Proceedings of the Standing Senate Committee on
Foreign Affairs and International Trade
Issue 5 - Evidence - April 29, 2010
OTTAWA, Thursday, April 29, 2010
The Standing Senate Committee on Foreign Affairs and International Trade met this day at 10:30 a.m. to study the rise of China, India and Russia in the global economy and the implications for Canadian policy.
Senator A. Raynell Andreychuk (Chair) in the chair.
[English]
The Chair: Honourable senators, the Standing Senate Committee on Foreign Affairs and International Trade is here to continue our study on the rise of China, India and Russia in the global economy and the implications for Canadian policy.
We are pleased to have here before us today Mr. Gary Comerford, the Executive Vice-President and Chief Marketing Officer of RGA International Corporation. Mr. Comerford has been honoured with the Indo-Canada Chamber of Commerce 2008 President's Award for his role in strengthening the trade relationship between Canada and India. That is quite a feat.
In 2002, he was appointed Vice-President, International and General Manager, India for Sun Life Financial Asia, where he was responsible for Sun Life's joint venture companies in India. I should note that during your tenure at Sun Life the company grew from 11 branch offices in 10 cities to 116 branches in 95 cities. You may have some updates for us on that.
You are also presently a director of Aditya Birla Minacs Worldwide Inc., the Canada-India Business Council and the Shaw Festival. You are also a past president of Birla Sun Life Insurance, Birla Sun Life Asset Management and Birla Sun Life Distribution in Canada.
Welcome to the committee, Mr. Comerford. The committee is eagerly awaiting your comments about the trade relationship, and you certainly come well qualified both in India and in Canada.
Gary Comerford, Executive Vice-President and Chief Marketing Officer, RGA International Corporation: Thank you very much. Honourable senators, it is a pleasure to be here today. I must admit, I was caught a little off guard by the invitation, but I was pleased. I was in Europe last week on business, and was notified that a request had been made that I appear today in Ottawa to express my views with regard to international trade and, in particular, China, India and Russia.
For the record, my experience is far more in the India side and the China side than the Russia side. Currently, I work for the Reinsurance Group of America. You have probably never heard of it. We are a Fortune 500 company. We are one of those financial service companies that went through the financial turmoil over the last 18 to 24 months incredibly well, a U.S.-based company out of St. Louis, Missouri.
We help mitigate risk for life insurance companies around the world. We specialize only in life insurance, not property and casualty insurance. As a result, all the major life insurance businesses throughout the world, and even the small ones in local markets, deal with RGA as they write business and as they look at means to manage the capital management of their particular businesses.
We do business in over 36 countries internationally. As you can appreciate, I am on the road a great deal. We have offices in many of those locations around the world also. I have had the fortunate ability to see the world from a user perspective.
If I may, I am not the academic. I am not the one who is coming here today to present a paper. I have written articles and done those things in the past, but that is not my purpose of being here. If you will, I am the guy CEOs normally turn to and say: Go do this.
I have had the incredible pleasure of a 24-year career with Sun Life Financial. I am retired, a pensioner of Sun Life Financial today. I had a wonderful experience with them. I worked closely with Don Stewart, their chief executive officer, in the international expansion of Sun Life's operations over a 15-year period.
Today I do that for RGA, and we have offices in India. We are currently looking to put a representative office and write business in China. We hope that will happen in February of next year. I just closed the office in Russia. I would be glad to talk about those things also.
To put it into perspective, I think it is good to give you an idea of the type of businesses and familiarity I have. It is fair to say that the vast majority of my experience in real world knowledge lies in India. I have made 79 round trips to India over the course of 15 years. While the introduction is accurate, that it went from 11 branches, the truth of the matter is when I got off the airplane in India in December 1996, Sun Life Financial had nothing. In 1956, Sun Life was nationalized, so all its businesses were then incorporated into what is now known as the Life Insurance Corporation of India.
Sun Life had a proud history, though, and, as Canadians and looking at the Canadian business model, this should not be forgotten. Sun Life went to India in 1892 and was the largest foreign life insurance company in India when it was nationalized in 1956 — a proud heritage.
