Chile luring Canadian firms with $40K of free cash

Dianne Buckner has reported on entrepreneurs for two decades. She hosts Dragons' Den on CBC Television and is part of the business news team at CBC News Network.

The temperature in Chile on the day I’m writing this (in grey, chilly Toronto) is a delightful 27 degrees, sunny, with scattered clouds. But the weather report that’s even more appealing is about the climate for entrepreneurs.

“We can fast-track the visa process,” says Jean Boudeguer, executive director of Start Up Chile, a program that’s attracting early stage business-people from all over the world.

“Participants can open a bank account within first week, and with all the information created by past participants, they can figure out where to live, where to buy, what to do — everything — very quickly. Within [the] first week you’re ready to go.”

Oh yes, and the government-sponsored program will hand over $40,000 US too, to help you set up your business, no strings attached. You just have to stay in the country for six months.

Start Up Chile is the brainchild of Nicolas Shea, the innovation and entrepreneurship advisor to the Chilean minister of economy. As the story goes, he was in California’s Silicon Valley in February of 2010, working with his own venture, eClass, when he got the call from the Minister.

Canadian entrepreneur Pete Field is taking advantage of the Start Up Chile Program. (Pete Field)

Chile is isolated both geographically and in the way people think, according to some observers, and its culture of innovation has been described as “weak”.

The minister wanted Shea’s help to change that.

The Start Up program is the result. And Canadians have been signing up. For this most recent third round of participants, eight were approved. “I was looking to get out of Whistler into a more technology-centric environment,” says Pete Field, a 38 year old entrepreneur who grew up in Ontario.

Field’s venture is called Kitchon, and as the name suggests, will be focused on cooking. “I love to cook and I dislike following recipes although I know I’ll make a better meal when I follow a recipe. Recipes aren’t written for the way that we cook, and with the iPad there’s an opportunity to improve the kitchen experience for people.”

Don’t bother visiting the site yet though – a closed test site goes up next month, and Field hopes to launch Kitchon in late April.

But being in Chile is speeding up his progress, he says.

“A big part of it for me is that I come into the office every day and I’m surrounded by really smart people who are at the same stage of developing their business as I am,” he explain. “We’re constantly talking about what’s going to work. And we’re all really familiar with each other businesses.”

But doesn’t any incubator offer that advantage?

Yes the weather is less hospitable in Canada at this time of year, but there are incubators here, not to mention the U.S., that wouldn’t require a trip to a faraway, Spanish-speaking country.

Field is quick to point out that the language of the Start Up Chile program is English. And he’s not a fan of one aspect of incubators.

“My biggest concern was that most incubators will take a percentage of your company in order to be in the program,” says Field. “In Chile they were asking for nothing, plus they were giving. And I’d never been in a developing country before. It was a chance to do something completely different. Toronto didn’t have that appeal.”

All this talk of Silicon Valley and incubators could give you the impression Start Up Chile is all about tech. Not so.

“We have many different industries in the program,” says executive director Jean Boudeguer. “Some are working with renewable energy, through sun or wind. Also Chile is well known because of its mining industry so some of them are trying to work on something there. We have three or four working with Biotech. It all depends on the stage of your company, not the industry.”

'In Chile they were asking for nothing, plus they were giving'—Entrepreneur Pete Field

This was the point at which I found myself wondering what Chile gets out of this. Are participants contractually obligated to set up their companies there, and to hire Chileans? The answer wasn’t what I expected.

To hear Boudeguer tell it, what Chile wants back from its international visitors is two things: to share their entrepreneurial energy, and to build relationships.

“We see personal relationships, not just business relationships. They are going to last forever,” says Boudeguer, pointing out that with Latin America’s economic clout growing, it’s a market where many entrepreneurs may want to have connections in the future.

“We encourage participants to be very active in entrepreneur society, to participate in lectures at universities, mentor other entrepreneurs, create events to connect with the local community.”

Pete Field is into that in a big way. He’s even accepted a key role as an organizer of one of the ‘tribes’ – people in various industries such as technology, finance, or education grouped together for meetings.

Another Canadian participant, University of Waterloo graduate Andrew Cross, says he and his three partners are less enthusiastic about the networking aspect.

“We work out of our own apartment a lot more,” says Cross, a 23 year old originally from Burlington. “I still head over to the co-working space once a week to bounce ideas around, and to stay connected. But at the end of the day we’re here to make the company the greatest it can be, and that takes priority.”

