a r a l l e l Systems: Redundancy in Govern - ment . B e r k e l y , Los Ange les and London: U n i v e r s i t y of C a l i f o r n i a P r e s s . Borden, W i l l i a m . 1984. The P a c i f i c A l l i a n c e . U.S. F o r e i g n Economic P o l i c y and Japanese Trade Recovery 1947 - 1955. Bus ines s A s i a . J u l y 10, 1989. p. 230. Ca l g a r y Economic Development A u t h o r i t y . A p r i l 1990. Ca l ga ry Economic Development A u t h o r i t y O r g a n i z a t i o n a l P r o f i l e . Canadian I n t e r n a t i o n a l Development Agency (CIDA). March 1991. I n v i t a t i o n C a l l f o r P r o p o s a l s on P r i v a t e Sec to r Development I n i t i a t i v e s Fund (PSDFUND). Ottawa: M i n i s t r y of Supply and S e r v i c e s Canada. Canadian I n t e r n a t i o n a l Development Agency (CIDA). February 1990. Annual Report 1988-89. Ottawa: M i n i s t r y of Supply and S e r v i c e s Canada. Canadian I n t e r n a t i o n a l Development Agency (CIDA). 1987. Shar ing Our F u t u r e . Canadian I n t e r n a t i o n a l Development A s s i s t a n c e . Ottawa: M i n i s t r y of Supply and S e r v i c e s Canada. C i t y of T o r o n t o . Summer 1987. C i t y P l a n n i n g Magaz ine. C i t y of Toronto I n t e r n a t i o n a l O f f i c e . March 1990. C i t y to C i t y 124 L i n k s : O b j e c t i v e s , A c t i v i t i e s and E x p e c t a t i o n s . Report sub- m i t t e d to Toronto C i t y C o u n c i l . C i t y of Vancouver C e n t r a l Area P l a n n i n g D i v i s i o n . October 1990. Centra1 Area Database (CADB). C i t y of Vancouver Economic Development D i v i s i o n . January 1989. Vancouver Economic Database. C i t y of Vancouver Economic Development D i v i s i o n . September 1990. Vancouver Economic Database. D a n i e l s , P.W. June 1990. Change and T r a n s i t i o n i n M e t r o p o l i t a n Areas: The Role of T e r t i a r y I n d u s t r i e s . F i n a l Report f o r the T e r t i a r y I n d u s t r i e s Working Group. Prepared f o r the 3rd World Congress of the World A s s o c i a t i o n of the Major M e t r o p o l i s e s , October 15, 1990. D a n i e l s , P.W. 1985. S e r v i c e I n d u s t r i e s : A Geographic A p p r a i s a l . Eddy, W i l l i a m B. 1981. P u b l i c O r g a n i z a t i o n Behaviour and Develop- ment . Cambridge, Massachusetts: Winthrop P u b l i s h e r s . Edgington, David W. and Michael A. Goldberg. 1989. Vancouver and the Emerging Network of P a c i f i c Rim G l o b a l C i t i e s . Paper presented at the North American meeting of the R e g i o n a l Science A s s o c i a t i o n , Santa Barbara, C a l i f o r n i a , November 10-12, 1989. E x t e r n a l A f f a i r s and I n t e r n a t i o n a l Trade Canada. February 1, 1991. CanadExport. E x t e r n a l A f f a i r s and I n t e r n a t i o n a l Trade Canada. May 1, 1991. CanadExport. E x t e r n a l A f f a i r s and I n t e r n a t i o n a l Trade Canada. June 3, 1991. CanadExport. Far E a s t e r n Economic Review. May 2, 1991. p. 47. Far E a s t e r n Economic Review. May 23, 1991. p. 1 25 F a r l e y , Josh and G l i c kman , N . J . 1986. R & D as an Economic Development S t r a t e g y . pp. 407-418 in J o u r n a l of the American P l a n n i n g A s s o c i a t i o n . Autumn I s sue. Go t tko , John and McMahon, R.O. 1989. Segmenting the Export Marke t ing A c t i v i t i e s f o r P u b l i c P o l i c y P l a n n e r s , pp. 143-166 in The I n t e r n a t i o n a l Trade J o u r n a l . 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R i c h a r d s o n , John . 1987. A S u b - s e c t o r a l Approach to S e r v i c e s ' Trade Theory . pp. 59-82 in G i a r i n i , O r i o ( e d ) . The Emerging S e r v i c e Economy. O x f o r d : Pergamon P r e s s . Rob inson, C a r l a J e a n . 1989. M u n i c i p a l Approaches to Economic Development. Growth and D i s t r i b u t i o n P o l i c y . pp. 283-295 in J o u r n a l of the American P l a n n i n g A s s o c i a t i o n . Summer I s sue. Root, F r a n k l i n R. 1987. E n t r y S t r a t e g i e s f o r I n t e r n a t i o n a l Marke t s . L e x i n g t o n , Ma s sachuse t t s : Lex ing ton Books. Rostow, W.W. 1960. The Stages of Economic Growth. Cambridge: Cambridge U n i v e r s i t y P r e s s . Ryan, P a u l . 1980. Segmentat ion, D u a l i t y and the I n t e r n a l Labour Market . pp. 3-20 in W i l k i n s o n , Frank ( e d ) . The Dynamics of Labour Market Segmentat ion. New York: Academic P r e s s . 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Techno logy Development, 1 27 Neighbourhood P l a n n i n g and N e g o t i a t e d P a r t n e r s h i p s , pp. 469- 477 in American P l ann ing A s s o c i a t i o n J o u r n a l . Autumn I s sue. Zhou, X iaoming . A p r i l 1991. J a p a n ' s O f f i c i a l Development A s s i s - tance Program. P re s su re s to Expand, pp. 341-350 i n A s i an Survey. Volume 31, Number 4. 128

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