I was with Sun Life, and as a pensioner I am still proud to say that Sun Life Financial has done business in India every single day since 1892 that we have been allowed to by law.
Moving that forward, when the financial services industry, in particular, and business generally, was opening up to the private sector in the 1990s in India, I was sent there by the current chairman, John McNeil, to investigate opportunities. Off the plane, we had nothing.
Our IBM sales representative accompanied me on that trip. Why? He was of Indian heritage and could speak the language. There were not many people I could turn to, not many other Canadians there doing substantial business. Bell Canada was there attempting to establish a business, SNC-Lavalin and others were there, of course, but it was nothing like what you see today. The infrastructure, the way business was conducted, the length of time it took to get things done, was very different.
Over that period of time, a Canadian company that has a solid balance sheet and ability took the organization to today being one of the largest life insurance companies in India. To put it into perspective, Sun Life has in excess of 180,000 advisers knocking on doors, selling good, old-fashioned life insurance. They own Birla Sun Life Asset Management, which we also set up, and I helped initiate.
For a period of time I was the CEO of that company. For the last two years, Birla Sun Life Asset Management has been the mutual fund company of the year in India, including all locals, all companies worldwide — a nice standard to have.
I make these remarks and I include the Sun Life experience because, of course, it is the closest to my heart and where I have the most experience, but I want to emphasize the incredible warmth and desire of Indian businesses to do business with Canada.
When what I call the beauty contest occurred between 1996 and 1999, when the Birla organization was looking for joint organization partners, they looked around the world. The companies that were on the short list, which is more or less public information, was MetLife, Lincoln National at the time, Legal & General in the U.K. and Prudential UK. It was all the major international companies doing business internationally. They chose Sun Life. I think they chose Sun Life because of the financial strength, our regulation, but also I think because of the personalities involved regarding the company. They liked doing business with Canadians. That was very clear. As a result, a strong relationship has developed over the years.
If I take you quickly through India and why I feel that it is a market that we should be looking at more aggressively, they are facts that you have heard a thousand times by everyone who has been before you. There are 1 billion people in India. I like the Canadian saying, "You are one in a million"; in India, there are 1,000 people just like you. The incredible potential of that is amazing.
There are the favourable demographics. You look at China and India; I am in the business of demographics, risk, and looking at demographics and how people age. If you are young, I want to insure you; and if you are old, I want to sell you an annuity. As a result, the life cycle is very important. When you do a comparison of China and India, it is clear that India has incredibly favourable demographics for the young, and as you build a business you can grow with them.
China has an older population and there will be issues' regarding sustaining the momentum as it goes along just because of demographics. That can be altered through immigration and other things, but it is an issue.
Now let us concentrate on the positive of India where there is the emergence of a huge middle class. When I first visited India, I was struck by the abject poverty; 800 million impoverished people. It was devastating. It was quite shocking to a Canadian who grew up in the Niagara Peninsula and enjoyed a nice lifestyle. My parents were very average.
The question is do you want to do business in an impoverished country. The answer is that the best thing I can do is establish a business and create jobs and that will turn this impoverished nation around. It will be great for Canada because in Canada I will be creating high-end jobs, people who are actuaries, underwriters, senior managers, who will be reinforced and allow Canadian financials to be dominant on the world stage. With a 35 million population base, it is difficult to become a world player. You have to look outside your borders in the business that I am in.
Unquestionably this burgeoning middle class has huge potential not only for financial services but consumerism overall. You have seen the statistics looking at the service industry, manufacturing, agriculture and the growth of the GDPs. It is not in any one segment. It is very evenly divided in India. You will see a strong service sector. When you look at the numbers published within federal trade publications, they are not correct. They may be accurate as far as numbers, but they do not reflect the actual business that is occurring.
The numbers for the activities of the financials from Canada, whether Lombard or Sun Life Financial, are not reflected in those numbers whatsoever. They do not reflect how important they have become to us as Canadians.
