MAPLE Business Community

By Stephen Armstrong, Co-Founder and President, MAPLE Business Council®

It is a very special experience launching an organization. As many of our readers know well, led by a mission and driven by a passion to connect that mission with a target audience, it is a heady and all-consuming ride.

Launching a non-profit is no less exhilarating especially when it is one that connects communities you care deeply about. The exciting thing is that the very process of connecting communities together gives birth to a new community itself. MAPLE Business Council® (MAPLE) is all about community. In fact, MAPLE Business Community may be a more apt name for what we do. Our success in helping businesses in Canada and in Southern California depends on nurturing a community of experts who can thin borders, overcome challenges, answer questions and define winning strategies.
 
While 2019 is well underway – I would like to share a quick recap of what our community accomplished in 2018.  It was another milestone-year for MAPLE. We turned three years old in May. We held our 49th and 50th events (those close to us know why '49' was an important number given our mission!). We welcomed new members throughout the year including iconic and leading brands in a variety of sectors including Avison Young, Canada Post, Fasken, and TMX Group (TSX, TSX Venture Exchange). We deepened our ties with renewing members and have grown to a community with over 15 sectors represented. 
 
A community by its very definition is about multiple stakeholders working collaboratively together. Our MAPLE community extends well beyond our membership to include a growing network of followers/readers of our online cross-border content and to a growing group of strategic partners.
 
In 2018, we were honored to renew our partnership with World Trade Center Los Angeles and welcomed a new partnership with World Trade Center Vancouver. And we are proud to be a new Canadian market partner with the City of Long Beach, California. Interestingly, our work to date with all of these organizations already shares a common Canadian touch point – the Vancouver, B.C. market.  
 
In 2018, we “brought LA to Vancouver” on two occasions for presentations by World Trade Center Los Angeles President, Stephen Cheung, and by the GM Americas, Christian Spaltenstein, of Woodland Hills-based, Associated Foreign Exchange (AFEX). 
 
We are now looking forward to sharing Vancouver with a civic and corporate delegation representing Long Beach next week as we build closer ties between two West Coast neighbors. Representing Long Beach will be District 1 Councilwoman Lena Gonzalez, the City’s Economic Development Office, the Port of Long Beach, California State University Long Beach’s Institute for Innovation and Entrepreneurship, and leading businesses. We are honored to facilitate an opportunity for Long Beach to share its story as part of the SelectUSA InvesTech Summit and related receptions.
 
MAPLE is really about setting the table for meaningful conversations to happen. For investment, trade and entrepreneurship. The capabilities, experience, expertise, resources, vision is in the room represented by our members, partners and guests. Our role is to facilitate the connection between business executives to find the answers and insights to propel their business forward whether it is a Southern California business considering Canada or a Canadian business looking south or between businesses in either region.
 
So in a year when the strength of our national ties were tested with rhetoric and policy, at our events in Canada and across Southern California, we witnessed an unwavering commitment by business leaders to continue working together, protecting valued supply chains, leveraging the opportunities to serve each other’s markets and working with trusted partners. The Canada - U.S. relationship can never be taken for granted and MAPLE provides opportunities for businesses, institutions, and cities to recognize the value of our longstanding cross-border partnership.
 
Our work continues as we approach our fourth anniversary in a few months. We are excited to play a small role in a tremendously important investment, trade and entrepreneurship relationship that Canada and Southern California share together. A relationship that deserves the focus that a sticky executive-level business network offers by bringing ideas and people together through events, visits to markets, and content curation. 
 
2019 has already brought some exciting new opportunities. We are showcasing our members’ voices with our new MAPLE Conversations video series, celebrating our new MAPLE® Canadian trademark, connecting Vancouver and Long Beach with our upcoming delegation trip, and we are excited to welcome Canada’s new Consul General in Los Angeles, Consul General Zaib Shaikh. 
 
It is a privilege to serve this community and help amplify the voices of our members and partners. Your voices are shaping the contours of the Canadian – Southern Californian investment, trade and entrepreneurship communities.  Thank you for your support and we look forward to an outstanding 2019 together.

An Interview with the Consul General of Canada in Los Angeles - Zaib Shaikh

Consul General Zaib Shaikh

Canada has a new Consul General in Los Angeles to lead its promotion of trade and investment in the region – Zaib Shaikh. 
 
Well known to Canadians from his work in film and television, including the CBC comedy series Little Mosque on the Prairie, Consul General Shaikh served from 2014 until his appointment in 2018 as the Film Commissioner and Director of Entertainment Industries for the City of Toronto. In that role, he oversaw and supported the growth of the city’s screen, music, live festival, sporting event and tourism sectors, helping to double the value of film production in Canada’s largest city, which surpassed $2 billion in 2016.‎
 
He is married to Kirstine Stewart, a media & tech executive who is now a member of the Executive Committee of the World Economic Forum, its Head of Shaping the Future of Media, Entertainment and Information.
 
Welcome to Southern California CG Shaikh. We are delighted to welcome you and Kirstine to your new home. 
Thanks very much, it’s exciting to be here. I started my position right away, even before my things arrived, and Kirstine started a new job on another continent at the same time – so we’re not quite settled in yet!
 
Can you share with us how you learned of your appointment?
Everything kind of happened at once for both of us. I was in discussions for a while, as these kinds of things take time. Then Kirstine and I both got confirmation of our new jobs on the same day, actually. First, Kirstine heard about the WEF role and it was, ‘Guess we’re moving to Geneva.’ We were in our kitchen in Toronto deciding what to make for dinner, still absorbing her news, and I answered a phone call from Ambassador [David] MacNaughton to hear him offer me the CG position. Most definitely a day we won’t be forgetting soon.
  
What are you most looking forward to about your appointment as Canada’s senior representative in Southern California, Arizona and Nevada?
I’m looking forward to digging into all aspects of the job, which is already underway at a hectic pace – we recently had a crisis response simulation for our team to be able to support Canadian citizens here in case of emergency, and I was traveling in Arizona this past week, speaking about our economic and defense partnership. Before that, I was meeting with as many of the over 250 Canadian companies showcasing at CES in Nevada as I could. Beyond all that, I look forward to working with businesses in all sectors to leverage the already great relationships Canada has here in the US especially Southern California, Arizona and Nevada. 
 
With your experience in front of and behind the camera in the entertainment industry, what is your assessment of how well Canada and Southern California currently work together in this industry?
Like so many areas of the Canada-SoCal relationship, we’re succeeding together. Hollywood film and TV production in Canada hit record numbers last year. Our studios are staying near full capacity, in many cases already at capacity and expanding. Thanks to streaming and “peak TV,” there are more opportunities for Canadian content and stories to be seen by American audiences. Canadian talent is, as always, behind some of the critically acclaimed films and series this year again – look at Stephan James, who stars in If Beale Street Could Talk and Sandra Oh in Killing Eve as just two quick examples of the great diverse Canadian talent. And that's just the beginning because the real excitement is in the  partnerships and creativity possible whether in film, TV, music, really any medium. 
 
What cross-border entertainment industry opportunities are you most interested in exploring further as Consul General?  
Beyond the collaboration I just spoke about, there’s also the VR/AR [virtual reality, augmented reality] universe, an area where Canada is already so strong and where there is obviously great interest from the industry based here. And the merger of those two with AI [artificial intelligence]. I’m also interested in the live-sports/event/music convergence. There’s still some untapped business opportunities for Canada there.
 
Beyond the strong ties between Canada and Southern California in the entertainment industry, what do you view as some of the other key strengths of our relationship?
It goes so far beyond entertainment. We have 525 Canadian companies operating in greater Los Angeles. 27,000 people here work for Canadian companies, not to mention the tens of thousands more whose jobs depend on trade and investment with Canada. So the linkages are already there. 
 
Canada is not only the second largest market for California exports, the country is also one of the largest sources of foreign direct investment. What do you see as some of the economic development opportunities in trade and investment?
Our trade and investment team at the Consulate are uncovering opportunities all the time.  We have sector specialists in the life sciences, tech, advanced engineering, clean energy and infrastructure and the creative industries sector. In the short time I’ve been here, I’ve already seen exciting progress in the IT sector. The team has a great history of hitting its goals and big, thanks to them and my CG predecessors, but of course, we can always strive for more across the board given the era we are in as 2020 approaches. As they say out there, what a time to be alive! 
 
What kind of relationship do you want to have with the Southern California business community? 
It's about building upon what are already close, business-to-business relationships, and facilitating more for greater positive impact.  Being from the media and entertainment industries, I've experienced the power of person to person collaboration so I want to make sure I connect as much as I can on that level for the good of the Canada-SoCal family and partnership. There’s a lot of benefit to be had if it doesn’t focus on being simply transactional from one organization or business to another. 
 
What should Southern California executives know about doing business with Canada that they might not be aware of?
For starters, the strength and diversity of the Canadian workforce. Canada is in the midst of the biggest increase in welcoming immigrants in more than a century. Two-thirds of foreign-born Canadian adults have a post-secondary degree – that’s the highest of all the OECD countries. We’ve become the destination for the most skilled workers in the world, which is another reason why our diversity is a true asset. From there, I’d say we have very dynamic cities on a lot of levels including, of course, economically. A lot of people were surprised to see Calgary actually ahead of Toronto and Vancouver on the list of the world’s most livable cities – and all three in the top 10. And lastly, I’d mention our stable incentive infrastructure across the country for attracting, keeping and enhancing business.
 
As part of what is widely held to be the largest diaspora of Canadians in the world, what message would you like to share with the Canadian expat community here in Southern California?
We're here to help and support you. Our consular team is world-class. Individually and collectively, they have steered Canadians through every sort of crisis in every corner of the world. So if you need help, call us. And even when you don’t need urgent, crisis-response assistance, know that we’re all in this together. 
 
On a personal level, have you spent much time in Southern California and what do you most look forward to doing when you settle here?
I have family here, so I’ve visited frequently both personally and through work opportunities. I’m looking forward to catching up with family and friends and taking time to embrace the legendary SoCal lifestyle‎ more fully. 
 
Thank you, Consul General, for speaking with us. MAPLE Business Council looks forward to working together with you and your team to advance the interests between Canada and Southern California.

Southern California Office Markets Offer Diverse Choices for Expanding Businesses

Arlyn Stoik, Principal, Avison Young

After more than 24 years in commercial real estate, we have never been more excited by the multiple, diverse options for expanding businesses in Southern California. Many of us have heard about Southern California’s booming economy. When we focus on commercial real estate, however, we get a much clearer picture of the industries, properties, regional markets, and undiscovered opportunities that underlie the region’s prosperity and promise. It is a region ideally suited to a broad range of users with a diversity of real estate needs.
 
Commercial real estate touches every industry and all of our professional lives, whether we are business executives, professionals, entrepreneurs or corporate employees, our work environments are critical tools for achieving business objectives, attracting top talent, and managing costs that can be significant.
 
Canadian companies with a presence in the Southern California region can reap all the benefits of one of the globe’s top economies and one of the largest manufacturing centers in the U.S.  With its international seaports, its leadership in startups, aerospace, entertainment and technology, its growing bioscience hub, topflight universities, and its diverse, highly skilled workforce, Southern California continues to attract growing, forward-looking companies.
 
Avison Young understands the unique cross-border nuances of the commercial real estate industry. With our Canadian roots, we are perfectly aligned to assist Canadian companies moving into the U.S. or alternatively heading north of the border. Here, we briefly introduce the key regions that comprise the Southern California marketplace and the factors affecting the real estate market.
 
Los Angeles
 
LA County is a region that thrives on entrepreneurship, creativity, and innovation.  Its vibrant, broad-based economy with its 5.1 percent unemployment rate is on track to continue the healthy trends that have prevailed in 2018. It offers increasingly high employment from media, science, technology, engineering, and math (STEM) professions that strengthen commercial real estate fundamentals. Avison Young expects steady office leasing activity to continue for media, entertainment, and especially tech companies in biotech industries. As an illustration of the growing biotech industry, neighboring Ventura County-based Amgen is partnering with LA County on the creation of a “BioLA” hub that will attract emerging biotechs and startups and make LA the next major biotech hub.
 
Along with strong demand from healthcare andbiotech related industries, LA office market conditions reflect a current decrease in the vacancy rate, at 14 percent in Q3 2018 with an average asking rental rate at $3.14 per square foot. This is still considerably less as compared to other markets such as San Francisco and New York.
 
Inland Empire
 
The Inland Empire (IE), a metropolitan area east of the LA metropolitan area in western Riverside County and southwestern San Bernardino County, is seeing increased construction, with most of the demand for new office product coming from medical tenants as the IE experiences major population growth; hospitals, clinics and medical office buildings represent a promising real estate market. Avison Young expects new construction to continue, reflecting the IE’s rapidly declining office vacancy rate of 9 percent in Q3 2018, down from 10 percent in Q2, a 10 percent decrease in three months.
 
A good amount of office demand accompanies the increasing growth of the booming logistics/industrial market and companies seek space for their warehousing, manufacturing and distribution needs. This sector is fueled by the region’s dense population as well as its proximity to the fast-growing Ports of Los Angeles and Long Beach. The IE offers logistics tenants room for growth and lower warehousing and labor costs compared to the other Southern California regions. Transportation and warehousing are largely responsible for the IE’s strong unemployment rate that continues to shrink—4.1 percent in Q3 2018, down from 4.9 percent a year ago.
 
Orange County
 
Orange County, the sixth-largest county in the nation in terms of population, offers a skilled and well educated labor force of 1.6 million, some of the best weather in the U.S., a central location in Southern California that attracts employees from Los Angeles, San Diego, Riverside, and San Bernardino counties, and a business-friendly environment. The county’s ideal geography, high quality of life and growing population continue to drive this thriving hub of financial services, information technology, logistics and health care.  Its unemployment rate, 2.8 percent as of September 2018, is well below California and national averages.
 