Cross is also developing an on-line venture, Goose Chase Adventures, a mobile “adventure platform inspired by scavenger hunts,” to quote the website. He’s using his 40K to buy new computers and phones, and to make a promotional video for the website.

Nearby Waterloo has a great start-up culture — so again, why go to Chile?

“We were excited about the idea of getting beyond that and getting connected with entrepreneurs from all over the world,” explains Cross. “Plus, South America is going to be a pretty big market, we wanted to see that first hand before it gets saturated.”

The Start Up Chile website boasts that the program “has gained impressive international recognition, having been published in Forbes, The Economist, BusinessWeek, and TechCrunch (among many others) and has inspired spinoffs around the world such as Startup America, Britain, Greece, and Italy.”

Should Canada be emulating the program? That’s the subject of next week’s column.

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Gail Vaz-Oxlade's financial advice for women

Women make up 80 per cent of household spending decisions, but that doesn't mean they're in control of their own finances.

So says personal finance guru Gail Vaz-Oxlade. She's an award-winning broadcaster and author who has been teaching Canadians to take control of their financial lives for more than 30 years. Her latest book, It's Your Money, takes direct aim at her latest target: women.

"A lot of women still cede control to their spouses," she said in an interview on the Lang & O'Leary Exchange recently.

Women are told to share everything with their partners, but that's not always a good thing because that robs them of their power to control their financial lives, she says.

"Women have to recognize they have a responsibility to themselves and to their children to be able to stand on their own two feet," she said.

Women don't always play an active role in investment decisions because society still expects them to handle more domestic issues like child-rearing. "Women tend to head more single-parent households," Vaz-Oxlade says, "and taking care of aging parents? It's a girl's job," she added, sarcastically.

She says women are too afraid of getting involved in investment decisions for their households because they're too often afraid of making a mistake.

"Just because you've got a partner, doesn't mean you become the shadow of your partner," she said.

Watch the player above to see her complete interview, or click here to see it in its own.

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Samsung to use smartphone success to expand tablet presence

If the length of press conference lineups at the Consumer Electronics Show are anything to go by, Samsung is one of the hottest gadget makers going right now.

On Monday, the South Korean company had to turn away hundreds of journalists who were hoping to catch a glimpse of its latest televisions, phones, tablets and appliances, simply because there wasn’t enough space to accommodate them all.

The company used the event to claim market leadership in a number of product categories, including smartphones. Samsung Canada president James Politeski later sat down with CBC News to elaborate on the company’s present and future in this country, as well as overall trends in the electronics business.

CBC News: Can you explain how Samsung calculates its leadership position in smartphones? Some numbers give that position to Apple.

James Politeski: The number we count is units, so 300 million phones [shipped] makes that the largest quantity of phones in the world, as measured by the various reported sources of information. We are the largest in units.

Q: And is that number reflective of Canada as well?

A: Yes, in 2011 we had a dramatic increase in our business [in Canada], more than two-and-a-half times the market share from the beginning of the year to the end of the year. In the last few weeks of 2011, from our industry sources, we were No. 1.

Q: One area in which Samsung hasn’t done well is tablets. According to some estimates, Samsung’s market share in Canada is in the low single digits. What’s happening for you there?

A: Last year was our start, our first foray into them. We obviously have an opportunity to grow that business. One of the concepts we’re focused on is walk-at-working so that when we talk about our tablet, we want the sales associates [in stores] to actually demonstrate how it works, get a Gmail account set up so you can connect to Android and download a couple of apps.

With the tablets playing off the success in phones, that momentum is also going to play through because the feel and the systems are very similar. As our smartphone business continues to dramatically expand, that’s going to raise the tablet business.

Q: There’s talk that wireless carriers don’t like Apple so they’ve pushed Android phones, hence their success. But with tablets, people aren’t really buying data plans for them, so carriers aren’t pushing them. Are tablets a harder market as a result?

A: Everything we do has its elements of challenge to it, but having said that, they’re very different products. Phones are just that – they’re communications devices. They have similar features, but tablets are mostly Wi-Fi, so it’s not so much that [carriers] aren’t interested in them, but they’re fitting a different profile in the marketplace.

I don’t think it’s any harder for us, but what’s attracting success for us is not only the operating system but the quality of the products. Whether it’s the quality of the screen, the battery life, the product speaks volumes for what you can expect for it. Android is catching on globally and locally, but really it’s the product that we’re most excited about.