A handout talks about the social, economical, political and technical aspects. You have seen it before. I did a speech two or three weeks ago in Ottawa and I think that is the reason I am before you today. The sheer positives lining up Canada against India are something to which you must pay attention.
I would like to recommend five points and open it up for questions. Sometimes the best dialogue occurs when I am responding to your concerns and information you would like to know from a practitioner.
I believe the Department of Foreign Affairs and International Trade should be designate India as the primary emerging market trade opportunity for Canada. Why do I say that? I fly around the world. I look at opportunities. I see an opportunity in India that we just cannot ignore. There is too much favourable emphasis right now. Please do not take this as a statement. I am just saying we want it to be one of our priorities.
Twelve years ago I sat here in Ottawa before a DFAT meeting — it was called DFAT then. The deputy minister sat across from me and said, "India is one of our top three priorities." I wanted to say why do we not act like it is one of our top three priorities? I was polite. I am old and a pensioner now.
We have to take the bull by the horns and do something. It is not saying that China and others are not good opportunities but, when you look at the existing relationship, we have an opportunity to do something substantial if we choose to do it.
Second, there are detailed trade negotiations going on with free trade. We have to encourage that and make that happen. At one point in time, in one of my drafts, I said it has to happen within 24 months. Then I realized we are dealing with India.
On the other side, it will be difficult for them to do it within the period of time. The reason being, in my respectful view, Canada needs India more than India needs Canada right now. In the last 10 years I have been to any number of sessions where John Major, prime ministers, presidents, kings, go to India and visit not only the bureaucrats and the politicians but also the industry leaders.
I remember when Lloyd Axworthy was doing a presentation and John Major was in the front row with 150 British delegates. They were all wearing the same tie and the same hat. They marched in giving the formidable impression that they were there to do business. Was it show? Absolutely. It certainly transmitted the message that they were there to do business. At the time we had sanctions because of atomic energy. I will leave it to you to best judge that, but it did not enhance our situation and has been a legacy we have had to deal with. The free trade agreement is something we should do quickly.
A "Canada Now" branding campaign in India should be launched in the first quarter of 2011. Why? They do not know us. They know us from our educational system and because the best and the brightest send their kids here to be educated. They know us because we are part of the Commonwealth. They know us because they have a favourable image of Canada. We must take advantage of it. There is a target audience out there of influence centres of business people who want to do business.
I was fortunate to meet a gentleman by the name of Kumar Birla. I do not know if you met him during your travels in India. When I met him, he was barely 30 years of age. His father had passed away and he had inherited a huge empire. People wondered what would happen. He was the new generation.
The first thing he did was hire McKinsey and they turned his business from an old business, primarily dealing in manufacturing and commodities, into a business that is a vibrant, modern, service-oriented business that rivals almost any in India.
One day, Dr. Singh, his chief strategist, turned to me and asked where New Brunswick was. I told him it is on the East Coast of Canada. He told me that there was an abandoned pulp mill there and that they were looking at it. I told him to phone Frank McKenna and that they could do business with him. They have two pulp mills there and they take the viscose fibre to Indonesia where they turn it into something other than pulp. That was one conversation.
The next was when someone phoned me one day and said they want to establish a call centre in India. I asked why they would want to do that, and they told me they have a large operation in Canada and had thought of doing something in India. I asked why they did not get a partner in India that is good in the business and move it together and at the end you will end up with something much bigger. That is Aditya Birla Minacs worldwide today which has well over 10,000 employees, 4,000 of which are in the province of Ontario.
Kumar Birla did the purchase of Novelis. When they know us, they tend to do business with us, and it is not because I have a bright, shiny personality. It is because there are tremendous opportunities in Canada for Indian business.
You see the growth in the U.S. and you look at the statistics. I am sure someone has presented that information to the committee. If you look at the second fastest growing capital injection of any country, it is India into the United States. Why is it not in Canada? It is as simple as that.
The trade minister should establish an "India Now" task force of business leaders to report back by December 2010. There is not all that much difference in your financial literacy. The notion is take it seriously, put people in charge and what can we do. Put a profile with it that you really mean it.
