The Canadian E-Business Opportunities Roundtable
Press Conference
Ottawa, January 17, 2000
E-BUSINESS CAN CREATE 180,000 NEW JOBS
($B)
180 160 140 120 100 80 60 40 20 0 1998 2003F 28.5 Infrastructure Total 100,000 180,000 21% Applications 30,000 53% Commerce 50,000 75% 156 Potential Incremental Jobs Potential CAGR(2)
QUICK ADOPTERS, LAGGING SHOPPERS
Canada at the forefront of adoption, Canada at the forefront of adoption, access and usage ...... access and usage
Hours 50% 46% 46% 40% Canada US 32% 30% 30% 20% 14 10% 10 20% 40%
… but trails in online purchasing … but trails in online purchasing
% of Internet Users 50%
40%
39%
12% 10%
0% Own Personal Computer (% of Households) Internet Users (% of Population) Average Monthly Home Hours Online 0% 1998 Internet Users Purchasing Online
CANADIAN COMPANIES SLOW TO RESPOND TO OPPORTUNITY
Fewer Companies Selling on the Internet Fewer Companies Selling on the Internet
Companies Selling on Internet by Size
% of Companies (1998)
Executives Express Lack of Urgency Executives Express Lack of Urgency Around Both Threat and Opportunity Around Both Threat and Opportunity
% Agree “In 5 years my company will be “In 5 years my company will be more reliant on e-commerce” more reliant on e-commerce” “Exploiting the full potential of “Exploiting the full potential of the Internet/developing the Internet/developing e-commerce is a high priority” e-commerce is a high priority” “Companies in my sector without “Companies in my sector without e-commerce will be at risk of e-commerce will be at risk of losing customers” losing customers” “E-commerce is a serious “E-commerce is a serious competitive threat to my company” competitive threat to my company” 84%
30%
Canada
24
U.S.
20% 14
19 17 17
29%
11 10% 7 6
67%
21%
0% 10-99 100-499 500-999 1000+ Employees
CANADA MISSING KEY CLUSTER INGREDIENTS
Established Anchor Established Anchor Companies Companies
Strong Research Strong Research Universities Universities
Strong Linkages Strong Linkages
Participative EarlyParticipative EarlyStage Capital Stage Capital
BOTTLENECKS IN THE IPO PIPELINE
Five Factors Influence the Pipeline to IPO for Sale of New Canadian Businesses
New Business Idea
Small pool of earlystage venture capitalists
Conservative financial institutions
Legacy tax and securities regulations
More restrictive stock exchange listing requirements
Lower Market Efficiency and Liquidity
IPO or Sale
In 1999, only 4 Internet-related IPOs on the TSE In 1999, only 4 Internet-related IPOs on the TSE compared to 165 on Nasdaq compared to 165 on Nasdaq
FIVE OPPORTUNITIES FOR CANADA TO LEAD
1. Network Infrastructure 1. Network Infrastructure 2. Multimedia North 2. Multimedia North 3. Global Customer Care Provider 3. Global Customer Care Provider
• •
Network equipment and software New technologies
• • •
Web design services E-business platforms Web animation and games
• • •
International call centres Multilingual labour pool Integrated telephone/ Internet technology
4. Remote Service Provider 4. Remote Service Provider
5. Exporter of World Class Web 5. Exporter of World Class Web Tools Tools
• • •
Healthcare delivery Distance education Professional services
• • •
Site performance tools Security/encryption Financial services/payments applications
SIX BUILDING BLOCKS FOR CANADIAN LEADERSHIP
I. Establish Canada’s global brand in e-business GOAL: Highest rates of Internet usage for businesses, government and citizens II. Accelerate transformation of existing II. Accelerate transformation of existing businesses businesses GOAL: World’s largest Internet-related GOAL: World’s largest Internet-related industry as a % of GDP, highest SME industry as a % of GDP, highest SME adoption and usage adoption and usage III. Foster e-business creation and growth III. Foster e-business creation and growth GOAL: World’s largest pool of venture GOAL: World’s largest pool of venture capital and IPOs as a % of GDP capital and IPOs as a % of GDP
IV. Expand e-business talent pool IV. Expand e-business talent pool GOAL: Attract e-business talent to GOAL: Attract e-business talent to Canada, achieve highest rates of Internet Canada, achieve highest rates of Internet literacy literacy V. Make government online a major V. Make government online a major priority priority GOAL: World’s most advanced digital GOAL: World’s most advanced digital government government VI. Build leadership in international VI. Build leadership in international e-business policy development e-business policy development GOAL: Widespread adoption of GOAL: Widespread adoption of Canadian trustmark Canadian trustmark
SPECIFIC RECOMMENDATIONS
I. I. Establish Canada’s global Establish Canada’s global brand in e-business brand in e-business
• •
Private sector leadership Targeted campaign for e-business investment
II. Accelerate transformation of II. Accelerate transformation of existing businesses existing businesses
• • • • • • • • • •
Sectoral initiatives e-Corps Time-limited tax incentive for SMEs Focused research spending Level capital markets playing field Stock options treatment International Computer Driving License All government services online Government portal Canadian trustmark and dispute resolution mechanism
III. Foster e-business creation III. Foster e-business creation and growth and growth
IV. Expand e-business talent IV. Expand e-business talent pool pool V. Make government online a V. Make government online a major priority major priority VI. Build leadership in VI. Build leadership in international e-business international e-business policy development policy development