Although rents continue to rise (averaging $2.74 per square foot in Q3 2018), the OC office market is experiencing an increase invacancy at 11.5 percent in Q3 2018, up from 10.6 percent in the previous quarter. Avison Young attributes the rise in vacancy to construction momentum, with more than 2 million square feet of office space completed over the past 12 months. The largest office project under construction is Flight at Tustin Legacy, with its first phase of nine buildings totaling 390,000 square feet, and The Quad at Discovery Business Center in Irvine Spectrum that added 364,000 square feet, of which 64 percent was pre-committed.  We predict that office vacancy will rise further only because the OC market will need absorb the recent uptick in new inventory of creative, tenant-friendly spaces in amenity-rich locations.
 
San Diego
 
San Diego has a proactive “Business Expansion, Attraction and Retention (BEAR) team designed to foster the retention and creation of jobs and investment in the city and ensure an attractive business climate for existing businesses and those interested in relocating to San Diego. With its large San Diego Naval Base and nearby Camp Pendleton Marine Corps Base, the San Diego office market benefits from strong demand for space from life sciences, mid-sized and start-up tech companies, health care, and sectors that work closely with the U.S. military, reflected in its low unemployment rate (3.2 percent as of September 2018, down from 3.7 percent a year ago).
 
The San Diego County office market remains competitive with top tech cities by developing attractive spaces and fostering a highly educated workforce. Demand is growing for creative and collaborative space, and the average asking rental rate is $2.83 per square foot. The highest rents ($3.35 per square foot) are in the Central Coast submarket, driven by strong demand from the life-science sector, which is among the most prominent in the U.S.  The vacancy rate in San Diego has increased slightly to 10.8 percent in Q3 2018, up from 10.7 percent in the previous quarter, but record employment gains have helped San Diego’s office market sustain competitive vacancy levels. With 10 investment-grade office projects under construction in the third quarter, including life-science projects, the San Diego office market will add 1.2 million square feet of new inventory in 2019.
 
Southern California Beckons
 
Avison Young’s analyses of these prosperous, future-looking markets reveal that, for Canadian companies looking to stake their claims in Southern California, there is no lack of golden opportunities in the Golden State.
 
Sound real estate advice from a trusted advisor is key to developing the deliberate, thoughtful real estate strategy that is the vitally important foundation for the success of your business. Avison Young’s international network, founded in Canada and with offices throughout both countries and a growing list of other key foreign markets, is particularly well aligned to assist Canadian companies in the U.S. 
 
Arlyn Stoik, one of Avison Young’s longest serving shareholders/principals, has more than 24 years of experience representing both owners and occupiers of commercial real estate and spanning all aspects of the industry, including land, development, leasing and sale of commercial properties. He has worked on some of the largest and most complex commercial real estate transactions in Western Canada and  Southern California. Continually recognized as one of Avison Young’s top producers globally, Arlyn has achieved the company’s Circle of Excellence Award several years running.

The Taxation of US Corporations in Canada and the impact of The Canada-US Tax Treaty on Corporate Residency Status

Todd Trowbridge, Partner - Corporate Tax, Trowbridge Tax

A frequent question that often arises in our discussions with US companies who want to expand into Canada is how our country goes about taxing foreign corporations. 
 
Residency Status
 
The process typically begins with determining whether the particular corporation is considered to be resident in Canada for tax purposes.  A corporation may be considered resident in Canada without being a Canadian corporation. A corporation that is resident in Canada for tax purposes is subject to tax in Canada on its worldwide income. 
 
Since residency is not specifically defined in the Income Tax Act (ITA), tax residency is determined using common-law principles and certain deeming rules within the ITA.  A corporation may be deemed resident in Canada in certain cases, such as where the corporation was incorporated in Canada.  Further, a foreign corporation will be considered resident in Canada if its central management and controlis exercised in Canada or if it is legally continued into Canada. 
 
Impact of Tax Treaty on Residency Status
 
It is possible that a particular corporation will be considered resident in both Canada and the US.  Fortunately, Canada has a tax treaty with the US that will override the ITA where applicable. The corporation must first be viewed asresident in the US for purposes of the treaty in order to gain access to its benefits. Generally, a corporation will be seen as resident for purposes of the treaty where the corporation is liable to tax in the US.  Further, the corporation must also satisfy the rules contained in the Limitation on Benefits provision contained in Article XXIX A within the treaty in order to be eligible for treaty benefits.
 
Contained within the residence article of the Canada-US tax treaty is a set of rules (generally referred to as the “Tie Breaker Rules”) that are applied to settle instances of dual residency. The overall objective of the tax treaty is to eliminate the possibility of a corporation being exposed to full income taxation in both countries on the same income. The “Tie Breaker Rules” are intended to ensure that a particular corporation is only considered resident in one country.
 
Under the first tiebreaker rule in the Canada-US tax treaty, if the particular corporation was created under the laws in force in one country but not under the laws in force of the other country, it will be only be considered resident in the country in which the corporation was created.  Otherwise, residency will be determined by the competent authorities (i.e. the country’s taxation authority) of the two countries.  Where a corporation is seen as a resident of another country under a tax treaty, it will be deemed to be a non-resident of Canada under the ITA.
 
Given the uncertainty involved in having the tax authorities determine the residency status of a corporation under the second rule, it would be ideal to understand what constitutes residency in each country and, where possible through proper planning, avoid the scenario of being seen as a resident of both countries.[1]
 
Care should be taken when using hybrid entities (i.e., an entity that is viewed as one type of entity in one country and another type in the other country) incross border scenarios such as US LLC’s which are treated as flow through entities in the US but corporations in Canada. The Canada Revenue Agency takes the position that hybrid LLC’s are generally not eligible for treaty benefits since an LLC is not liable to tax in the US.  As a result, if central mind and management of an LLC is exercised in Canada (such as where the LLC is owned by a Canadian resident person or entity and managed from Canada), it may be seen as a resident of Canada for tax purposes and subject to worldwide taxation in Canada. 
 
Taxation of Non-Resident Corporations in Canada
 
If it is determined that the corporation is not a resident of Canada for tax purposes, it will only be subject to tax in Canada to the extent that it carries on business in Canada or disposes of taxable Canadian property in which case it must file a tax return in Canada.  Carrying on business in Canada is not specifically defined in the ITA.  Whether a non-resident corporation carries on business in Canada is a question of fact and is determined based on common-law principles. 
 
A US corporation may also be deemed to be carrying on business in Canada under the ITA if it solicits orders or offers anything for sale in Canada through an employee or agent (regardless of where the contract or transaction is completed) or if it produces, grows, mines, creates, manufactures, fabricates, improves, packs, preserves or constructs, in whole or in part, anything in Canada.
 
Where benefits under the Canada-US tax treaty are available, a US corporation will generally be exempt from Canadian income tax on its business profits earned in Canada, unless it carries on business through a factual or deemed permanent establishment in Canada. The term “permanent establishment” is defined in Article V of the treaty as a fixed place of business through which the business is carried on but also contains specific inclusions, exclusions and deeming provisions that will impact whether a company has a permanent establishment.
 
In the absence of tax treaty benefits, a corporation that is seen to be carrying on business in Canada will be subject to Canadian tax on its business profits earned in Canada.  However, there is a ‘look through’ rule within the residency article of the treaty which grants treaty benefits to an LLC or hybrid entity that carries on business in Canada by looking through the LLC toit’s members.  If those members would otherwise qualify for treaty benefits, relief under the treaty may still be available in limited circumstances.
 
Branch Profits Tax
 
A branch profits tax of 25% may also apply (subject to possible reduction and exemption under the tax treaty). In simple terms, the branch tax is calculated based onafter tax profits that are not reinvested in Canada.  The branch tax is intended to replicate the withholding tax that would otherwise be applicable on dividends if the US corporation were to instead operate its business through a separate corporation in Canada. 
 
Regulation 105 Withholding on Services Rendered in Canada
 
A US company rendering services in Canada is subject to a 15% tax withholding on their invoices under Regulation 105 of The Income Tax Act (and an additional 9% under Quebec tax law if services are rendered in Quebec).  The Canadian customer isrequired withhold and remit the tax to the Canada Revenue Agency (CRA) as well as  file Form T4A-NR to report this tax withholding.  The withholding is not a final tax but rather a tax instalment against a potential tax liability in Canada. 

Where a US company will not have a PE in Canada in respect of their services, it may be possible to obtain a Regulation 105 waiver (in respect of the 15% tax withholding) in advance of providing their services in Canada in order to eliminate the cash flow impact of this tax withholding.  Otherwise, the tax withheld will either be applied against the final Canadian tax balance owing for the year or refunded upon filing a tax return in Canada with a claim for treaty exemption.
 
US Tax Implications of Paying Tax in Canada
 
Both the Canada-US Income Tax Convention (i.e., the “Treaty”) and the US foreign tax credit system should help California corporations - or other US based corporations - mitigate the impact of any potential tax paid in Canada as a result of a requirement to report taxable income in Canada.  As mentioned previously, the Treaty limits Canada’s ability to subject a US corporation to taxation where the level of activity does not rise above certain thresholds as provided under the “Permanent Establishment” rules.   It also provides for reduced tax rates on certain income streams that are subject to withholding tax.
 
However, even if a US corporation does exceed the thresholds and is subject to Canadian tax, the US federal foreign tax credit system provides that such Canadian tax is generally available as a credit against US tax – subject to the foreign sourced (Canadian) income amount, the category of income and the amount of US tax deemed to be assessed on the income.  Effectively, the system provides for a US corporation to effectively pay the “higher” of the two rates (Canadian orUS) on the Canadian sourced income after application of the foreign tax credit.  With the recently passed Trump tax reform legislation and the US tax rates sitting at historical lows, in most cases this may result in the Canadian income being subject to the now slightly higher Canadian corporate tax rates.  Any excess foreign tax credit is carried forward to be used in future years.  Note that California generally does not allow a similar foreign tax credit on its California corporate returns.
 
As always, proper planning will ensure that a US corporation does not pay unnecessary tax in either country and that interest and penalties are avoided.  On that note, working with a tax adviser that is well versed incross border tax issues is highly recommended.
 
[1] It should be noted however that some countries, may not allow the treaty to override their domestic residency rules; at the same, in such cases if the company is resident of another country under the treaty rules, they typically could still claim the exemptions from (foreign) taxation that are provided by that treaty.

The Blurring of Residential Spaces and Traditional Offices Creates Exciting New Design Opportunities

What will the office of the future look like? It’s an oft-asked question these days as the workplace continues to evolve, moving from the era of the cubicle to the open office and now settling quite comfortably on a landscape with a more residential look and feel.
 
“Office space today is being used differently, with an emphasis on making the environment more inviting and comfortable for users,” explains Ami Kvas, Director Product Management, Casegoods and Custom Solutions, Teknion. “Biophilia – bringing elements of nature, daylight and natural materials indoors – is a component of this movement. The craft and use of wood exhibited by our new collection of Punt furnishings introduces a warm, inviting and relaxing tone to the workplace, along with an elegance and comfort of home.”
 
The trend toward residential/commercial office landscapes was front and center at NeoCon this past June in Chicago, and at Orgatec in Cologne during October. More and more designers and manufacturers are creating new workplace furnishings that address the blurring of residential spaces and traditional offices. Just prior to NeoCon, Teknion announced the new partnership with distinguished Spanish furniture company Punt Mobles. More than just a distribution agreement, Teknion will be manufacturing four popular Punt wood product lines in North America.
 
Teknion is, as expected, excited about the possibilities this partnership presents. And so is Punt.
 
“We recognize Teknion as the ideal partner, and fully capable of producing our signature wood products centered around Art and Design,” said Mariano Soria, CEO, Punt Mobles. “Teknion shares with us the same high level of care required to execute Punt’s design details and level of skilled craftsmanship.”
 
Teknion’s Kvas elaborates: “The Punt furnishings will be crafted at our high-end Teknion Solutions facility in Calgary, Alberta, providing clients with shorter lead times and a North American shipping address,” she says. “Rich in design culture, Punt embraces a new kind of sophistication in the quality and combination of materials used, along with precise styling in its contemporary furniture. Our level of attention and skill align perfectly with the values of Punt.”

Furnishings from the new Teknion Punt Collection for North America are offered as a boutique collection appropriate for private offices and meeting spaces, where a warm, residential and sophisticated ambience is desired. This classic mid-century offering comprises the Literatura Open Shelf System, Mava Wood Guest Chair, Mitis Table and Stockholm Credenza. These beautiful pieces can be showcased alongside Teknion standard product as signature designer elements to personalize, complement or transition any workspace.
 
Literatura Open Shelf System
Literatura is an open bookcase featuring a small, distinctive storage unit on casters ideal for displaying works of art, music, photos, souvenirs and what-nots. Literatura integrates with all kinds of architecture and interior design works. This “light, balanced collection of cubby holes” can also be used as a room partition. Literatura is designed by Vicent Martinez.
 
Mava Wood Guest Chair
Mava is an elegant wooden armchair with a solid oak or walnut wood frame. Its light appearance makes it the perfect guest chair by bringing a unique element of warmth to smaller spaces. Mava is inspired by the image of original wooden clothes-pegs from the early 20th century. Its legs are similarly slotted to hold the backrest, which has a wide, open form that seems to fly in the wind like a piece of cloth. Stephanie Jasny is the designer behind Mava.

Mitis Table
Mitis, from the Latin word for lightweight, is a collection of rectangular wood tables. Mitis is available with an optional glass top that offers a natural, essential and consistent expression. Mitis offers a solid appearance and exquisite detail both in the tabletop and trestle-like grooved legs. Tables are available in three heights and widths to accommodate both private offices and large meeting rooms. This table collection was designed by Marios Ruiz.
 
