Invest in Canada

France and Canada have always been very close to each other. Thanks to their common history, their common language but also to their trade. Nowadays economic relations between Canada and France are really dynamic and diverse. Both countries consider each other as privileged partners.

France is in fact Canada’s 3rd European partner and 2nd foreign investor.The total amount of bilateral trades in 2003 reached $Can 56.5 billion.

On one hand Canada is a major supplier for France for many products such as high-tech and high-value added finished products, especially professional goods which represent 40% of French import, but also as uranium, aluminum, wood pulp, aircraft launching gears and engines.

On the second hand France is a major supplier for Canada for many products including wines, planes, air navigation equipment, industrial lifting gears, perfumes, cosmetics and books.

 

 

Why to invest in Canada?

Canada presents lots of advantages for French investors.

Thanks to its location and different agreements such as NAFTA (North American Free Trade Agreement) or FTAA (Free Trade Area of the Americas) it offers lots of opportunities as well in the acces to the American and the Asian market. Canada is a country in constant expansion in relation to investment. Since 1990 direct foreign investments have doubled, and in 2002, the global amount of import represented 31% of the Canadian GDP and in 2003 the French stock in Canada was of $ Can 31.6 billions. Consequently Canada is the 6th most invested country by France. It is also the most wide opened country of the G7.

It has been ranked first of the G7 and the OECD for the easiness and the rapidity of the possibility of firm creation. It has also been recognize that it was the safest country of G7 for business because of the efficiency of its justice.

 

Moreover the costs related to the creation of a firm are much lower in large Canadian cities such as Toronto or Montreal than in other North American towns, notwithstanding numerous tax advantages and low labor and social costs.

Canadian past reputation as a place where business taxes are high is an out-dated one; recent reforms to its tax regime have made Canada a very attractive place for starting and growing a business.

Moreover, the Canadian government created different kinds of programs and all kind of incentives for investment.

 

How to approach the Canadian market?

The biggest specificity of the Canadian market is its lack of uniformity. In fact because of its federal organization and the vastness of its territory, there is not one single Canadian market but many regional markets.

 

Each of them is distinct from the others depending on the type of goods and the provincial legislation. It is also important not to forget that a high majority of the trades are concentrated in a small part of the country. In fact nearly 80% of the market is located in Quebec and Ontario.

The most important sector of both import and export is the aeronautic, it represents on its own 19% of the trades.

Nevertheless it decreased a lot in 2003 because of the ending of the Airbus delivery. Yet it is the only sector showing a decrease.

Other markets are really in high and constant expansion (+12% in 2003). The more successful among them being wine (+16%) drugs (+50%), integrated circuits (100%), and cosmetics and perfumes (+12%).

Finally it is important to notice the increase of the services trades on the part of Canada, especially in the area of company services, transport and travelling.
Canada is a clear importation in those fields, its expenses in French services reaches $Can 2.1 billion.

 

Practical matters

Canada is mainly a Common Law country but each province has its specificities concerning implementation, the most obvious one being of course Quebec, which is governed by Civil Law.

Therefore it is quite easy for a French investor to make flourishing business in Canada.

The latter is a real advantage for French investor as it is really close to French law.
Canada mainly offers 5 different ways of creation or implementing a business on its territory, which namely are:

- The commercial agent: able to carry a sale of one or more goods in a specific region for one or more supplier

- The importation wholesaler: buys the good and store it, thus assuring the financial risk.
He usually has a provincial and not national competence.

- The franchise: this system is in constant expansion in Canada

- The local manufacturer: to enlarge the range of products on their market they often choose to import goods they do not manufacture themselves.

- The direct marketing: this system is also in very high expansion, inspired of the satellite television network

- The e-commerce: Canadian people are among the more connected people in the world.

 

Almost 70% have access to Internet. This system is particularly efficient for clothes, jewellery and accessories.

Moreover, a person or company wishing to operate a business in Canada has a choice of several different business structures.

The appropriate structure depends on several factors including the nature and location of the business, liability and general issues of exposure, the entity’s financing requirements, and tax considerations.

There are three basic structures available:

- Sole Proprietorship: the business is owned and operated by the individual responsible for the business and its liabilities. This structure is extremely simple and can avoid many legal complications.

- Partnership: a partnership exists when two or more individuals or corporations carry on business together with a view to profit. In Canada, the provinces maintain exclusive jurisdiction over partnerships and thus each province has enacted specific partnership legislation.

- Corporation: it is a separate legal entity, which offers limited liability, an easy way to transfer assets and perpetual existence. Since a corporation is a distinct legal entity it must pay tax on its income. The corporation is, by far; the most common business structure employed in Canada.

- Subsidiary Corporation: a foreign corporation may incorporate a separate subsidiary corporation under the federal statute or any of the provincial statutes governing corporations. However, as with branch operations, a license or registration may be required from any province where the company carries on business.

- Joint Venture: any arrangement whereby two or more persons agree to contribute goods, services or capital to a common commercial enterprise. Currently there is no statute governing joint ventures in Canada. Joint ventures are governed by the contracts entered into by the private parties to those ventures.

What can we do for you?
Because of all the different possible ways of investment and the legal specificities it is highly necessary to seek advice at the right place.
So that you are sure to succeed in your investment in Canada, we suggest you to contact a business law firm such as ours.
In fact, as we are the an official partner of the Canadian embassy in France you could benefit from many advantages including a perfect coordination and knowledge of commercial law, international tax law and Canadian law and a web of local partners chosen for their abilities and their broad range of practice areas.
We could help you in entering the local market with the partnership of local correspondents, choosing the most effective structures for your project, producing at low cost by expanding the partnership with the local firms.

Low costs, a great business environment, access to North American markets, a superior work force and ideal guidance and help all combines to provide you with the best environment for your business to flourish.

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