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From the archives

The Melmac Years

My peculiar resin d’être

Maple Branches

Who talks of my nation?

Listening In

What recent populist victories tell us about Canada

No Financial Cachet

Why are Canadians so unwilling to compete for the big pie of world trade?

Andrew Allentuck

Why Mexicans Don’t Drink Molson: Rescuing Canadian Business from the Suds of Global Obscurity

Andrea Mandel-Campbell

Douglas & McIntyre

328 pages, hardcover

Business books are a sorry lot of flavour-of-the-month ideas and bromides, but this sermon on trade stands out for its freshness, familiarity with relevant facts and passion. In Why Mexicans Don’t Drink Molson: Rescuing Canadian Business from the Suds of Global Obscurity, Andrea Mandel-Campbell, a former business reporter in Latin America, blends economics and evangelism to produce what should be a blockbuster on Canada’s role in global trade.

Deservedly so, for she focuses on serious issues. On the risk of Canada’s being marginalized in world trade, she writes, “the threat is all the more dangerous because it won’t be a calamitous collapse, like that of Argentina, but a slow, stealthy slide that will sneak up on us while we snooze, our bellies still uncomfortably full after gorging on a feast of oil sands and high copper prices.” 

Even when Canadians’ bellies are empty, protectionism flourishes. Ms. Mandel-Campbell notes that Canada has allowed the devastation of the cod fishery and perpetuated the lives of 139 fish plants and 12,000 fishers whose main business is collecting welfare cheques. One might add that Canada’s bumbling-though-ardent defence of sealing brings in what Farley Mowat has estimated as the revenues of a couple of franchise burger joints each year. “Resources in Canada are viewed as a public utility whose prime purpose is to dole out jobs and insulate Canadians from the harsh realities of the marketplace,” she explains. 

Mandel-Campbell blames what she sees as a national trait of flaccidness, with Canadians being unwilling to seek trade and to make foreign investments. She recalls that Bank of Montreal CEO Tony Comper wimped out of making big investments in Latin America. “Canadian companies take the cautious route or no route at all,” she writes, quoting a Canadian who headed the Canadian Chamber of Commerce in Mexico.

The author argues that Canada is too bland. Some countries, Switzerland for example, have used their banking laws and cachet for running what the world has regarded as an alpine hideout to build a global banking business. The banking laws have been loosened but the country’s reputation still sells the concept. Canada—the Great White North—seems to have the whiteness thing down pat, but nothing else. We lack financial cachet, she complains.

Some say it’s because we’re just too darn nice and middle-of-the-road to put our imprint on anything and duke it out for world domination … When has Canada ever conquered another country? … So instead of being scrappers, we are skimmers.

Geddit? The argument is a rhetorical question with the convenient answer. One has to ignore massive Canadian investments in foreign oil wells, gold mines, nonferrous metals, dams and exported hydro power to accept her thesis. The Toronto Stock Exchange is the world’s premier mining bourse and Canadian investment dealers have deep roots in resource industries. Her rhetoric is ahead of the facts, but there is still merit in her message.

Beneath the sermonizing, Mandel-Campbell is on to serious issues. She identifies Canada’s long history of maintaining high tariffs from the early days of Confederation onward. Protectionism and a passion for keeping Canadian trade from draining south to the United States allowed the country to grow into an expensive place to do business. This is, of course, entirely by-the-book economic history. The Canada-U.S. Free Trade Agreement did more to end the “little Canada” mindset than almost any other initiative in the nation’s 140-year history. Canada is less protectionist than it used to be, but the combination of provincial jealousies that maintain internal trade barriers and ill-conceived tax laws that inhibit foreign investment really do deter investment by foreigners in Canada and by Canadians abroad.

Mandel-Campbell provides an abundance of evidence that Canadian business and government is usually content to nurture small domestic concerns rather than to compete for the big pie of world trade. To back that up, she adduces a mass of facts to show that many of Canada’s top international traders and businesses are really foreign in origin. Alcan, a great and admirable Canadian company, was spun off from Alcoa, the Pittsburgh-based giant of the industry, by U.S. trustbusters. The Bronfmans, whose fortune originated in creative trade deals for distilled beverages being sought by interested parties in the United States, made for the U.S. once this U.S.-directed fortune was assured. Canada’s biggest shoe company, Bata, really began in Czechoslovakia. Frank Stronach, founder of Magna International, was an Austrian machinist. All old facts and all well organized. Her point is that they flourished in the protected Canadian market—the Bronfmans by the fact that Canada had no prohibition to match the Volstead Act, Bata by high tariffs and Stronach by the Auto Pact and closeness to U.S. assembly lines. Canadian banks prosper because of their oligopoly and because the Bank Act discourages foreign banks from entry.

One could argue, in spite of Mandel-Campbell’s passionate attack on Canadian small-mindedness, that Canada, in failing to follow the U.S. into prohibition, was a land of brilliant jurisprudence, that Bata’s ability to build their shoe business showed Canadian business at its best, and that Canadian banks are very good at running their businesses profitably. Add in other Canadian pluses, at least from a business perspective. For example, our securities regulations are lax and run by commissions in every province—idiotic to be sure, but not nearly as onerous as American regulations such as Sarbanes-Oxley that impose huge accounting costs on listed corporations and criminal liability on their chiefs if they sign off on fraudulent accounts.

And so to the rhetorical question that the book answers. Mexicans don’t drink Molson because the Canadian brewer did not know how to market its suds when it bought a Brazilian brewery, Cervejarias Kaiser. It paid us$765 million for the number-two brewer in the land of the samba, watched its sales fall from nearly 17 percent of the market to 7 percent, then sold the brand and the business for us$8 million and us$60 million of debt. When Molson picked up the company, it sent just ten people to run it. A Quebec financial manager with no experience outside of the province was put in charge of Kaiser. Brazilian competitors saw weakness and moved in for the kill.

Mandel-Campbell’s prescription for fixing Canadian trade is a recipe with several ingredients, such as “cultivate interests, not friends,” “invest in a Rolodex” and “embrace your inner entrepreneur.” Research in Motion, creator of the BlackBerry, does it. Cirque de Soleil does it, and so can any company with a product to sell, she insists. Why Mexicans Don’t Drink Molson is a hit about to happen. Its mix of evangelism, apocalyptic pronouncements and facts should make it a must-read by managers and mandarins.

Andrew Allentuck is the author of Bonds for Canadians (John Wiley, 2006).