Stockholm Credenza
Also designed by Mario Ruiz, Stockholm conveys a new kind of sophistication with its combination of wood and metal materials. For a lighter appearance there is a metal base. Or, Stockholm can be mounted to the wall. The credenza doors and drawers are without handles, showcasing the beauty and natural appearance of the wood grain as it flows across the storage fronts. Stockholm is finished with an elegant anodized aluminum top, which features precise styling and balanced radii.
 
“We have long employed some of the best Red Seal Certified journeymen cabinet makers and craftsmen in the industry,” concludes Kvas. “Finding the balance of using state-of-the-art equipment while never sacrificing the human component of care and attention to detail has been key to producing custom and production products with the highest-level quality and craft. It’s a challenge that we welcome, and a great opportunity to contribute to the trend of more residential look and feel in the modern workplace.”

Opportunity Zone Funds - An Exciting New Tax Incentive Investment Program

By Garth Stevens and Marc Schultz*

The Tax Cuts and Jobs Act passed in 2017 created as a new federal income tax incentive program, the opportunity zone program, located in Section 1400Z-1 and Section 1400Z-2 of the Internal Revenue Code of 1986.  In just the past few weeks, the U.S. Department of the Treasury and the IRS issued much anticipated guidance on many important aspects of the opportunity zone program, which has now moved investors’ and other business stakeholders’ interest in opportunity funds into high gear.

The opportunity zone program is designed to encourage private capital investment in qualified “opportunity zones,” which are designated census tracts throughout the United States that qualify as low-income communities.  Opportunity zones have now been designated in almost all states, including California.  Various parts of Los Angeles, Orange and Riverside Counties and much of greater San Diego incorporate designated opportunity zones (among many other parts of the state).

What is an Opportunity Fund?
The opportunity zone program provides investors with significant tax benefits for investing in opportunity zones, provided that such investments are made through qualified opportunity funds, which serve as intermediaries between the investors and the particular opportunity zone investments.

An opportunity fund is an investment vehicle that has been organized as either a corporation or a partnership (typically formed as a limited partnership or a multi-member limited liability company), has undergone (or will timely undergo) the requisite certification process, and holds at least 90% of its assets in qualified “opportunity zone property” (as further discussed below).  Certification is a self-certification process whereby the opportunity fund attaches IRS Form 8996 to its federal income tax return for the tax year in which the fund first elects to be an opportunity fund and to its federal income tax return for each subsequent tax year.  An opportunity fund may be formed to invest in a single project, such as a real estate development or in a qualified entity.  However, the opportunity fund may also be formed to invest in multiple different investments.

As noted above, an opportunity fund is required to hold at least 90% of its assets in “opportunity zone property” (described below).  An opportunity fund holds opportunity zone property either by directly holding “opportunity zone business property” or by holding stock (treated as equity) or partnership interests in a domestic corporation or partnership, where such stock or partnership interest is issued to the opportunity fund after Dec. 31, 2017, in exchange for cash, as long as such entity is a qualified “opportunity zone business” (described below) on certain testing dates.

In general (and subject to certain other qualifications not mentioned here), an “opportunity zone business” is an entity engaged in a trade or business in which substantially all (at least 70%) of its tangible property owned or leased is opportunity zone business property, and where such entity derives at least 50% of its gross income from the active conduct of a trade or business in an opportunity zone.  “Opportunity zone business property” is tangible property used in a trade or business of the opportunity zone business or opportunity fund (as the case may be) that was acquired by the opportunity zone business or opportunity fund (as the case may be) by purchase from an unrelated person after Dec. 31, 2017 and that meets other certain requirements.

Tax Benefits to Opportunity Fund Investors
The opportunity zone program provides three principal benefits to taxpayers who invest in opportunity funds.  The first principal benefit is that a taxpayer (by making an election) may defer any taxable capital gain (short term or long term) arising from a prior sale transaction (e.g., a sale of a company or business, or a division thereof, real property or other assets), where the purchaser in such transaction was an unrelated person, by investing all or a portion of such taxable capital gain in an opportunity fund within 180 days after the date of the sale.  The amount of the taxable capital gain that is deferred by the taxpayer is equal to the amount that the taxpayer invests in the opportunity fund.

The deferred gain (i.e., the amount the taxpayer invests in the opportunity fund) is required to be included in the taxpayer’s income for tax purposes upon the earlier of (a) the date that the taxpayer sells or exchanges his interest in the opportunity fund or on which the opportunity fund liquidates, or (b) Dec. 31, 2026.  However, the second principal benefit of the opportunity zone program is that if the taxpayer holds his investment in the opportunity fund for at least five years prior to the date on which the taxpayer is required to include the deferred gain that the taxpayer invested in the opportunity fund in his income for tax purposes (as noted in the prior sentence), the amount of the deferred gain to be included in the taxpayer’s income will be effectively reduced by 10%; and if the taxpayer holds his investment in the opportunity fund for at least seven years prior to the date on which the taxpayer is required to include the deferred gain that the taxpayer invested in the opportunity fund in his income for tax purposes, the amount of the deferred gain to be included in the taxpayer’s income will be effectively reduced by an additional 5%.

In short, not only can an opportunity fund investor defer paying federal income tax on capital gain from a sale transaction for potentially many years, the amount of capital gain subject to tax, once due, can be reduced by up to 15%.  Such gain, when finally taxed, will likely be subject to the investor’s income tax rate in effect at the time such tax is required to be paid.  Therefore, when considering an investment in an opportunity fund, thought should be given as to the potential risk of income tax rates rising between the time of making such an investment and the end of the deferral period when the investor is required to pay tax on the original deferred gain.

The third principal benefit of the opportunity zone program is where the taxpayer holds an interest in the opportunity fund for at least 10 years.  In such a case, the taxpayer may make an election to increase the tax basis of his investment in the opportunity fund to the investment’s fair market value on the date of a sale of such interest, thereby eliminating any taxable gain on the appreciation of the taxpayer’s investment in the opportunity fund.  This is where much of the excitement in the opportunity zone program has been generated because this benefit permits the taxpayer to continue to obtain tax-free appreciation on his opportunity fund investment as long as the taxpayer disposes of such investment on or before December 31, 2047.

Because the above-noted tax benefits are U.S. federal income tax benefits, they should be available to all eligible taxpayers who are subject to U.S. federal income tax and generate capital gains sourced in the U.S., including Canadians who have taxable capital gain from the sale of a company, business, real property or other capital assets in the U.S.  (Canadians, as well as other non-U.S. persons should nevertheless consult with their own tax advisors as to how these tax benefits and other aspects of the opportunity zone program may be treated under the tax laws for their own jurisdiction).

Conclusion

The opportunity zone program is an exciting new tax incentive program that aims to promote capital investment in economically disadvantaged communities in the U.S. by offering substantial federal income tax benefits to opportunity fund investors.  This article touches only on a few key aspects of the opportunity zone program.  The program is subject to many other pertinent details, rules and limitations, as well as continuing development by the U.S. Department of the Treasury and the IRS of further regulations and related guidance.  As such, this article should not be construed as a complete discussion of the opportunity zone program.  Persons interested in learning more about the program can contact the authors through the email addresses noted below.
 
Garth D. Stevens (gstevens@swlaw.com) is a corporate and securities partner at Snell & Wilmer L.L.P. and a member of the board of directors of MAPLE Business Council.  Marc L. Schultz (mschultz@swalw.com) is a federal tax partner at Snell & Wilmer L.L.P.   Both are actively involved in opportunity zone fund formation.

10 Legal Considerations for Marketing & Selling Products in Canada

LuAnne Morrow, Counsel and Trademark Agent - Borden Ladner Gervais LLP.

 
Despite the talk of trade disputes and the apparent political divide between Canada and the United States the two countries continue to be closely connected in many ways, including with respect to consumers and consumer products.  Building your brand and product in the United States in many cases means that you have also built a reputation among Canadians due to the frequent travel of Canadians to the United States and the American media presence in Canada. This creates an ideal opportunity for many companies to launch their products and brands in Canada. While there are many similarities between the countries with respect to marketing and selling to consumers and consumer products there are also many differences. The following are some key issues to consider when launching your product in Canada:

1. Register your Trademarks and Copyrights

Trademark registration is jurisdictional in nature so the trademark registration you have secured in the United States or other countries does not mean your trademark is protected in Canada. A trademark agent can conduct clearance searches and advise if the trademark you are considering or already use in the United States is available for use and registration in Canada. A trademark lawyer can also provide strategic advice with respect to choosing an effective trademark for Canadian consumers. The system for registration in Canada is similar to that in the Unites States but can take much longer so it is advisable to consider trademark registration as part of your launch plan well in advance to selling products in Canada.
 
If your product has a unique package design or design elements, or is computer software or other work protectable by copyright, registering the copyright in Canada is an inexpensive means for further protecting your product and brand.
 
Registered trademarks and copyrighted works can be recorded with Canada Customs to reduce infringement, piracy and counterfeit products. Registered trademarks also offer benefits in Quebec where a registered mark is not required to appear in French on packaging.

2. Secure <. Ca > Domains

Although not required many companies choose to use Canadian country code domain names for e-commerce websites aimed at Canadians. It can also be a helpful tool to manage e-commerce directed at different countries. Canadian presence is required to secure such domain registrations and there are options for how to manage such registrations if your company does not have a Canadian store or office.
 
3. Decide if you will Market and Sell to Consumers in Quebec

The province of Quebec has requirements with respect to the use of the French language when marketing and selling to consumers in Quebec. Making a decision early in your planning process as to whether you plan to sell products in Quebec will inform many other steps you take along the way, such as building your website, terms and conditions for e-commerce, packaging, signage on store fronts, contests and trademarks.

4. Prepare Labels and Packaging to Meet Canadian Requirements

Canadian labelling and packaging requirements are different in several respects from those in the United States. The most significant difference is the requirement for bilingual labelling throughout Canada. In addition the system of measurement is different and will require changes to packages to reflect the metric system. There are also numerous specific requirements for particular classes of products. For example: food products may require inspections or certification both provincially and federally. Use of certifications for organic products must comply with Canadian requirements and nutritional labelling is dramatically different in Canada than the United States. Cosmetics must follow strict guidelines for ingredient lists and alcoholic beverages and cannabis products must meet both federal and provincial requirements and in each province those may differ. All labels must include bilingual ingredient lists and in some cases instructions must also be in both languages and comply with legislation respecting product claims. Companies often engage consults to assist in preparing new packaging and labels, however the consultant should also liaise with legal counsel to ensure the packaging and labelling legal requirements are met.

5. Review Advertisements for Compliance

The principles of ensuring that advertisements are not misleading to consumers are similar in Canada and the United States as are the guidelines for endorsements by influencers or celebrities. However, there are some unique issues in Canada including restrictions in Quebec with respect to advertising to children and restrictions on advertising certain other products such as pharmaceuticals, cannabis, tobacco and alcohol. A campaign that is compliant in the United States may not necessarily be so in Canada. Your advertising agency and legal counsel should work together to review marketing and advertising materials for compliance.

6. Prepare your Website for Canadian Consumers

There are three key issues to consider when making your website and e-commerce sales directed to Canadians:  terms and conditions that comply with Canadian consumer protection legislation, a Canadian specific privacy policy, and if you intend to market to consumers in Quebec portions of your website content may need to be in French. Consumer protection legislation exists in all of the provinces in Canada and can impact many elements related to e-commerce and use of websites such as return policies, limitation of liability, and transparency as to changes to the terms and conditions. You may want to consider gating the site to filter Canadian consumers to a separate website or simply integrating Canadian requirements into your content and current terms and conditions.

7. Consider Electronic Promotional Campaigns

Canada’s Anti-Spam legislation (CASL) is far more comprehensive and onerous for companies than the current laws in the United States with respect to spam. Even if your company doesn’t have an office or location in Canada the law still applies to electronic promotions sent to Canadians. These requirements include opt in consent, the ability to unsubscribe from receiving messages and the need to remove names from lists within 10 days of receiving the request, as well as requirements for content and privacy considerations. The fines for failing to comply with CASL are significant and can be in the million dollar range, however compliance is not complex and can be integrated into your current electronic campaigns.

8. Have Contest Rules Reviewed for Compliance

As part of your launch you may want to consider contests, promotions or giveaways. Contests, giveaways and sweepstakes are required to follow specific requirements set out in the Canadian Criminal Code and Competition Act. In Quebec there are additional requirements with respect to contests open to residents of Quebec that including registering with the government authority and posting a bond. If you want to include Canadians in contests that you are running the rules for the contest must meet the Canadian criteria and be communicated in a specific way. Promotional coupons, gift cards and loyalty cards are all subject to provincial consumer legislation and should be reviewed for compliance.

9. Consider Translating Materials into French and other Languages

In Quebec the translation of some materials into French may be mandatory and bilingual labelling requirements are Canada wide. However, from a marketing perspective you may also consider translating promotional materials to French to reach a wider audience in other provinces such as Ontario, and New Brunswick where French is widely spoken or to other languages to market to the very diverse Canadian population.

10. Review your Privacy Practices for Compliance

If your product will be sold through an e-commerce platform, or you will be collecting personal information through your website (including by the use of cookies and other tracking tools), or by other means your privacy policies and procedures must comply with Canadian law. You may wish to consider a policy just for Canadian consumers or integrating Canadian requirements into existing policies.

While the various differences and requirements may appear overwhelming legal counsel with expertise in consumer issues, packaging and labelling and advertising laws in Canada can guide you and work closely with other consultants and your distributor or retail partners to ensure a smooth and successful product launch in Canada.

LuAnne Morrow is Counsel and trademark agent at Borden Ladner Gervais LLP. Her practice focuses on trademark prosecution, strategy and licensing, advertising and consumer issues and she specializes in assisting companies to launch brands, products and companies in Canada. LuAnne is recognized in the 2019 (and since 2010) edition of Best Lawyers in Canada (Advertising and Marketing Law and Intellectual Property Law), the 2018 edition of Managing Intellectual Property's IP Stars (Intellectual Property) and in the 2018 edition (and since 2010) of World Trademark Review's WTR 1000 - The World's Leading Trademark Professionals (Prosecution and Strategy).