Q: There’s a benefit to a person getting all of their gadgets – TVs, tablets, phones and so on – from one manufacturer, but it’s obviously unrealistic to expect many people to do that. How do you draw the line between making your products work better with each other and getting them to work with those of other manufacturers?

A: We’d obviously like people to have a full assortment of Samsung products, but practically speaking, that doesn’t always happen because manufacturers are at different stages with different devices. The idea is there are some connectivity features that are seamless when it’s just Samsung products, but then there are examples where they just work within [a larger] ecosystem. So our ChatOn messaging app is an example – it’s an app that’s designed specifically for our stuff, but it’s going to work on all the other platforms as well. It’s not just about focusing on what we have, it’s about offering the consumer choice, because that’s what they want. We’re not trying to pigeonhole what the consumer has to pick. We’re saying, “You pick the best of what you want.”

Q: Here at CES, we’re seeing a lot of companies, including Samsung, applying new interfaces such as gesture and voice recognition to things like TVs. What’s behind this move?

A: What you see here is a giant next step. This is not a small innovation, it’s a major change in how you interact with your TV and how it participates in your life. We’ve talked about the connectivity between devices, but now we’re talking about connectivity between the human being and the TV. You’re going to see tremendous app and software development around this. As we unveil it here, it is new to the world, so it’s like a starter’s pistol.

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Exports forecast to grow 6%

Canadian exports will continue to grow this year in the face of a global slowdown, and it's the U.S. consumer that's likely to come to the rescue, the federal government's export agency said Thursday.

Export Development Canada, a self-funded Crown corporation that assists Canadian companies doing business abroad, forecasts foreign sales will rise by six per cent this year.

The EDC also significantly lowered its estimate for global economic growth but chief economist Peter Hall maintains that the United States will more than make up for whatever is lost in the rest of the world, particularly in Europe.

Hall said he's usually "not big on decoupling arguments" — which maintain that one country or region can significantly outperform others in an integrated global economy — but added "it does seem like the U.S. is pulling away from the pack."

"The momentum is rising there. This is not a flash in the pan."

Hall said the U.S. appears to be getting over its late-fall pessimism — consumer spending is continuing to grow, particularly on volumes, factory activity is strong, the housing sector is coming off multi-year lows, and employment is picking up.

As well, a global slowdown should keep commodity prices in check and the Canadian dollar below parity for most of 2012, making Canadian exports more competitive abroad.

But the big factor is the U.S. consumer, says Hall.

"The U.S. consumer has been down so long, the cork is making its way back to the surface. This is the beginning of the recovery."

A survey of districts by the U.S. Federal Reserve, released in its so-called Beige Book on Wednesday, found unusual optimism from the central bank, calling the final weeks of 2011 strong, triggered mostly by consumers stepping up travel and spending.

Economists noted that it has been some time since the Fed used words like "vibrant" and "robust" to describe aspects of the American economy. But the Fed still called the housing sector as weak.

"Consistent with hard economic data releases, the latest Beige Book points to an economy vastly improved from the summer and fall months of 2011," said TD Bank economist Alistair Bentley.

The EDC expects Canadian exports of forestry products will increase by 12 per cent this year, the aerospace sector by 16 per cent and the automotive industry by 21 per cent — all three feed mainly into the U.S. market.

Oddly, the agency said exports in Canada's booming resource sector will be weaker, with energy flat, metals up only 3.2 per cent and agri-food by 2.7 per cent.

But that is mostly due to price effects, said Hall, since the EDC is counting on the loonie averaging about 98 cents US during the year. Volumes will still remain relatively strong.

Price effects and starting from a higher base also partly explains why export growth — which is measured on the value of exports, rather than amount — will slow this year to six per cent from a strong 11 per cent gain in 2011.

"The slightly lower dollar and rising U.S. production, alongside decent emerging market growth, will power sales of higher-value Canadian exports," said Hall, especially in volume of sales.

Hall sees the U.S. outstripping Canada in growth this year for the first time in several years, with an expansion of 2.9 per cent south of the border and 2.0 per cent north.

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Wind firm Vestas to cut 2,335 jobs

Vestas Wind Systems says it will lay off 2,335 people, or 10 per cent of its global workforce.

The world’s biggest maker of wind turbines also warned Thursday that an additional 1,600 jobs in the U.S. could be at risk if Congress doesn’t extend tax breaks for renewable energy.

