Where do you think the IT companies Nortel Networks, Corel and Newbridge come from? For Canadians the fact that many of their indigenous high-tech industries are mistaken as American is an ironic compliment - something it is willing to ignore as it builds up its IT sector to try to beat California at its own game.
Canada is secretly waiting for the day when American companies are mistaken for being Canadian, and believes its plans for "Silicon Valley North" will move it out of the IT shadows. It is off to a good start with 17 Canadian firms featured on a recent Deloitte & Touche survey of the top 500 IT companies in North America. In 1999 the country also developed the CA Net, the world's most advanced optical Internet network to link government and private enterprises in major cities across Canada. It also acted as an advertisement for Canadian technology, much of which is cutting edge. Indeed, in some places the network makes a detour across the border to connect some major US cities, such as Chicago, to the network.
So if you are an Irish company wanting to get into the North American market, why not think of locating to Toronto, Ottawa or Montreal, rather than the obvious choices of New York, Boston or California?
In total, 90 per cent of Canada's 31 million population lives within 160 km of the US border. In terms of GDP, employment and exports, the country's ICT sector is growing at five times the national average. Half-a-million people are now employed in the sector, which has revenues of more than $100 billion. High-tech now accounts for 46 per cent of all research and development in the country - a total of $4.4 billion.
Many of Ontario's up and coming high-tech companies are within this socalled "Technology Triangle", based around the big industrial cities of Toronto and Montreal, exploiting their two strong points - a large skills pool and "quality of life". Over the years, Canada's main worry was the "Brain Drain", a fear that educated people would simply pack up and move south of the border for higher wages and the sunshine. When you consider that, on average, salaries in the US are a third more, it is a persistent fear, but the winning card up Canada's sleeve continues to be its "lifestyle". For the last six years it has been voted top of the "quality of life" league, and 200,000 new immigrants choose Canada each year.
"It is important when attracting companies to the region to let them also know that there will be people who are willing to live here," says Mitzi Hunter of Smart Toronto, a private sector IT promotion group in the area. The Greater Toronto Area (GTA) has 4.8 million people and is the main focus of high-tech in the country.
"In Toronto we believe that other parts of North America will `hit a wall' because of the skills shortage and think that quality of life will make it possible to encourage people to come. We do have shortages in specific areas, but if you consider that in the city there are 162 languages spoken, then we can convert that potential."
As the country is held together by a very loose federal system, this often leads to a certain competition between provinces. Although the two powerhouses of the country are Ontario and Quebec, more marginal places, such as British Columbia, are trying to adopt the "low tax, high revenue" Celtic Tiger approach. A corporate tax cut, from 35 per cent to 30 per cent by 2005, is already on the table and there are generous research and development grants for business setting up in Canada. For every $100 invested in R&D, the company gets $40 back, directly and indirectly, though a set of tax incentives.
Despite the relatively high tax system, Canadian industry is actively hiring experienced American CEO's to come north (a practice which is very expensive, considering they have to offer higher salaries than is normal in Canada) in an attempt to foster a new generation of home-grown managerial talent.
The state of Quebec even set up its own VC company, Innovatech in 1992, with $300 million available for hightech ideas. Although technically state money (with the province of Quebec being a 100 per cent shareholder), Innovatech is run by a board made up of private industry figures and is given a free hand to invest where it sees fit. It is now receiving 400 business plans per year and currently has 120 firms on its portfolio.
"Our aim is to tell them what is good for them, the investors and the country," says Caroline Singleton, vicepresident of the IT technology division of Innovatech. "Our investment criteria is that the company must have some link with Quebec and will create jobs in the region. Also, when we finance them there is often a requirement that they hire a good management team that will foster good Canadian practice in the future. When it comes to our relationship with the US, we still have to knock on the door, but they are beginning to notice us."