Gearing Up for U.S. Tax Reform

Mo Ahmad, Founder & CEO Westmark Tax

It’s hard to believe we are already in the 4th quarter of the calendar year 2018, with the year-end right around the corner.  As the year-end approaches, most of us start planning for the winter months and the holidays.   It’s also a good time to catch up on personal paperwork and gear up for year-end tax planning in preparation of the 2018 U.S. tax filing season (starting in early 2019). 

Taxes may not be the first thing on the top of your year-end to-do list; however, given that the implementation of the “Tax Cuts and Jobs Act of 2017” (TCJA) is right around the corner, it’s a good time to see what you can do now to be prepared and positioned for expected results and no surprises.   

Perhaps you’ve read all about the TCJA in the press.  If you are still unclear about TCJA changes or how it will impact you, here is a brief recap of the more prominent changes impacting individuals.

1) Decrease in federal individual income tax rates 

The individual federal income tax rates were decreased with the top marginal rate moving from 39.6% to 37% starting in 2018.  To bolster the good news, the seven tax brackets (or bands) were widened so that more of your taxable income will fall within the lower tax bands resulting in lower taxes for a large majority of us (there are some exceptions for individuals in the higher tax brackets).
 
For payroll withholding on supplemental wages (e.g. bonus, stock options, restricted share units) a new rate of 22% on $1 million or less of wages and 37% for over $1 million.
 
2) Increase in the Standard Deduction for 2018
 
The Standard Deduction was increased to:
- $12,000 for single filers (including married filing separate)
- $18,000 for heads of household
- $24,000 for joint filers
(compared to $6,500, $9,550, and $13,000 respectively under 2017 law)
 
To provide some background, an individual or married couple can deduct against taxable income the higher of Itemized Deductions or the Standard Deduction.  
 
Taxpayers can now take advantage of the higher Standard Deduction versus having to itemize their deductions.  Thus, tax filing becomes simplified as less individuals will have to itemize their deductions.  A word of caution, states may still require you to itemize your deductions.
 
The new Standard Deduction amounts almost doubled; however, the benefit may be offset by the loss of personal exemptions under the TCJA.
 
3) Expanded Child Tax Credit
 
The child tax credit expanded from $1,000 to $2,000, while increasing the phaseout from $110,000 in current law to $400,000 for married couples. The first $1,400 is refundable.  If a dependent child does not have a social security number, but has an Individual Tax Identification Number (ITIN) then, a $500 nonrefundable tax credit may be available.  Other dependents, other than dependent children, may also qualify for the $500 nonrefundable tax credit.

4) New 20% Qualified Business Income Deduction

If you own a sole proprietorship, partnership, or S corporation—known to the IRS as a "pass through" business, you'll see your top tax rate drop to 29.6% for qualified business income attributable to the new 20% Qualified Business Income Deduction. As a "pass through" business, the profits (or losses) pass through to you as the business owner and is reported as personal income. The new tax law excludes some professional services income when certain taxable income thresholds have been exceeded. Professional services can include health, law, consulting, athletics, or financial services fields where the essential asset is the reputation or skill set of one or more of its employees or owners. Professional services businesses involved in investment management, and the trading of stocks, bonds, and other securities for clients are also excluded. How to maximize the 20% deduction is tricky so best addressed by your professional tax advisor who is knowledgeable in how the deduction works.

5)  C Corporation changes: Drop in federal corporate tax rates to 21%, new limit on net operating loss carryforward, and more options for accounting method.

If you currently own a pass though, or plan to set up new business in the U.S., you may want to consider a C corporation given the drop in federal corporate tax rates to a flat 21%.

But watch out for the limits on net operating losses, also a new provision for C corporations.  When operating cost exceeds revenue on a business tax return, it creates a net operating loss (NOL). The new tax law allows businesses to carry those losses forward indefinitely and use them to offset 80% of their taxable income in a future tax-reporting period. While you can carry these losses forward indefinitely, they cannot be carried back and applied to a prior tax period.

Many small business owners of C corporation that are not personal service corporations prefer the more straightforward cash method of accounting, where you only account for income when the money is received. Thanks to the federal tax overhaul, these businesses with up to $25 million (previous limit was $5 million) in revenue may now stick with cash method of accounting.

6) Full and immediate expensing of short-lived capital investments

For those taxpayers owning a business, there are now provisions for larger and more write-offs. Any qualified personal property you purchase for your business, such as a car, computer, or office space, is now fully deductible for a property acquired or placed in service after September 27, 2017 and before January 1, 2023. For equipment not subject to 100% first year expensing, first year write-offs are increased from $500,000 to $1 million and now includes equipment such as heating systems and home alarms.

7) Elimination of Personal Exemptions 

That’s right, you can no longer deduct yourself, spouse or dependents (although, some states allow for personal exemptions).  This new provision may have no impact to you if you were in Alternative Minimum Tax (AMT) in 2017 or prior years.  Basically, this elimination does not impact you as AMT does not allow for personal exemptions in the first place.

Another mitigating factor that may lessen the impact of the loss personal exemptions is the increase in the child tax credit, and more individuals can now take advantage of the credit due to the increase in phaseout threshold.

8) Changes to Itemized Deductions including mortgage deductions, state and local tax deduction limitation, elimination of miscellaneous itemized deductions.
These changes are significant and will impact taxpayers in especially high tax states and in states who have high property taxes.

• The mortgage interest deduction is now limited to the first $750,000 in mortgage loan indebtedness (new loans as of December 15, 2017).  

• Home equity loan interest no longer deductible

• State and local tax deduction is limited to a combined $10,000 for income, sales, and property taxes. Note taxes paid or accrued in carrying on a trade or business are not limited.

• Miscellaneous Itemized Deductions are no longer deductible.

 
9) TCJA changes effective 2019

Alimony is no longer deductible to the payor and not taxable to the recipient (for divorce or separation agreement in effect after Dec 31, 2018).

Mandate of share responsibility payment is reduced to zero effectively nullifying the Affordable Care Act tax penalty.
 
Recommended Steps and Actions

• A tax projection can be prepared to assess all TCJA changes that may be applicable.If you are impacted by the many changes in itemized deductions, it’s generally the case taxable income will go up but the lower tax rates may soften the impact. Moreover, the changes to the 2018 payroll tax withholding tables and the lower 22% tax withholding rate on bonuses and other one-time payments can cause underpayments in tax withholding resulting in potential underpayment penalties and interest.

To reiterate, if you have 2018 state income taxes and property taxes that exceed the maximum tax deduction of $10,000, will this change cause an increase to your federal tax liabilities given that the individual income tax rates are lower in 2018?  A projection of your 2018 tax liabilities will allow you to plan for 2018 tax balances due (or refunds) and assess whether estimated taxes need to be paid in or payroll tax withholding increased in the last quarter of 2018 to minimize underpayment penalties and interest. 

• You may want to consider timing your itemized deductions such as timing charitable contributions.

For example, if a married couple achieves the maximum $10,000 deduction for state and local taxes (state income taxes and property taxes) and mortgage interest of $10,000, it may be wise to stagger charitable contributions between two years. If the taxpayer wishes to donate $10,000 a year to charitable organizations, it would be beneficial for them to pay $20,000 in one year and $0 in the next. Their deduction for the year they made the $20,000 contribution would be $40,000 and the other year they would take the $24,000 standard deduction. If they instead made $10,000 in contributions each year, they would get $30,000 in total deductions for both years. By staggering their contributions, they will have a net gain of $4,000 in deductions over the two years (i.e. $64,000 vs. $60,000 over a two-year period).

• If you own a pass-through entity, review eligibility and tax benefit from the Qualified Business Income (QBI) deduction.There may be steps to implement before year-end to maximize the benefit for 2018 and future years as the combination of taxable income, the type of business, and wages can impact eligibility and the calculation of the deduction.The Qualified Business Income Deduction planning should be done prior to the 2018 year-end.

An item to note, taxpayers with international aspects can be affected by other changes in the tax law not mentioned above including disallowance of qualified moving expense deduction and disallowance of foreign property taxes on personal use properties.

Not all TCJA tax law provisions were addressed in this article as it is a highlight of some of the more prominent changes affecting taxpayers.  This, coupled with the complexities of new tax law should be reviewed by your tax advisor so planning can be implemented.  

Westmark Tax is dedicated to following the impact of the TCJA on your business and your personal tax situation. Feel free to contact Westmark Tax at www.westmarktax.com or (604) 637-9775 with any tax questions.

Is the Stock Market Too Concentrated?

Matt Carvalho, CFA, CFP®, Chief Investment Officer, Cardinal Point Wealth Management

It probably doesn’t come as a surprise that Amazon, Netflix, Microsoft, Apple, Alphabet and Facebook have been some of the best performing stocks in the first half of this year. But what may be surprising is that those six stocks made up 98% of the S&P 500 Index returns for the first half of 2018 according to a recent CNBC article1!

Many headlines over the last year have pointed out just how large these tech giants have grown For the first time since 20002, the tech sector now represents 25% of the S&P 500. When viewed another way, the market capitalization -the amount investors have deemed the companies are worth- of the top (largest) five companies is approximately equal to the bottom (smallest) 282 companies in the S&P 500, as illustrated by the amazing pie chart below created by Michael Batnick of Ritholtz Wealth Management3.

Weight of Top 5 Companies in S&P 500 Versus Bottom 282 Companies

In other words, the bottom 56% of the S&P 500 has the same market capitalization as the top 1%.  That’s a lot of companies. Those 282 listed include many household names such as Chipotle, Kohl’s, Clorox and H&R Block, all of which are multibillion-dollar firms on their own. Which begs the question, is it typical for a handful of the largest companies to dominate an index?

It turns out that historically it’s not uncommon for the largest companies to represent an enormous percentage of the index. Today the largest 10 companies represent a little over 20% of the large cap space  That’s right about the average we’ve seen over the last few decades, and significantly lower than it was in the 1960s, according to a recent study by Travis Fairchild at O’Shaughnessy Asset Management4. This study also found that on average, about 6-7 of the top 10 names  fall out of the top 10 within the following decade, suggesting that many of the current top ten companies will be replaced in the next ten years.

This phenomenon isn’t limited to just the U.S. According to Benjamin Felix of PWL Capital, through July 13th of this year, 75% of the S&P/TSX return came from just 10 of its 246 stocks, led by Suncor Energy, Toronto-Dominion Bank and Shopify5. This may lead you to ask, is there anything I should be doing as an investor to take advantage of this?

First off you should note that well diversified portfolios likely hold all the names mentioned in this piece; Amazon, Apple, TD, etc. are some of the largest holdings for most North American investors. But investing a portfolio solely in those largest companies has two pitfalls - undue concentration of risk and missed opportunities in other areas of the market.

The first pitfall of investing solely in individual names - even some of those red-hot tech stocks, came home to roost at the end of July. Both Facebook and Twitter reported earnings which fell short of market expectations. On July 26th, the day after their quarterly earnings announcement, Facebook fell by a whopping 19%, erasing $120 Billion USD in value! This amount is greater than the entire value of large companies like GE, Nike or Starbucks. A day later, following Twitter’s earnings announcement, that stock also fell 19%. Twitter had been one of the best performing stocks over the previous year prior to that announcement.

While these companies are included in most major stock market indexes, the performance of any individual company is going to be relatively small in comparison to the entire index - for example the S&P 500 was basically flat on July 26th, even with Facebook falling dramatically. But if you owned them individually - they would likely represent a far greater percentage of your overall assets.

Another major downside of only holding those largest of companies is missing out on large potential gains elsewhere. Small companies outperformed their large cap counterparts in the U.S. and Canada significantly over the second quarter of this year. And academic research shows that historically small companies have outperformed their large counterparts over decades6. Yet for the average investor, it’s difficult to not want to go all in on the large gains you’ve recently seen on familiar companies you likely interact with every day.

If outperforming were as easy as picking the recent winners and calling it a day, active fund managers would have a far better track record than they currently do. Yet, the record of both U.S. and Canadian active stock managers is poor, supporting the idea that it’s extremely difficult to outsmart the market and predict in advance who the winners of tomorrow will be.

Like the Apples or TDs of today, or the IBMs or Blackberrys of the past, a few large high-flying companies will often garner the headlines. Yet the key to reaching your financial goals is not the fool’s errand of trying to guess what the wonder company of tomorrow will be, but in keeping a well-diversified portfolio that will own all the companies that may provide that growth.

Matt Carvalho, CFA, CFP® oversees Cardinal Point’s Canadian and U.S. investment management strategy and process. His former role was Vice President, Portfolio Strategy for a $17 billion dollar Turnkey Asset Management Provider or TAMP. While in this role, Matt served with Dr. Harry Markowitz (Nobel Prize winner in economics) and Dr. Meir Statman (expert in behavioral finance) on a six person investment committee offering advice to the TAMP.

Cardinal Point is an independent Canada-U.S. cross-border wealth management organization. Our advisors operate under the fiduciary standard and provide solutions to high-net worth families, individuals, and related institutions. As a respected thought leader, Cardinal Point has been featured and asked to comment on Canada-U.S. planning subjects in over twenty-five publications and videos, including the Wall Street Journal and Globe and Mail.

To learn more, please visit cardinalpointwealth.com or contact us.
 