The Prime Minister's Office should appoint a special envoy to India to promote political and economic relations, and that is not to circumvent our High Commissioner, who is absolutely superb. Again, on the political front and to put extra strength onto it, I am sure there is some form of senior in some ways supplemental that we can do to gain profile and recognition from the Indian government.
Senator Wallin: Thank you very much for your terrific presentation.
We have heard a lot of testimony — I think you have been the most forceful on this —, which is, get your act together and get over there. You are restating the fact today that we probably need them more than they need us. We have had the fights over the nuclear issues. Why are not we doing this? In all your relations with DFAIT and other people you speak to, what part of this do we not understand? Are you seeing a block?
Mr. Comerford: I have had the privilege of dealing with a lot of trade ministers in India and China and other places from Canada. They do their job. Our trade people do the job. We have some very nice people. I look at EDC and the people who represent Canada exceptionally well. I would say that our current High Commissioner is 10 out of 10 as far as attitude, experience and political knowledge of what is going on.
What is it? From my experience, we have not separated economic requirement from political need, and we have had a number of opportunities where politicians from Canada, from prime ministers to cabinet ministers, tend to go there for photo opportunities. That is important. I do not deny that.
We have had prime minister's visit India for 24 hours. Let us get serious. The point I go back to, 12 years ago, we have to act like we are serious. We cannot wait for diplomatic niceties like Prime Minister Singh has to come here first. I heard that for the longest time. The good news is that Prime Minister Harper went. I think that is terrific, but we have to show initiative.
If we follow the protocol exactly, then we will stay behind. This morning, I am trying to hire someone in India. Why? My business is not growing as fast as I want it to because the previous business I established was going a lot faster. Will I hire a 27-year-old who has never done the job or will I hire someone who is Mensa smart and works like no tomorrow? That is what I do because I have catch-up to do.
I have to alter the strategy that I may use normally in a market in order to take advantage of a situation. This is a window of partnerships waiting to be made. Canada is behind. Is it out of the running? No, but it will become out of the running because relationships get established. There are the Ambanis, the Tatas, the Birlas, a handful of incredibly influential families. Canadians want to be married with these individuals.
I met Mr. Tata a couple of weeks ago when he was coming through town and we had a meeting. He is a delightful man, but understanding the Indian psyche is very important. As an example, recently I was asked to set up a meeting with the Aditya Birla group with Roy MacLaren and John Manley who were visiting, ex-ministers. Roy is a particularly close friend. So I phoned Dr. Singh, the chief strategist to the Birlas. He is kind of retired now. He is the go-to guy. I asked Dr. Singh if he would please establish a respectful meeting with the Birlas. He said he would get everybody there. He had the CEOs of their companies there and everything else. He said no problem. We had emails back and forth. Dr. Singh sent me a note saying: "Gary, I look forward to seeing you in India." Oops! It is my sixtieth birthday the day of that meeting. I will not be in India. At the end of the day, I phoned Dr. Singh back, apologized, and told him I could not be there. Dr. Singh said to me, "Gary, it is important. If you are not here, it will just be protocol. If you come, we will do business."
I ended up establishing a video link to show respect to Dr. Singh. The way you do business, it takes time, and it is not just me. Countless Canadian companies have done this, but we need to recognize and celebrate these successes. We need to promote these successes with Indians. We need to clearly identify on the high-tech side where we can marry the resourcing we want.
I remember one evening having a dinner in my role as vice-chair of the Canada-India Business Council. I was sitting with a man who makes rear-end axles. What do I know about rear-end axles? The Canada-India Business Council married a person that made trucks in India who needed this rear-end axle. That is what we should be doing.
The Internet is a marvellous source. How do we marry emerging businesses, manufacturing, whatever they are in India, with the great technical skills we have in Canada not in the "we are going to have a trade mission" but in the "we will do business together"? It will take some different, dynamic thinking, but I know we could do it if we put our mind to it. More of the same will get more of the same.