The firm blamed the need for job cuts on tough competition and a market slowdown following the global recession in 2008-2009.

Vestas, based in Aarhus, Denmark, said it would lay off 1,300 employees in its home country; 450 in Spain, Italy, Germany and Sweden, 400 in China and 182 in the United States.

In 2010, Vestas was awarded about $51 million in federal tax credits in the U.S., where it has invested more than $1 billion in four facilities in Colorado. The U.S. operations are headquartered in Portland, Oregon.

The additional cuts might come if the U.S. doesn’t extend its Production Tax Credit for renewable energy, which expires at the end of 2012.

Vestas expanded rapidly until the economic downturn slowed investments in wind power. In addition, it has lost market share to Chinese competitors.

Danish Prime Minister Helle Thorning-Schmidt called it "very, very sad news" for the country, which seeks to profile itself as a green energy leader.

"This is one of the businesses that we thought would be the new way of doing green technology," she said. "Despite the setback that we have seen right now, this is and will be the right approach.”

Last year, Vestas laid off 3,000 workers after posting a 24 per cent drop in profits in the third quarter.

After the cuts, Vestas said it will have around 20,400 staff and 25 factories worldwide.

With files from The Associated Press

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Health funding formula helps Ottawa, burdens provinces

Parliamentary Budget Officer Kevin Page has issued a report on the impact of Ottawa's formula for health care transfers after 2014. (Canadian Press)

Parliament's budget watchdog says the new health-care funding formula will slowly reduce Ottawa's support for medicare, but it will also put the federal government on a solid fiscal footing for the future.

The trouble is the provinces will have to shoulder a growing health-care burden over the long run and they can't afford to do that without cutting spending elsewhere or raising taxes.

Kevin Page, the parliamentary budget officer, crunched numbers from the federal government's recent announcement on how health care will be funded until 2024. He projected costs and revenues out to 2040-41.

In his report released today, Page found that Ottawa's promised cash transfers will keep pace with projected increases in provincial health spending until 2016-2017.

But after that, Ottawa's funding will be tied to expansion of the economy. Increases will likely average 3.9 per cent annually, compared to the previous six per cent, the report forecast.

That means Ottawa's share of provincial health-care funding will fall to an average of about 18.6 per cent for the coming two decades from about 20.4 per cent today. It will continue to slide significantly after 2035 if the policy persists.

As a result, Ottawa's debt burden will decline steadily, the report said. The federal government will have some room to cut taxes or increase spending and still maintain fiscal health.

The provinces, however, will find their debt rising and some jurisdictions will have to increase taxes, cut spending or both in order to stay on track.

The report comes as the premiers prepare for a crucial meeting on health-care financing in Victoria starting Sunday.

They will attempt to figure out how provinces should deal with health care after suddenly being handed a funding formula from the federal government last month.

Finance Minister Jim Flaherty announced increases in funding with no strings attached — signalling a federal step-back from health-care policy-making and a slow erosion of federal funding increases.

In another report released today, a coalition of health associations said federal and provincial leaders need to confront the deterioration in the health-care system, clarify their roles and then get to work fixing things.

The Health Action Lobby of 34 national health organizations polled leading health-system experts and compared Canada's regime to others around the world.

They found a consensus on what the problems in Canada's health care system are, as well as general agreement on how to fix them.

But they also found a lack of political leadership at both the federal and provincial levels.

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RIM's PlayBook update 'nifty,' but 'too little too late'

While tech experts and analysts are impressed with Research in Motion's long-awaited update to its PlayBook tablet, many aren't optimistic it will be enough to prop up the BlackBerry-maker, which was hard hit by outages, product delays, as well as a plummeting stock price last year.

The update coming in February, 10 months after the PlayBook was first released, was unveiled at the glitzy Cosmopolitan Hotel in Las Vegas during the Consumer Electronics Show this week. A free PlayBook 2.0 upgrade will be pushed out to current PlayBook owners in February. The new features will include:

Built-in contacts, calendar and email applications to run on the device itself without having to connect to a BlackBerry phone.Expanded capabilities on the BlackBerry Bridge to allow your smartphone and tablet to work better together by transitioning tasks from your BlackBerry to your tablet, opening websites, documents and pictures on your tablet from your phone, as well as using your phone as a remote control for your PlayBook.The capability to sync profile information from your connected LinkedIn and Twitter accounts.A video store catalogue with thousands of movies and TV shows as well as thousands of other applications available from partners.Access to Google's Android apps, which can be ported over, as well as other new apps that the company is getting developers to build software for, which it has promised for the second half of 2012.