1Just three stocks are responsible for most of the market’s gain this year, CNBC, Jul 10, 2018
https://www.cnbc.com/2018/07/10/amazon-netflix-and-microsoft-hold-most-of-the-markets-gain-in-2018.html
2S&P 500 Hits Tech-Heavy Milestone Last Seen With Dot-Com Bubble, Bloomberg, Feb 28, 2018
https://www.bloomberg.com/news/articles/2018-02-28/s-p-500-hits-tech-heavy-milestone-last-seen-amid-dot-com-bubble
3@michaelbatnick tweet, July 18, 2018
https://twitter.com/michaelbatnick/status/1019680856837849090/photo/1
4@tbfairchild tweet, Jun 6, 2018
https://twitter.com/tbfairchild/status/1004375185179529217
5@benjaminwfelix tweet, July 13, 2018
https://twitter.com/benjaminwfelix/status/1017869943226937345/photo/1
6 Common risk factors in the returns on stocks and bond, Journal of Financial Economics 1993

Delivering LA and Southern California to the Global Market - How Does Your Business Plan Fit?

Cynthia Coulter, Senior Consultant, ColLAborate

Southern California (SoCal) has a huge business presence globally. It is one of the most vibrant business environments in the world.  Los Angeles is the third largest municipal economy in the world. Tokyo is the largest and New York is second. LAX is the 4th busiest airport in the world and the Port of LA ranks as the busiest port in the western hemisphere. This growth of SoCal’s economy brings with it opportunities for businesses from around the world to participate in the building of infrastructure and providing services throughout SoCal. It is an opportunity to gain market share in this culturally diverse region.
 
 Los Angeles will host for the third time the summer Olympics in 2028.  While this event alone is not a defining factor for growth, it does provide the opportunity to showcase and encourage the international business community to do business in SoCal.
 
Unprecedented growth is occurring in infrastructure sectors that need to be improved or built. New subway and transportation systems are being constructed to connect all communities in SoCal. The Ports of LA and Long Beach are becoming world class centers for logistics and trade, while instituting sustainable energy and environmental practices to keep our waterways clean.

Real estate development continues to add more housing and commercial space to keep pace with the neighborhoods where integrating work and home office space becomes more and more attractive.
 
As always timing and positioning are everything. Businesses wanting to enter this market have to understand the dynamics of doing business here.
 
Business development, strategic planning, lobbying and public affairs, marketing, and sales have to be integrated. Coordinating these corporate activities is a process for successful growth.
 
Business development strategies must strengthen longer term values of a company. It is imperative that business leaders in this market share their vision and goals with stakeholders. Through strategic planning, marketing and communications, and lobbying and public affairs efforts--business leadership coming into the market will be building their brand and awareness of their business intentions and goals among stakeholders. Gaining a voice in this competitive and highly energized community requires planning and commitment to the marketplace.
 
It is a fact, and part of human nature that people love to deal with important people! Being active in organizations that fulfill your business objectives, and where you can interact with prospective clients and other business leaders, goes a long way to being included and accepted as an active, interested participant in the market.
 
Businesses entering or expanding in this market need to build their presence to increase sales. Attaining these goals may require them to make the decision to bid for contracts with local governments. These bids are large lucrative contracts that include the ports, transportation systems, infrastructure improvements, real estate development, energy delivery systemsand other largescale improvement projects. Effective lobbying and advocacy can afford a corporation lasting competitive advantage. Lobbying efforts are critically important in SoCal. Few activities an executive may engage in carry the potential business impact of a lobbying and communications efforts that reflect the corporate objectives and plans for this specific market. It is the well informed business executive who understands that in today’s climate to win there has to be an integrated business development plan to include strategic planning and lobbying.
 
Successful business development is dependent on the implementation of strategies building long term value for a company from the point of view of customers (including government organizations and departments) and stakeholders (community organizations, other businesses and business organizations).
 
It is not easy for international businesses to understand the business and regulatory climate in California. It is complicated. It is based in history that is not always apparent to outsiders.
 
Professionals who have experience in doing business in California and specifically in LA and SoCal have to have experience and understanding of the global markets. Companies coming here want to know that they are getting guidance, advocacy and business advice that is in line with their business growth objectives. More than ever, the old adage of, “think locally; act globally,” applies.
 
ColLAborate has its roots in lobbying and public affairs and is known for advocacy, community outreach, entitlement processing, and business to business projects. Since 2000, the partners have worked on some of the most important projects in LA.
 
Kate Hennigan Ohanesian is founding partner at ColLAborate. Prior to founding the firm, Kate spent more than 12 years serving the City of Los Angeles in various roles, most recently as Economic Development and Legislative Director for Councilmember Paul Koretz. Kate previously served as Senior Policy Director in the Office of Economic and Business Policy for former LA Mayor, Antonio Villaraigosa, where she was responsible for the Hollywood Film and entertainment community.
 
Cynthia Coulter is a senior consultant to the company who advises on business development opportunities for the firm and brings significant international C-suite experience with a career in international marketing and corporate communications. She is Canadian born, and longtime LA resident who was an executive with California based Fortune 500 companies to successful start-ups. Recently, she worked extensively in the renewable energy/clean tech and sustainability sectors developing successful business opportunities between North America and China.

For more information on ColLAborate, please visit their website, www.collaborate-la.com or contact Cynthia Coulter (cynthia@collaborate-la.com) or Kate Hennigan (kate@collaborate-la.com).

The Riverside County Office of Foreign Trade - An Active Partner to Businesses and Investors

The Riverside County Office of Foreign Trade is an active partner with the multitude of businesses and investors who work in this booming and sprawling Inland Southern California county, and the Office’s many programs this year illustrate the wide array of services and support exporters and investors receive.

Agriculture

From grapefruits to garlic, Riverside County farmers have diverse and robust export businesses that send products to more than 50 countries around the globe including Canada, China and Ghana, among many others. Many of those farmers and the businesses that want to work with them gathered for a day of programs and exhibits on trade, technology and more earlier this year.

The Riverside County Economic Development Agency’s Office of Foreign Trade focused the Ag Expo on high-tech tools of the trade like drones and cutting-edge equipment in the picturesque Coachella Valley. The event drew hundreds of people from across the country eager to showcase their agriculture products and connect with the growers in the room.

Those growers remain strong in spite of the many challenges facing agriculturalists, with the total gross value of agricultural commodities topping $1.2 billion in 2017, according to the recently released annual report by the Riverside County Agricultural Commissioner’s Office.

Trade Agreements

Riverside County businesses concerned about the effects of tariffs and trade negotiations on their businesses had an opportunity in August to share their thoughts with Bryan O’Byrne, chief of international affairs and trade policy at the U.S Small Business Administration.

Mr. O’Byrne listened as a farmer, a manufacturer and others shared their concerns about tariffs and the ongoing NAFTA renegotiations. Mr. O’Byrne is able to carry those perspectives back to the negotiating table. The event was hosted by the Office of Foreign Trade in Riverside.

The discussion provided the latest updates on trade policy topics and enabled businesses to provide direct feedback to a senior SBA representative on what would be beneficial to their business as they seek to start or grow their exports.

The roundtable was featured in an article in The Desert Sun:
https://www.desertsun.com/story/money/2018/08/14/sba-business-people-impacted-tariffs-we-feel-your-pain/949910002/

The article noted the Commerce Department’s statistics on this region’s impressive export growth: “In 2016, goods from the Riverside-San Bernardino-Ontario area had an export value of $10 billion, according to data compiled by the U.S. Department of Commerce. Trade in the region grew 144 percent between 2006 and 2016. … Mexico, Canada, and China – in that order – rounded out the Riverside area’s top export markets.”
 
GoGlobal Export Accelerator Program
In an effort to work with Southern California businesses looking to begin exporting or expanding their exports, the Riverside County Office of Foreign Trade will host an exclusive one-day accelerator program September 12. The GoGlobal Export Accelerator Program will have guest speakers discussing different markets, innovation, business growth through E-commerce and cryptocurrency trade.

This exclusive event will help manufacturers, growers and others who are in need of guidance in the international market realm. With only 20 spots available, businesses will receive focused and highly skilled guidance on how to invest and export from experienced professionals. The event will be located at the Riverside County Business Center, from 8 am to 5 pm. Interested businesses must apply to attend:
https://www.rivcoeda.org/oft/CalendarofEvents/News/TabId/1605/ArtMID/2867/ArticleID/19/Riverside-County-College-of-Foreign-Trades-GO-GLOBAL.aspx

SoCal Business Connect Summit
The Office of Foreign Trade’s annual and highly popular event known as the Procurement, Trade & Manufacturing Summit has been renamed the SoCal Business Connect Summit and scheduled for November 7 at the Riverside Convention Center. Last year’s summit drew attendees from across the state and beyond with more than 900 matchmaking appointments held with major buyers and vendors.

Multiple breakout sessions on everything from international trade to cybersecurity to procuring government contracts filled a jam-packed agenda. Anyone interested in attending, sponsoring or participating in the matchmaking can learn more here:
https://www.rivcoeda.org/oft/CalendarofEvents/News/TabId/1605/ArtMID/2867/ArticleID/18/4th-Annual-SoCal-Business-Connect-Summit.aspx

Los Angeles Chamber Event

EDA Deputy Director Leslie Trainor, as well as Economic Development Manager Michelle DeArmond, represented Riverside County in a private briefing with 40 members of the L.A. Area Chamber’s Diplomatic and Commercial Officers Group.

Patricia Elliott, Consul & Senior Trade Commissioner with the Consulate General of Canada in Los Angeles, was the event’s emcee. Elliott (far right in the photograph) serves as vice chair of the L.A. Area Chamber’s Diplomatic and Commercial Officers Group.

Representatives from the Economic Development Offices of the counties of Ventura, Orange, Los Angeles and Riverside participated in this private briefing to discuss economic development by foreign investment and future trade opportunities. The Diplomatic and Commercial Officers group centers its work around infrastructure where members and trade offices are able to develop their own strategies and programs when it comes to trade.

Vietnamese Delegation from Ninh Binh Province visits Riverside County  

Riverside County Board Chairman Chuck Washington and Riverside County Executive Officer George Johnson joined the Office of Foreign Trade for a diplomatic roundtable discussion in June with a delegation from Ninh Binh Province in Vietnam. The delegation representing the Vietnamese Chamber of Commerce, as well as public and private entities in Ninh Binh Province, met with the Riverside County to discuss potential trade opportunities between our two governments. 

For more information about the Riverside County Office of Foreign Trade, we invite you to follow us on Facebook and Twitter @GoRivcoOFT and on our Web site: rivcoeda.org/oft

TSX Venture Exchange: An Alternative Financing Option for SoCal Growth Companies

Delilah Panio, VP Capital Formation (Southern California), TMX Group

SoCal growth companies looking for funding should consider all capital raising options. While many entrepreneurs tend to only consider the traditional route of angel investors to venture capitalists to being acquired, there are other options that may be a better fit for the company’s long term growth strategy.
 
With the introduction of equity crowdfunding and Initial Coin Offerings (ICOs), there are now more financing options than ever, including the public markets. However, in the United States going public means being quoted on the unregulated over-the-counter markets on one end of the spectrum, or completing a large IPO on one of the country’s main exchanges on the other end.
 
The Canadian capital markets are unique in that TMX Group owns and operates a two-tiered marketplace serving companies from early stage pre-revenue companies on TSX Venture Exchange (TSXV) to multi-billion dollar established businesses on Toronto Stock Exchange (TSX). The idea of going public “early” may not be intuitive to most U.S. companies, but it is an important option worth considering.
 
TSX is the senior market for larger, more stable companies with a track record. The average financings on TSX fall in the $25-$100M range and have an average market cap of $2.0B. These companies benefit from increased analyst coverage and being eligible for our index products.
 
For smaller, early stage growth companies, TSX Venture is a unique platform that is tailored to companies of this size. TSX Venture provides financings typically in the $5-$25M range and TSX Venture issuers have an average market cap of $31M.
 
Recent U.S. Tech Listings
 
In the last year, several California technology companies have listed and raised growth capital on TSXV.

• Boardwalktech Software (TSXV:BWLK) offers patented digital ledger technology supporting blockchain applications; Based in Cupertino, CA; Raised $10M on its TSX Venture listing in June 2018.

• Nubeva Technologies (TSXV:NBVA) is engaged in developing and selling software related to blockchain technology and cybersecurity; Based in San Jose, CA; Raised $10M on its TSX Venture listing in March 2018.   
• Universal mCloud (TSXV:MCLD) is building the next generation IoT platform for asset and smart energy management; Based in San Francisco, CA; Has raised $6M since listing on TSX Venture in October 2017.

For the 2018 Technology & Innovation Mid Year Review, click here.
 

Going Public Considerations

1. Reason: Does your company have a reason to be public?

Advantages of being a public company include:

• Access to capital for multiple rounds of financings.
• Acquisition currency (i.e. public stock) to acquire competitors, technology etc.
• Diversified shareholder base from a few shareholders with potentially onerous terms to a flat cap table of common shareholders.
• Public shares can be used as a recruitment incentive to attract quality talent.
• Being listed on an internationally regulated stock exchange can provide credibility and exposure, particularly important if working with Fortune 500 clients.

2. Ready: Are you and your company ready to go and be public?

• Management Team: Your management team should be interested and ready to go public, and include a CFO with public company experience.
• Board of Directors: Your company will need a formal board of directors that understands its legal and fiduciary responsibilities as public company directors.
• Audited Financials: Two years of audited financial statements will be required.
• Internal Controls: Your company will need to establish the required financial controls and reporting infrastructure to be public.
• Time for Investor Relations: A significant amount of your CEO’s time will be spent on communicating with current and potential investors.
• Transparency: Your company’s financial information will be public to everyone including competitors, and you and your team need to prepare for that.

3. Requirements: Does your company meet exchange listing requirements?
 

As a junior regulated market, TSXV uniquely lists pre-revenue companies. Listing requirements are based on financial fundamentals including working capital, revenue and net tangible assets, unlike the U.S. markets which base listing eligibility on share price, market cap and shareholder equity. See the Guide to Listing for more details: www.tsx.com/ebooks/en/2018-guide-to-listing/

4. Reality: Can Canadian investment bankers get investor support (retail and institutional) for your type and size of company in current market conditions?
 