Senator Mahovlich: Thank you, Mr. Comerford, for coming here, but I am not so sure you are the gentleman we wanted. When you speak of India, you make me feel as if I want to go and see what it is all about, and we were hoping that you would come up with all the answers so we do not need to go and visit India. Would you recommend the committee visit India?
Mr. Comerford: Absolutely.
Senator Mahovlich: We have been to China. We did a thorough study in China and were very impressed.
Mr. Comerford: You should be.
Senator Smith: Russia as well.
Senator Mahovlich: Shortly after I returned from China, I heard Condoleezza Rice speak on China. She said things that I was thinking, but if I had not experienced China, I would not have had the right experience or understood what she was talking about, how China is coming along and being aggressive in the world economy. I am sure India would have the same effect on me.
Mr. Comerford: If I use an example, two or three years ago — I lose track of the time sometimes — Tom d'Aquino, Chief Executive of the Canadian Council of Chief Executives, took a group of CEOs to India. Mr. Stewart of Sun Life could not go, so he asked me to accompany him, which I did.
Senator Mahovlich: You have been over there 79 times.
Mr. Comerford: Yes, I have been and returned from India 79 times. They spent a week there, and you could see the lights bulbs going on.
Someone asked me why I know that I have been to India 79 times. The truthful answer is because the first time I went I did not want to go back. I counted the number of times because, in 1996, it was a broken country. In 1996, there was no infrastructure. You could not get a fresh glass of water unless it was out of a bottle, so you worried about your health constantly.
Somewhere around the fifth or eighth visit something happened, rather than looking at the broken infrastructure, I was looking at the people, the opportunity, and I saw a country that I could do business with. It evolved into a total infatuation in many respects.
When I am on an airplane landing in Mumbai, a part of me feels like I am actually going home, which is kind of strange. I am about as Canadian as you get, but there is an association that develops, and I would love the Senate to experience that feeling. I would be pleased to in any way help facilitate that because it is only by that type of visible show of force that the message will get across.
Senator Mahovlich: You mentioned our representation in India and you spoke highly of our High Commissioner. Do we have enough representation there, enough offices in certain cities?
Mr. Comerford: Given the business we are doing today and the approaches taken by the government, my sense is yes. There has been a good effort to open a number of additional offices, and that is a bit of a proportional thing.
It depends, senator, on the approach you take. Do you build them and hope they will come or do you generate such an activity that you need them to handle the business? When I build a business, for example, I send business developers out first and try to generate the revenue and then build the infrastructure. In today's world, you can do a lot remotely.
I am not hung up about having five more consulate offices. I am hung up about having five more centres having 10 times the business they are doing and the consulate will come.
[Translation]
Senator Fortin-Duplessis: Thank you for your very impressive and lively speech. You are very positive about the relations with India and I am pleased to see that high-level visits are really very important for you in order to forge ties with this country.
Quebec, the province that I represent, has no hesitation in supporting a free trade agreement between Canada and India. We feel that it would be a tremendous opportunity for our two economies.
But the tariffs are still very high in India. In a sector like the automotive industry, foreign builders, who want to conduct business in that country, must pay a 40 per cent tariff. The tariffs are significantly lower in sectors where India has pressing needs, like infrastructure construction, for example. The country has also come up with an ambitious investment plan of $500 billion over five to ten years.
In your opinion, what should be the scope of a potential agreement between India and Canada?
[English]
Mr. Comerford: Thank you, senator, for that excellent question. I am not sure I am 100 per cent qualified to answer this. My feeling is that in the past sometimes I have referred to Porter, who has this theory of the value chain, and every business has a different value chain.
In the value chain of my business, financial services, Sun Life Financial and RGA are able to control that value chain from start to finish. While only 26 per cent is the equity portion that we can have, it is not quite a high tariff but it is an illustration, you have to ask yourself if you are prepared to do business knowing that is all you can own. My employer made the decision that it was worthwhile. It was better to own 26 per cent of a company with population of 1 billion people and the potential rather than 100 per cent of something much smaller.