The built-in email and contact integration with LinkedIn are key updates, Donald Bell of CNET.com wrote in a blog post.

"Needless to say, the PlayBook's non-corporate customers found the lack of a basic email app (on the earlier version) to be puzzling…Still, it's a surprisingly subtle update that comes at a time when interest in the now nine-month old product is seemingly flat."

RIM needs to get more aggressive with its update if it wants the PlayBook to be a success, he adds.

Damon Poeter of PCmagazine.com says the update is superior to the version rolled out prematurely last year, calling it "a nifty bit of technology."

"As you tool around on an upgraded PlayBook, the interface isn't glitchy and jumpy like it has been up until now," he wrote in a recent blog post.

"RIM's Bridge technology is ideal for situations where one person wants to show a group something on the PlayBook without having to mess around with the device and then pass it around.

"Our only quibble with this particular feature is that, at just 7 inches [17 centimetres], the PlayBook is really pretty small. It'd be nice if there were some other tablet form factors available from RIM, so larger groups could see what's happening on a remote-controlled PlayBook screen without huddling close together or squinting their eyes."

A real bonus is that the access to Google's Android Market for apps, "immediately cranks up app availability on the tablet to many times the number that are available in the company's own App World store," Poeter says.

However that doesn't necessarily mean PlayBooks will "start selling like hotcakes," he adds.

"RIM may have finally gotten its tablet operating system mostly right, but there's still a danger that in consumers' eyes, it will be too little, too late."

Other tech experts say the updated PlayBook may be just the thing to turn RIM's fortunes around.

In a blog post, Melissa J. Perenson of PCWorld wrote that it, "looks like it's teeming with potential"…[and] "given the current promotional pricing on the PlayBook, the tablet may actually go from being a fancy brick to a viable tablet option."

"From my early look, the update was not only worth the wait, but also may be what RIM needs to make its 7-inch PlayBook tablet more competitive and desirable."

Among Perenson's favourite features is a visual on the monthly calendar — "the busier your day is, the larger the date appears relative to other dates on the calendar; this way, at a glance, you can view which days are busiest for you."

She points out that Docs to Go has improved functionality, including PowerPoint editing, enhanced formula support, and the capability to embed images, which are unique to the PlayBook.

"You can also send content such as Web pages, photos, emails, and documents from your phone to the BlackBerry via Bridge. [You can] wirelessly turn content on your PC into a PDF viewable on the PlayBook using the Print to Go app. The print driver communicates with the PlayBook using BlackBerry ID, then prints and sends the document as a PDF," she wrote.

Perenson also likes that the PlayBook's video store is powered by Rovi for buying and renting TV shows and movies so you can use your content on other devices that support Rovi Now, she says.

Despite the hype, Canaccord Genuity technology analyst Michael Walker is maintaining his "hold" rating and $15 price target on RIM shares.

"While we were impressed with the improvements BlackBerry 2.0 offers, we believe it still lags competing tablet offerings. With competing OEMs continuing to introduce high-end smartphone products on more established software ecosystems and low-cost Android smartphones pressuring RIM’s international margins, we believe sales and earnings will remain under pressure until BlackBerry 10 smartphones launch in late C2012," Walker was quoted on a Forbes.com blog post.

"While we believe RIM management is focused on improved product execution during 2012, we believe new BB 10 smartphones will launch into an even more competitive smartphone market, as we anticipate innovative new Android LTE smartphones from multiple OEMs, a significant increase in Windows smartphone offerings from Nokia and other OEMs, and a refreshed LTE iPhone 5 by the time BB 10 smartphones launch.”

Jennifer Fritzsche, an analyst at Wells Fargo & Co. in Chicago, says the update is "too little, too late,” for the BlackBerry tablet to be a serious challenger to Apple's iPad. “I would call this a working version of what should've come last year — things that should've been there out of the box," she told Bloomberg Businessweek.

Fritzsche believes the tablet's appeal will largely be retricted to its corporate BlackBerry customers and expects the company to ship fewer PlayBook devices this fiscal quarter —100,000 — compared to 150,000 last quarter.

Meanwhile, Apple's iPad has outsold the PlayBook 74 to 1, selling 11.1 million iPads in the most recently reported period, according to Businessweek.

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