In today’s market, Canadian bankers are looking for companies raising growth versus development capital. This means that the company has developed a commercially viable product, has early customers or interest, and now needs growth capital for customer acquisition and expansion. Typically, companies raising at least $10M are of interest.

 Why Consider a Listing on TSX Venture Exchange?

1. A Source of Growth Capital

Last year, TSX and TSXV issuers raised over $55B, making Canada the 4th largest market in the world for financings… which is impressive considering the size of the Canadian population! Approximately 40% of TSX daily trading originates from outside of Canada (a majority of that coming from U.S. sources), providing access to international investors.
 
As an alternative to private venture capital, a TSXV listing can provide the benefit of raising small, subsequent rounds of capital. TSXV companies raised $6B in 2017, with an average financing of $4M. These are small public companies… and we like to refer to this market as “public venture capital”, as companies are accessing rounds of capital similar to the typical VC route of Series A, B, and C rounds.
 

2. Tailored to Small Public Companies

With a 165-year history of financing exploration companies, the Canadian public markets have evolved to support small cap public companies. From the securities commissions, the exchanges, and analysts to the retail and institutional investors… everyone in the Canadian ecosystem understands and embraces small public companies. This is not the case in the U.S. TSXV companies benefit from right-sized corporate governance and reduced time and costs to listing. Listing vehicles like the Capital Pool Company (CPC) program allow growth companies to access the public markets without the high costs and risk of a large initial public offering (IPO).
 

3. No Longer Just a Resource Exchange

While TSX has historically been known as a natural resource market - given our 165 years financing mining and energy companies - today our stock list is quite diverse. In fact our mining issuers currently account for just 10% of the market cap of all issuers, with other sectors surpassing them.
 
For the past five years, the number one source of new listings has been tech and life sciences companies (including cannabis). Last year, there were 138 new technology/life sciences listings… and all of the issuers in these sectors raised over $29B.

4. A Platform for Long Term Growth

The key benefit of this two-tiered market is the potential for early stage growth companies to list on TSXV, raise several rounds of capital, and when ready, graduate to TSX. In the past 20 years, over 650 companies graduated from the junior board to the senior board, and almost 40% of current TSX-listed technology companies started on TSXV.

TSX is also a true stepping stone to the U.S. markets. Once a TSX issuer is large enough and relevant enough, it can look to interlist on a U.S. stock exchange. If your end goal is to be listed on Nasdaq, TSXV and TSX are a viable path to get there.

For the growth company that is looking to build a long-term sustainable business that requires ongoing access to capital, TSXV is an important financing option to consider.

For more information, contact Delilah Panio, VP Capital Formation (Southern California), Toronto Stock Exchange and TSX Venture Exchange at delilah.panio@tmx.com

Financial Infrastructure is Key for Crypto Company Success

Scott Schimberg CPA CMA Partner - Armanino, LLP

As cryptocurrencies gain traction toward mainstream adoption and acceptance, companies in the crypto ecosystem must balance an influx of revenue and fast growth with the challenges of building a financial infrastructure capable of supporting their changing needs.

 
Whether they’re a cryptocurrency exchange, a company funded through an initial coin offering (ICO), a platform or technology provider―or any combination of those categories―firms need processes and tools to help them address technological, marketplace and regulatory uncertainty amid rapidly changing token and company valuations.  
 
Without proven monetization strategies, crypto companies are developing their technology and commercialization plans dynamically while the marketplace and regulatory climate evolve. Like other high-growth startups, most are understandably more concerned with proving their concept, attracting investors and rushing to gain market acceptance than with investing in back-office financial tools. The return on investment of engineering talent, for instance, may be more readily apparent than the ROI of financial systems.
 
But neglecting financial infrastructure can lead to management and compliance challenges as a firm grows and plans for its near- and long-term future. Companies with more effective financial tools and controls outperform competitors that are unable to overcome their technical debt, develop the appropriate financial and compliance processes, or scale efficiently.
 
A key to establishing a strong financial infrastructure is adopting a cloud-based ERP platform that provides clarity about your operations while enhancing your compliance and governance framework. Core ERP financial tools improve company performance by providing deeper insights into financial and operational results, and centralizing information to enable faster and more accurate decision making.
 
Key Questions to Answer
 
With widespread uncertainty underscoring the crypto ecosystem, building core financial tools improves your ability to meet change head-on, scale effectively and plan for future growth.  As market and regulatory pressures change the landscape on a near-daily basis, you have to be able to answer some fundamental questions, including:

• Are you operating profitably?
• How much revenue do you have? And how and when do you recognize it?
• Which financial and non-financial metrics are critical for understanding your results?
• Can you account for equity accurately?
• Can you report financial and performance data to investors and regulators?
• Is the data feeding your financial systems timely and accurate?
• Are you managing your cash efficiently?
• Do you have an effective separation of duties?
• Do you have an effective internal controls framework to reduce the risk of fraud and material misstatement of your financial results?

 
This challenge is complicated by the fact that the accounting rules for cryptocurrencies are vague at best. There aren’t defined standards for cryptocurrency valuation or accounting, or for paying employees in tokens. There are no clear SEC or IRS guidelines, other than the well-understood concept that fraud is illegal.
 
Beyond that, there's still very little direction on how crypto companies should define revenue for financial reporting or taxation purposes, report it or recognize it. Without this information, it’s difficult at best to communicate results with employees or investors.
 
Building a Platform for Growth
 
To answer these key questions (and address the underlying challenges they represent), companies must develop a financial and compliance infrastructure that meets their current needs while accommodating future growth and increased regulation.
 
Starting from the basics of developing an idea and setting up a corporate entity, to issuing equity and managing cash, to reporting results to investors and regulators, a firm’s reporting requirements will become more complex as it scales. Cloud-based ERP tools can support a company at each stage of its growth by improving its ability to understand its financial performance and take advantage of emerging opportunities.
 
For growing companies, cloud ERP solutions offer a number of advantages over costly, complex on-premise implementations, beginning with increased flexibility. Instead of assuming all of a company’s transactions and processes will be housed within the ERP―or forcing companies to adapt processes to meet the ERP’s requirements―today’s cloud-based ERP platforms allow greater flexibility by integrating with other financial or operational tools your company is using.
 
This best-of-breed cloud architecture allows you to invest in a platform offering the most effective performance for your company today, while preserving your ability to expand and upgrade as your company grows and its compliance needs evolve.
 
These tools also offer user interfaces and terminology that are easier to understand than their on-premise predecessors. This reduces the amount of time needed for training and implementation―allowing for a stronger focus on your company’s core mission and performance.
 
Beyond technology, a strong financial infrastructure also means having the right people. Companies that aren’t ready to add in-house accounting staff can consider outsourcing some financial reporting, management and accounting support.
 
Investing in cloud-based ERP and enlisting support from financial management and reporting professionals are foundational steps that can improve your company’s operating efficiency, financialperformanceand credibility with investors, regulators and customers. This strong foundation will help you successfully weather the inevitable changes ahead.

Learn more about cloud solutions and how they can impact cryptocurrency companies with Armanino.

Scott Schimberg

Scott graduated from San Jose State University in 1991. He became a Certified Management Accountant in 1995 and obtained his CPA certificate in 2002. Scott is a member of the Institute of Management Accountants (IMA). He has held various positions with the Amador Valley Chapter, including President. Scott has a mixture of industry experience and has held positions as Assistant Controller, Controller and VP of Finance. He also has more than 13 years of consulting experience, where he has focused on implementing ERP systems.

Connecting with Canadian e-commerce - Where to Go as Domestic Markets Slow

Jamie MacDonald - Director of International Sales for Canada Post

While e-commerce in the U.S. reaches a stage of maturity and online sales stabilize, Canada is expected to see consistently higher e-commerce growth – especially this year and into 2019.1. Canadians shop more online, they increasingly turn to their neighbor to the south. Last year, 67 percent of our e-commerce shoppers bought from U.S. merchants. That’s 23 percent more than in 2016. How often do they shop? Six times each, on average. And, according to Canada Post’s 2018 Canadian Online Shopper Study, 65 percent of Canadian e-commerce shoppers are planning on buying just as much, if not more, in 2018.
 
If you haven’t yet had the opportunity to plan your strategy for connecting with Canadian e-commerce shoppers, stay awhile. We have the insights. Read on to discover everything you need to know about cross-border growth.
 
Canadian e-commerce gathers speed
Every year, more Canadians shop online, and they shop more frequently. From Vancouver in the west to Moncton in the east, our enthusiasm shows no signs of slowing. As the market evolves, frequent shoppers become loyal hyper shoppers – many of them millennials. By 2021, online sales are expected to hit over CDN $94.15 billion, while the average online spend will probably grow more than 50 percent by next year.
 
Using 2017 data from 2,300 Canada Post e-commerce customers, we’ve identified the growth hotspots. E-commerce sales in west coast Victoria BC led the field with an increase of 37 percent. Sales to Ontarian shoppers in Kitchener, Londonand Windsor all climbed by more than 30 percent.
 
Plus, Canadians are the biggest cross-border online shoppers in the Americas. According to a 2016 Paypal Ipsos study, 59 percent of those surveyed shopped both at home and abroad in the previous 12 months.2
 
Selling to Canadians is the smart way to grow a resilient business
Here are just a few of the reasons why it makes sense to expand internationally by selling into an economically stable and trusted market:

It’s easier to build relationships with consumers who know your brands

Not only are Canadians familiar with American brands – through advertising and bricks-and-mortar shopping trips across the border, but they actively follow your brands. This makes it easier for U.S. merchants to build relationships and generate buzz, even before opening a store north of the border. 
 
 So why are Canadianssuch international online shoppers?

• Better availability (35%)
• An appealing offer (34%)
• Better conditions, like service or price (25%)
• A broader range of products (21%)
• Better quality products (10%) 3

Canadian customers live close together and are easy to reach
Although Canada is one of the largest countries in the world, most of us live in dense concentrations within 100 miles of the border. As the country’s national postal service, we are one of Canada’s most trusted heritage brands – and the only carrier delivering to all 15.7 million households and business addresses throughout the country. We also have shopper data to share, by category and geography.


Canadian and American shopper profiles are similar

This means you can not only tap into an additional source of revenue, but also take advantage of economies of scale. For example, you’ll have access to English speakers who are high adopters of internet and mobile – and also buy everyday products in significant numbers.
 
Acquiring Canadian customers
In the past few years, Canada Post has commissioned ethnographic, neuroscientific and generational research to dig deep into how people connect, interact and act on marketing messages at all of life’s stages. These studies reveal the effectiveness of direct mail in driving action and spotlight the intimacy of ritual, the impact of physicality and the power of data-driven relevance. They also spotlight the effectiveness of an integrated, properly sequenced campaign, using mail to prime other media. Direct mail is a compelling way to make email and other digital communications better recognized and received. Canada Post’s Smartmail Marketing™ solutions take all these considerations into account. It’s the scientific way to connect with Canadian consumers on their path to purchase:

• 64% of recipients will visit a website in response to a piece of direct mail
• 43% of recipients ordered a product online because they received a direct mail piece

 
The power of the home address
So, how do you find Canadian consumers who behave like your best customers at home? How do you reach those people who shop in the category you’re selling?  The Canadian postal code is a powerful thing. It’s our version of the zip code, containing significantly rich data on groups of about 20 households – providing you with the insight you need to acquire customers. Postal code data helps you target new customers in Canada with confidence, so you know you’re getting to the right people.
 
Respectful, intelligent targeting
This Statistics Canada Census data, along with other rich information sources,helps us characterize the type of customer who lives in an area within a neighborhood. And, although we have more privacy restrictions in Canada, they don’t apply to postal codes. So, you can use respectful, intelligent targeting to connect groups of like-minded people with the brands they’ll love.
 
Birds of a feather
To find look-alikes, you can select and test postal codes that intuitively align with the characteristics of your best customers – using your current data to identify the lifestyle similarities you want to find and pursue. By applying precise data that reflects the Canadian marketplace, you can create a portfolio of marketing solutions that perfectly align with the needs of Canadian shoppers.
 
To find out more about how to grow your business by marketing to Canadian online shoppers, connect with Jamie MacDonald at jamie.macdonald@canadapost.ca or learn more at canadapost.ca/gonorth.  We look forward to seeing you at our presentation during MAPLE’s Fall Events (September 5-6).

1 eMarketer’s Retail and E-Commerce Sales Report, published in December 2017
2 https://www.paypalobjects.com/digitalassets/c/website/marketing/global/shared/global/media-resources/documents/passport-citation.pdf

3  Google and TSN’s Consumer Barometer report

A Solid Logistics Strategy Brings Canada Closer to Your Customers

John Costanzo is the President of Purolator International

A few years ago, the manager of a Southern California manufacturing company contacted one of Purolator International’s regional offices regarding the manufacturer’s recent expansion into Canada.  Things were going very well, the manager explained.  The company had lined up an impressive number of Canadian retailers to carry its products, and sales were quite robust.  The problem though — and the reason for the call to Purolator— was that shipments seemed to be taking longer than necessary to arrive in Canada.  Was it possible for Purolator to find a way to cut the transit time, and make the overall process of shipping to Canada more efficient?
 
Faster, more efficient service is a common goal of all businesses that ship to Canada, and this need for speed has been exacerbated in recent years, with the surge in e-commerce shipments heading to Canada.  Canadian customers share the same delivery expectations as their U.S. counterparts — shipments should arrive within 2-3 days, on-time, and at little or no cost to the customer. 
 
But with an international border to cross, longer distances to travel, and an unknown distribution network to conquer, how could this be done?
 
In fact, tremendous advances have been madeincross border logistics such that U.S. businesses can now reach the Canadian market faster and with more flexibility than ever before.  Much of this innovation has been fueled by technology, and some, by looking at things in a new way.
 