As far as tariffs are concerned, some industries will be more important to Canada than others. It may well be that, in the free trade agreement, compromise has to take place. If we look for a perfect free trade agreement on all sectors, I will be a very old man before it happens. On the other hand, if we look strategically at what battlefield we want to play on, what is important to us, and it may well be automotive, then we deal.
In my experience in negotiating with my Indian partners, they are very tough negotiators but very fair because they need to see the fairness on both sides. As we negotiate, if we can clearly demonstrate the advantages that come, my experience is they listen.
Two things have to be taken into consideration. There is a huge division between the speed with which Indian industry acts today and Indian government and getting Indian industry to influence Indian government. That is far more powerful than Canadian government trying to influence Indian government.
Again, when the Birlas, the Tatas see it is advantageous, they have profound influence in Delhi. I would say this is where we have to pick our battles, have a measured approach and show success. Time is not on our side.
[Translation]
Senator Fortin-Duplessis: You have partially answered my question, but do you see any other solutions? What problems must be solved to strengthen trade relations between Canada and India?
If you have anything else to add, we would be very interested in hearing it.
[English]
Mr. Comerford: I wish I had all the answers. My experience is building a business and doing business in India is like running a marathon. I ran the London Marathon on Sunday. If I looked at the 42 kilometres ahead of me, I would not start. The reason I run marathons broken down into kilometre sections is because I have more successes, and I would view the same thing with business in India and Canada's position. You asked what will cause the trade. Success will cause the trade, success in key industries for us.
There are numerous success stories in Canada. If you look at agriculture and chickpeas, Canada is the largest provider of chickpeas to India. There are a number of these stories around. Working with Canadian business, we have to identify where we can have these successes.
I apologize. I have never negotiated a free trade agreement, so it is not my area of expertise, but I do know that when my partners and my business associates see that I am successful in X, they want to do 10X with me; but if I cannot demonstrate X, they are very hesitant to jump to 10X. I am not sure I am answering the question but I am not sure I am the one that should be.
Senator Nolin: Thank you for coming on such short notice. The more I hear your answers and comments, the more I am interested to understand why you left Russia.
Mr. Comerford: It is a very simple answer. My business partners decided to leave. One of our strategies is that when the multinationals of the world, such as Met Life, the Sun Life, Manulife and AIG go to a market and begin writing business in a sufficient amount, we go. We had a small office in Russia to support them. We asked do I take it in the next step and begin putting actuaries and underwriters in or do I keep it the same? The next thing I knew, the major life companies were pulling out, so there was no business for me there.
My very first early indication in my business is that my direct writers have to be successful. It is not a slight on all of Russia; it is a comment that in the sector I am performing in right now there is nowhere near the potential that there is in other markets, for example, the Middle East where 10 months ago I set up a office. I can see a very healthy flow of revenue already, so I follow that.
Senator Nolin: The life insurance business is not prosperous in Russia.
Mr. Comerford: It is not prosperous enough for me as a reinsurer to go in at this time. I have an office in Poland, so I can service Russia from there. If one of my major customers began having a product or a service that was causing them great success, I would join them, but it has been a tough market for multinationals up until now.
Senator Nolin: In your opening remarks, you referred to your first venture in India and the fact that you hired or selected someone who was from India to open the door first.
Mr. Comerford: Yes.
Senator Nolin: Can we conclude with that affirmation that the Indian diaspora in Canada is a tremendous and important resource for anyone in Canada who wants to do business in India?
Mr. Comerford: Yes. Again, thank you for asking that question. The Indian diaspora have been so kind and in just a couple of years recognized me with a president's award.
It is incredibly important, and if I look at the first wave of entrepreneurial interaction, you can clearly see that the Indian diaspora plays an important role. Why? They are familiar. There is often a language comfort. They have relatives and everything else.
I do not believe, though, that Canada can build a long-term sustainable strategy around the diaspora alone. That is not diminishing the importance at all, but when you look at core organizations, whether it is Sun Life I referred to in the past, or others that look at it, it is important that it is not just diaspora-centric but is Canada-centric with our skills and everything else. I have clearly taken advantage of the relationship with people of Indian heritage to be successful.