My company, Purolator International, is a leading provider of logistics services for shipments moving between the United States and Canada.  Since this is our area of expertise, we’ve not only had a front row seat to the exciting changes taking place, but we’ve been behind several of them.  I’m happy to share a few experience-based tips that can help ensure your shipments enter Canada as quickly and efficiently as possible.
 

1. With the right provider, you can shave days from your Canadian transit time.  For many years, “standard” service from California to Canada included a stopover at a distribution center — often located several hundred miles off-course.  After being held at the distribution center, the shipment would be loaded onto an LTL carrier and make multiple stops before finally reaching the border.  That’s all changed.
 

• Today it is possible to have shipments move direct to the border, with no distribution center layover, and no stops along the way.  This is because LTL linehauls now operate regularly in California, with direct service to Canada.

• Route optimization is another tool that helps ensure shipments travel on the most expeditious route.  This is a technology-based tool that maps out the shortest route possible, taking into account factors like infrastructure delays and weather issues.

• Consolidation can help reduce freight costs and expedite the border clearance process.  By combining several smaller shipments into one larger shipment, a business can qualify for reduced freight charges and, since a consolidated shipment can clear customs as a single unit, the process also helps facilitate the border clearance process.
 
Taking advantage of these options depends in large part on your logistics provider.  A provider that owns its own fleet of trucks, for example, is generally locked into using their own vehicles, and customers’ shipments must fit into a pre-determined, inflexible schedule.  But if you use a logistics provider that does not own its own assets, but instead has relationships with many different carriers from which it selects the best option for each customer, you will have a lot more flexibility.

2. Make sure you can reach your customers.  It’s also important to understand some important nuances about the Canadian market.  The population of Canada is almost 37 million people, compared with California’s population of 39.5 million.  But, Canada is the second largest country in the world, in terms of geographic area.  Imagine if the population of California occupied the entirety of the United States, with room to spare.  That’s essentially the situation in Canada. 

A U.S. business must do its homework, and make sure its transportation provider has the capacity to guarantee delivery to all parts of Canada.  Many parts of the country are remote, for example, and not accessible via traditional distribution networks.  Most carriers do not offer service throughout Canada, which often means a shipment will have to be transferred from one regional carriertoanother, and then to a courier for last mile service.  There’s a lot of opportunity for shipments to get lost or damaged when that happens, so make certain you’re entrusting your customers’ shipments to a truly experienced provider that can guarantee delivery to all of Canada.

3. Prioritize customs efficiency.  Did you know missing or incomplete paperwork and inaccurate tariff classifications are top reasons for border clearance delays?   These seem like such obvious “to do’s,” but the fact is many shippers underestimate the scope and complexity of the customs process.

For example, almost 50 different U.S. agencies have some degree of authority over the import/export process.  In the United States, these agencies, called Partner Government Agencies (PGAs) range from the Food and Drug Administration which oversees imports ofpharmaceuticals, to the Fish and Wildlife Administration, which regulates wood products, among other things.  Depending on a shipment’s contents, the PGA will usually require a shipper to provide additional documentation and receive a permit.  In some instances, multiple PGAs have jurisdiction, and a shipper must comply with information requests from each agency.   But if a shipper is unaware of this step in the customs clearance process, it will mean delays.
 
This is exactly what happened to one of our customers, a manufacturer of musical instruments.  The company’s guitars included different species of wood, which fell under the scope of the international CITES treaty, which is administered by the Fish and Wildlife Service.  The customer’s shipments were routinely being held at the border, accruing fines and wasting time.  Fortunately, we were able to intervene and get this situation sorted out, but this customs issue had been a real bottleneck in this customer’s Canadian shipping strategy.
 
Most businesses choose to enlist a customs broker to handle documentation and customs filings on their behalf, which can be an enormous help.  An experienced 3rd party will know precisely which forms and documents need to be submitted to U.S. Customs and Border Protection (CBP) and/or to Canada Border Services Agency (CBSA), and will also assist in ensuring that the proper tariff classification code is assigned to a shipment.
 
4. Register as a Non-Resident Importer.  The Canadian government does not allow U.S. businesses to collect Canadian sales tax or act as an importer of record in clearing goods into Canada.  This means a business faces the highly inconvenient and unwelcome dilemma of having to collect taxes from Canadian customers at time of delivery.  Further, it is possible the Canadian customer will have to become personally involved in the customs process, by retrieving the shipment from a local customs office.  Neither or these situations are helpful to a U.S. business trying to build its brand in the Canadian market.

Fortunately, the Canadian government addresses this problem through its Non-Resident Importer (NRI) program.  Businesses are allowed to register with CBSA as an NRI which essentially eliminates these two obstacles: 
•Taxes can be collected attime of payment
•NRIs can clear goods through customs. 
 
Having NRI status essentially levels the playing field for U.S. businesses by removing barriers, and allowing them to provide the same types of seamless transactions as Canadian businesses. 
 
5. Duty Paid or Unpaid?  Every business that ships to Canada agrees to certain “shipping terms” with its transportation provider as a way to establish each party’s responsibilities in the transaction.  Among the many topics addressed:

•  Which party is responsible for paying border fees and tariffs?
•  Which party will actasimporter of record?
•  Where will exact point of delivery take place?
•  Which party will have responsibility for unloading the shipment?
 
To ensure there is no uncertainty, a set of 11 universally-recognized shipping terms — known as “Incoterms” -- establish each party’s responsibility in the shipping transaction.  Of the 11 Incoterms, only one — “Delivered Duty Paid” — designates border clearance responsibility to the seller.  This allows the seller to ensure that shipments arrive in Canada with all taxes and duties pre-paid.  Shipments traveling via any other Incoterm will arrive at the border with taxes and fees to be paid by the buyer.
 
There are reasons why a business may want its shipments to arrive in Canada with duties unpaid.  But for most retailers — especially e-commerce businesses that ship directly to consumers — having to collect dutiesattime of delivery would be highly inconvenient.  Choosing the right shipping term can have a consequential effect on your business, yet this is something many businesses know very little about.
 
Many, many factors come into play in successfully shipping to the Canadian market.  These five “tips” though, should be at the top of your list as you think about ways to better serve existingcustomers, or plan to expand your Canadian reach.  There’s never been a more lucrative time to be involved in cross border trade or, thanks to better logistics capabilities, an easier time to ensure guaranteed, on-time deliveries into Canada.
 
Oh, and the California manufacturer who reached out for help in reaching the Canadian market faster?  We were able to offer a logistics solution that shaves 2-3 days from its transit time.  It’s all about understanding theCanadianmarket, and having the tools in place to succeed.

California Dreaming: Real Benefits for Canada

Canadian companies that may have cast their dreams of California aside because the state is too far and too competitive ought to go try out—especially since it has recently become the world’s fifth largest economy and is brimming with opportunities.
 
The state’s economy is so large that the Canadian Trade Commissioner Service (TCS) treats the northern part of the state and the southern part as two separate markets, explains Krista Eisan, a trade commissioner based in Los Angeles who covers the clean technologies sector.
 
Southern California is well-known as the entertainment capital of the world with a multitude of roles for Canadians there and in related fields such as digital media. The region also boasts many robust industries, namely environmental technology, life sciences--includingbio-technology and medical devices and research, manufacturing—particularly for apparel. For companies looking for an “agent”, the TCS is ready to help.
 
“Take a really good look at the opportunities here--it’s a humungous market for many things that Canadians do well, and Canadians have a good reputation here,” Eisan says. “California is not always top of mind-especially for those companies in Eastern Canada, but really, it should be.”
 
New data released by the United States government in May 2018 indicates California’s gross domestic product (GDP) went up by US$127 billion from 2016 to 2017, surpassing US$2.7 trillion. That puts the state ahead of the United Kingdom to become the world’s fifth largest economy. The state has a population of nearly 40 million. Canada sells more to Californiaalone, than to all of China.
 
The TCS can provide market intelligence and insight into specifics opportunities in the region, make introductions and help Canadian companies connect with the right contacts, and help with various other aspects of entering the market and finding success. Sometimes that can mean just making sure Canada is top of mind, Eisan says. She adds that her colleague Mohammad Kondri, who focuses on life sciences recently brought representatives from the California-based Amgen Inc.—one of the world’s largest biotechnology companies—to Atlantic Canada to see what Canadian companies have to offer.
 
The TCS has four offices in California including the Canadian Consulate General in Los Angeles--where 11 of 60 employees focus on trade—as well as the Consulate in San Diego in the south; and the Consulates General in San Francisco and in Palo Alto in the north. The northern region is a well-known telecommunications hub, and home to the famous Silicon Valley, while the middle region is largely agricultural.
 
“This is one of the most advanced markets in the world. It’s a very advanced, fast-moving, competitive market and there’s a high-level expectation for high quality. Companies wanting to do business here have to recognize that they will face stiff competition You have to be able to demonstrate that you have a proven product or technology,” Eisan cautions, adding that’s where the TCS and its network of contact-including provincial offices in the region—can really make a difference.
 
“In areas like cleantech Cali is one of the most progressive places in the world, a lot of disruptive clean technologies come from this market and there’s a big appetite for environmental technologies,” she says. Canada’s largest foreign competitors in Southern California are Mexico and Asian countries including China.However she adds that Canada has an advantage in several areas, including cleantech. There are many affinities with Canadian business partners-especially along the west coast, up to Vancouver, she says.
 
Southern California is home to more than 500 Canadian companies, and has a large Canadian ex-pat community, she says, adding opportunities keep growing. For example, Southern California needs to import water, and that is creating new opportunities in infrastructure and water technologies industries, Eisan adds.
 
Her advice:  “Visit the market.Come see us, talk to us (the TCS)—it’s really not that far away, even if you’re from the east coast.”
 
View additional CanadExport magazine articles pertaining to California including: California beckons women in technology and  Canada’s digital talent a hit in Hollywood:

Part of Global Affairs Canada, the Canadian Trade Commissioner Service (TCS) helps Canadian companies export to international markets. The TCS is on-the-ground in more than 160 cities in Canada and worldwide gaining market intelligence and insight and uncovering opportunities for Canadian businesses. The TCS covers the full spectrum of international trade activities for companies looking to export, invest abroad, attract investment, develop innovation, forge partnerships or pursue research and development opportunities. This article was first published in CanadExport, the official magazine of the TCS.

Footnote
The TCS will also work with SoCal companies interested in expanding their operations to Canada. More information on Canada’s strengths and incentives for investment is found at: http://www.investcanada.ca/

Limitless Long Beach

Limitless Long Beach

In a recent New York Times article, Long Beach Mayor Robert Garcia said of his City, “the downtown is being reborn and recreated.”  Indeed, Long Beach has undergone an impressive revitalization in recent years, transforming its historic downtown into a desirable urban environment on the water and building upon its rich tradition in aerospace, manufacturing, and shipping.  People often associate Long Beach with its Port, and for good reason – it is one of busiest in the United States moving more than $100 billion in goods in 2017 and creating 1 in 8 jobs in the City.  Yet, Long Beach’s strong Port is only part of what makes the City a great business destination. 
 
Long Beach has close to a half a million residents and is the seventh-largest city in California, with a population exceeding that of many other well-known American cities, such as Cincinnati, Minneapolis, and New Orleans.  The City has a highly diverse population, a temperate climate, quality state and community colleges, a vibrant downtown and a wide variety of neighborhoods. Together, these features help make Long Beach one of the most livable communities in the country.  The City is also undergoing an economic development renaissance and real estate boom.
 
Today Long Beach is one of Southern California’s best business destinations – and a growing number of investors and business leaders are jumping on the many opportunities it has to offer.  The City’s location, access to infrastructure and markets, real estate opportunities, and talent are all drawing considerable interest and excitement.
 
What makes Long Beach an attractive business destination?

• Business Friendly: One of the most business-oriented cities in the U.S.

• Large Market: Population of 470,000+ on the California Coast

• Prime Location: Ideally situated between L.A. and Orange Counties, with direct access to the nation’s largest port complex

• Expansive Opportunity: Numerous development sites available

• Faster Processing: Streamlined pre-development and entitlement process

• Innovation and responsiveness in service delivery

Infrastructure
Long Beach is a transportation hub with unparalleled access to local and global markets. The City is located between Los Angles and Orange Counties (and their combined 13 million residents), close to three airports, the twin ports of Long Beach and L.A., multiple freeways, and rail lines. The Port of Long Beach is also nearing the end of a set of 10-year, $4.5 billion capital improvement projects that will make it more technologically advanced, capable of handling even larger and more efficient cargo ships.  The City also has its own full-service commercial airport, which has become a traveler-friendly alternative to other busy Southern California airports. Los Angeles' rail transit system, the Metro Blue Line, has numerous stops within Long Beach and throughout the region, including downtown L.A., and has a $1.2 million makeover planned for 2019 that will further decrease transit times.
 
To put it quite simply, as Long Beach Economic Development Director, John Keisler has said, Long Beach is about “building stuff and moving stuff.” He adds, “Transportation and manufacturing have always been huge for us.”
 
Long Beach’s Real Estate Boom
Long Beach has nearly three-dozen development projects, valued around $3.5 billion, underway or in the pipeline.  Projects range in scope from the construction of the Long Beach Civic Center that will include a new City Hall, Port of Long Beach Headquarters, and park; to the 35-story Shoreline Gateway residential tower; to the $15 million overhaul of the historic luxury liner the Queen Mary and adjacent entertainment complex on the Long Beach waterfront. All told, the City is set to add an additional 3000 residential units.
 
Today, there are a number of sites that have yet to be developed or repurposed, which include Boeing’s 87-acre site where C-17 airplanes were built.Next to the airport there is another 1.8 million square feet of vacant hangar space. The City is working to reposition and reuse the site, which may include rezoning to prepare it for the factories of the future.
 
Emerging Technology Cluster
An emerging cluster is forming centered on aerospace, commercial space launch providers, and ocean and water technologies (“blue tech”) at and around the twin ports of Long Beach and L.A. and their respective neighborhoods.  While American ports as a whole have lagged behind other international ports in creating and attracting companies, the San Pedro Port complex may now be catching up with its complimentary innovation clusters:

• In 2017 Virgin Orbit, founded by Sir Richard Branson and Virgin Galactic, launched a new commercial space company that offers low-cost launch services for small satellites.

• In 2017, the Institute for Innovation and Entrepreneurship at the California State University, Long Beach, was founded to foster startup businesses in the City.

Along the LA Waterfront on the other side of the San Pedro Bay a number of recent announcements demonstrate the region’s growing strength in “blue tech” and aerospace:

• SpaceX will manufacture and assemble the company’s new Big Falcon Rocket at the Port of Los Angeles at an 18-acre site where ships were built for World War I.

• AltaSea, a 35-acre Innovation Campus at the Port of Los Angeles, will work to advance the region’s economy through water and ocean related business, science, and educational activities.

• Boeing’s Echo Voyager submarine, which will be used to inspect underwater infrastructure, create 3D underwater maps, and take water samples, will be housed at the AltaSea at the Port of Los Angeles.

Long Beach is Limitless!
With its world-class transportation infrastructure, vibrant real estate opportunities, and burgeoning technology ecosystem, Long Beach has a host of opportunities to offer a wide range of business interests.

Eric Eide is a strategic advisor to MAPLE Business Council and principal of TradeWorks Global.

Reflections on Building a Career at Canada's National Flag Carrier

Anna Innis is National Manager, Passenger Sales USA at Air Canada.

I Want to Start with the Elephant in the Room. I am not Canadian.

This feels a lot like a confession.

Next month marks 23 years that I have worked for a Canadian company. Next month also marks 23 years as an Air Canada employee and therefore, an Ambassador of our neighbors to The North.  But ties to Canada began, for me, long before I “flew the flag” for its country’s Flag Ship Carrier. It began in the 1940's.

Landing in Canada

My Dad was 14 years young when he boarded a ship to Canada from Greece.  His parents were dead.  His older siblings would all remain in Greece. And he, an Immigrant, was on his way to becoming Canadian. He soon called Windsor his home, working as a bus boy at a Chinese restaurant called The Condor with other Greek Immigrants. He later married my Mom and I would be born in Michigan. He died when I was only 8 years old and I know that those years were some of the best years of his life. The last trip he took before he died was to St. John’s, Newfoundland. My entire family went to the Muskegon, Michigan airport to see him off. So, maybe Canada was already calling me too.

Answering the phones

At 25 years old, I left a high-profile PR job with a division of General Motors in the Midwest and hit the road for warmer skies. I drove to Tampa, Florida with no job, where skies were shiny and bright. I took a job as a reservations agent for Air Canada in Tampa and a 23-year relationship began defining so much of my adulthood.

The years to follow brought me to places around the world, where I felt proud to travel with the Maple Leaf on my bag. It set me apart. I felt safer, accepted and remained quietly behind the force field of the Maple Leaf Brand, as I journeyed.

In recent years, most of my relationships and joys came from time in Toronto & Montreal. It always felt like home. The moment I stepped into the 787 Dreamliner Los Angeles to Toronto, I could relax. Breathe. Think. Jumping on the UpExpress and, only in minutes, contacting close friends and sharing food and stories at some of my favorite restaurants became my solace. But in recent years I came home to Cali.

Finding my place in the world

Throughout my career with Air Canada, I moved in and out of California three times. I couldn’t stay away.  In the last two years, I made a conscious decision to really engage in the Los Angeles community and take it as my home. Working for Air Canada opened so many doors for me. I’ve met heads of states, traveled the world, given training in Portuguese, built a team, had numerous mentors, and collaborated with people from around the world. But one thing I never did over 23 years, was deciding to call a place home and own my city.

For years, people didn’t know where I lived.  I didn’t want anyone at headquarters in Montreal to think I couldn’t take on any assignment or do anything.  Just last week a client from Rhode Island called me and asked why I wasn’t at a reception since I lived in NYC. We had a laugh when I told her I live in California.

Working outside Home Country means that you are beyond time zones and geography. And, there’s a fine line of being everywhere and finding balance. Many colleagues didn’t realize our entire team was Home Office based, thus creating different challenges to create engagement and staying on point. But that is exactly why I have stayed. My career outside home country is like swimming in water instead of sitting in a cubicle. I have had the freedom to make it what and how I wanted. And my Air Canada family trusted me to do so.

When I was asked to write a piece on what it is like working for a Canadian company in the US, I come back to the same place where I started. Air Canada has been a family that raised me with Canadian values, setting me apart in a land of 400 million strong, where I now sit on The Board of Directors for CAST, Coalition to Abolish Slavery & Trafficking, led by a strong Canadian Woman CEO and oversee one of the most diverse teams in the country for Air Canada. And, there has never been a more relevant time, in my lifetime, where I have been more proud to be associated with a Canadian company, and a country, that welcomes immigrants & diversity. So, 23 years, 6 cities and one divorce later, I’m just getting started. Wherever that takes me.

Anna Innis is National Manager, Passenger Sales - USA at Air Canada. MAPLE is proud to count Anna, her team, and Air Canada as part of our cross-border community.
 

The Arc of a Border - An Expatriate's Relationship with the Canadian-U.S. Border

The Arc of a Border - An Expatriate's Relationship with the Canadian-U.S. Border

We think of borders as being fixed by geography. Something that we can point to on a map. Something we experience when we cross it. Most Canadians live in proximity to the U.S. border and part of Canada’s identity is defined by this border. But for an expatriate living away from one’s home country, a border can be more elastic than fixed. Over time, the proximity to the border is measured less by physical distance and more by personal attention, relevance and interest. And so while a physical border in times of peace is rarely redrawn, for an expat, the border can actually stretch near and far over the years. For me, it has been in the shape of an arc – sometimes feeling very close and sometimes existing far away - regardless of the actual distance.
 
I now look at the longest undefended border in the world that Canada and the United States share having lived equal years on either side of it. It makes for an interesting perspective on what a border, this border, represents. Growing up in Southwestern Ontario, the border was multi-faceted. Despite being easy to cross, it meant protection for a smaller culture that could be easily overwhelmed by its much larger neighbour. But equally it could feel like an unwanted impediment to importing more of what makes the bigger culture exciting. 
 
Professionally speaking, early on in my marketing career, the border spelled opportunity. As the first non-executive to be promoted from the Canadian subsidiary to the world headquarters in my company, crossing the border to live in the United States meant expanding my horizons, adding zeros to budgets, testing my abilities, and playing in the big leagues. I will never forget looking out of my office window high above Minneapolis one afternoon and seeing an American flag waving in the breeze and at that precise moment, feeling like I had really made a significant change in my life. I was actually living and working in the United States. And it was exhilarating!
 
Early on the border was a kind of life preserver – a safe harbour that I could return to and cross should the new home not be what my wife and I desired. In time; however, the border gradually became a mental wall, as we assimilated into the U.S., secured our green cards and started our family. Watching hockey was increasingly being replaced by enjoying basketball, and college basketball at that, and trips home were less pressing. Over time, celebrating Canadian Thanksgiving in October was less the main Thanksgiving we celebrated as the culturally more significant American celebration took root. Living outside the United States in Hong Kong and Singapore made this particular border all the more distant even though my family’s passports still proudly said “Canada”.
 
When the border became physically closer again upon returning to the United States from living in Asia, the mental distance did not. Successive regional moves within the U.S. brought new experiences along my career arc and Canada gradually became more distant and a smaller share of my identity.
 
But when we moved to Dallas, our little growing family began to seek out some of our Canadian roots. We joined a Canadian family network and began to socialize with others who shared our identity. And with a life goal of living in Southern California, that day finally came when I seized the opportunity to join a start-up based in SoCal. The physical distance between ‘home’ and ‘home and native land’ grew even further. So too did the mental distance. The elasticity of my border relationship had stretched wide.
 
But it was after nearly a decade of living the dream in Southern California that my Canadian roots came back to me all on their own. Not that they had ever left, but for many years, they were not how I primarily identified myself. A chance meeting with a Canadian networker in Orange County brought me in contact with fellow Canadian expatriate executives who were about to create an organization to connect Canadians together socially and for business value. What took root first was what comes easiest of course…hockey games, Canadian Thanksgiving and Canada Day celebrations.
 
At the same time, our daughters were growing old enough to be able to appreciate more of our Canadian roots. Fulfilling the stereotype, their parents brought them to their first NHL game.  I like to think the instant attraction for a12 year old and a 9 year old came somewhere from within their Canadian DNA, as the appeal was instant and those early games sparked a newfound enjoyment of Canada’s game.
 
As a marketer, I am trained to think about positioning, differentiation, and unique voices for brands, be they for consumers or businesses. Now well into my second decade of living in the U.S., I experienced an organic renaissance of my Canadian identity. It was no longer something to overlook instead it increasingly came back to me as a vibrant part of my identity. And it did not mean that I had to be any less part of the U.S. especially after my wife and I became U.S. citizens joining our daughters who were both born in the U.S. It was a complement to our newly minted citizenship in our adopted country that has given us so much to appreciate and be thankful for.
 
So now, Canada was no longer exclusively in therear view mirror but an important facet of my current persona and a growing part of my future. An opportunity to co-found a business network with a friend and fellow expat expressly to build a business bridge between Southern California and Canada bilaterally became a defining moment for me. Now the border was a focus. Helping businesses of all sizes and in all sectors to cross that border in both directions for business benefit. Foreign direct investment. Trade. Entrepreneurship. Innovation. Collaboration.
 
And so now in the third year of growing a sticky and meaningful cross-border organization with a mission to connect Southern California and Canada, the border has become a destination. Something to celebrate. A focal point.
 
In 2017, I began to live more of my life in the United States than in Canada. I feel truly blessed to benefit from two amazing, dynamic, and complementary cultures. Neighbours. Partners. Allies. Friends. Both with some blemishes but also full of shining stars and brilliant maple leaves.
 
My border relationship continues to be elastic and my border arc is still moving. I anticipate to some extent it will continue to do so.  From once defining an imagined horizon of new opportunities, representing a safe harbour, defining where I’ve been, a relevant differentiator, and now a defining opportunity. My border relationship has been unpredictable, uniquely mine, and something very special to treasure.

Stephen Armstrong is the principal of a marketing consultancy firm, The 360 Marketer, which provides strategic and tactical marketing and communications strategy support for businesses across sectors. Stephen is the co-founder of MAPLE Business Council.

Québec Canada - The Accent is on Opportunity

Québec Canada - The Accent is on Opportunity

There is a large and dynamic Canadian market waiting for Southern California businesses to discover. Québec, a province of over 8 million people with an annual GDP of over $300 billion, may be better known among the Northeastern U.S. states it borders than here in Southern California. And for that reason, MAPLE Business Council has developed a turnkey three-day fact-finding mission to share some of Québec’s leading centers of excellence and innovation.  It will be a chance to explore new export, investment, and innovation collaboration opportunities.
 
Getting one’s arms around a market can be challenging. Sometimes the breadth of a regional economy is not clear beyond one’s own sector focus. And increasingly in this age where technology blurs the edges between sectors (just consider the automotive and tech sectors as an example), there can be exciting connections to explore between industries. The MAPLE delegation model is structured to sample a variety of markets to view the economic landscape laterally.  As such, our upcoming mission will have a window on artificial intelligence, cleantech, aerospace, electric & intelligent vehicles, home building, nutraceuticals & functional foods, optics & photonics, innovation incubation and more. Québec is a world leader in many of these sectors. Montréal is one of three cities in the world where a complete plane can be designed and built. Elément AI is at the vanguard of artificial intelligence business solutions to name just a couple.
 
Visiting new markets can be valuable not only for understanding what a region’s centers of excellence and innovation are generating as goods and services, but also for their methods of innovation. For example, Québec has had considerable success accelerating its global competitiveness through an industry cluster model that engages an ecosystem of business, government, unions, research, and higher education to propel technology advancements forward. At work in sectors such as aerospace, electric and intelligent vehicles and cleantech, these clusters align and engage key industry stakeholders. MAPLE will be visiting with these clusters to learn more about their work.
 
Delegations can suggest new horizons for businesses but market navigators can show how to penetrate these markets. We are working with leading navigators of the Québec market to make it easier for companies interested in marketing, investing and collaborating with Québec, to engage this market. With our trip focused on Québec’s largest markets of Montréal and Québec City, we will be visiting with Montréal International and Québec International who are both well equipped to help a Southern California business find their way. In addition, MAPLE member organization, Borden Ladner Gervais LLP, Canada’s largest law firm, will be briefing our delegates on how to do business in Québec.  Our trip would not be complete without a meeting with the U.S. Commercial Office in Montréal and Québec City to understand the services available to help U.S. businesses successfully export.
 
Delegations may connect visitor to host but the outlook need not be unidirectional. As ambassadors of Southern California to Canada, MAPLE missions also provide a window on the Southern California market. At our networking reception in Montréal, we will be taking the opportunity to share what is new and noteworthy for Québec businesses to know about in key markets such as Irvine in Orange County, and Long Beach in Los Angeles County. The bridge of opportunity is always one that can be crossed in both directions.
 
As the 10th largest trading partner of the United States, Québec represents an exciting new business horizon for Southern California to understand better and we look forward to sharing it with our delegates. We invite you to join us for ’72 Hours in Québec’ on June 13-15. For more information, please contact me at charles@maplesocal.com or visit the MAPLE website. The accent is on welcome. Bienvenue!

Charles Gauthier is a former 26-year diplomat with the Québec government where he held posts in New York City, Los Angeles and Mumbai, India. He now leads business development for Float 4 - a Québec-based multidisciplinary studio that integrates digital experiences in physical spaces to amplify their identity. Founded in 2008, Float4 produces immersive and interactive installations internationally for companies. Charles is also the Business Ambassador to Québec for MAPLE Business Council.