Vijay Singh, an initial consultant I hired who is still at Sun Life today and running the outsourcing operation in Gurgaon, was incredibly important to me. Vijay smoked and I did not. It used to be a joke that Vijay learned more in the corridor — he would go to the staircase to smoke — about what was happening in negotiations than what I was supposedly doing in the main room. That ability to have a relationship was important.
It happens on many different fronts. There is no silver bullet, no one bullet. It is a multi-faceted, well-organized, orchestrated effort to be successful.
Senator Smith: Let me say at the outset that I certainly agree with your encouragement of members of the committee to go to India. I have been fortunate to go many times, mostly for private business reasons but also on public events. I was there at events with Premier McGuinty and there with Minister Stockwell Day, and it does make a dent.
You just touched on this but I want to review it a bit. There is one reason I feel the Canada India thing is off to potentially such a great start. You touched on the language issue. I have been at many meetings there. I cannot recall a single instance where there was an interpreter. The operating language of the business community is English. I have been to China a number of times. You have to use an interpreter all the time and that does make for quite a difference.
You have to go beyond the diaspora, but when you have people, and I have been at meetings with Prem Watsa over there. That is about as heavy-duty as you get for a Canadian businessman, and you do not find any better network than the kind he has there. I think you have the same sort of instincts on the potential, but am I missing something?
Mr. Comerford: No. When Senator Segal sat on the Sun Life board, I remember when I was putting the case together that was going before the Sun Life board — this is 15 years ago — of why India. There were preconceptions of what India was. The trouble was India would validate it. A lot of it was true, but you had to see beyond that.
I started my remarks with the demographics, the language and British common law. When I was negotiating the contract with Adesh Gupta, I did it in English. We had the lawyers sitting with us. I could have been in downtown New York. It is the exact same experience. The only difference is occasionally they would turn the television on to watch the cricket match if there was an important one on. That was about the only difference.
The ability for me to read those documents in India, to understand the subtlety of the language, that it will not be subject to some interpreter translating it later on, was very important because I know what I meant. I remember one particular phrase that has come back to my mind, and that was "to endeavour to." They wanted me to guarantee I would do something and I said I would endeavour to do it. The language in the contract is "endeavour" and I did. It did not quite work out the way I hoped but I sure endeavoured. I felt I lived up to the contract. That could have been translated in China many different ways and I guarantee I would not have won. That is very important.
People also talk, if I may take an extension of this, about corruption. Is India corrupt? Are there issues of inappropriate behaviour? There are reports, clearly published, that demonstrate that it is unquestioned, yes. However, for companies, it is what you choose to do and the message you send. The modern businesses that are coming in, the partnerships and the way the new businesses are evolving, they want IPOs. They want today's standards of ethics. Why? Because that is required in order to be a world-class multinational organization, and that is what Canada brings. My partner never once asked me to compromise on something because that was very clear from the outset what was happening.
When you align language, legal, potential of the market demographics and all those things, it is a perfect store for future success. When I look at my boys who are 27 years and 21 years and I look 20 years down the road for them, growing up in the Niagara Peninsula, I had far more of an association with Buffalo than Toronto. The north-south axis will continue to be robust and important to Canada, absolutely, but the future is Asia. The future is these emerging economies, and we have to get our unfair share of that market being a country of only 35 million.
The question is what will you do to help to make it happen? It needs a strong initiative and wind in the sails from our government.
Senator Finley: Thank you for an interesting and animated conversation. I only have one general question concerning the third point of your five-point action plan, the "Canada Now" branding campaign. I have branded companies, I have branded products, I have even branded a few opposition leaders, but I have never branded a country.
I wonder if you could give me some idea of how one might do this to such a huge geographic and highly populous country such a great distance away. How does one brand a country?
Mr. Comerford: About 10 years ago, I remember visiting with the trade officials in Mumbai. They were having this mini-campaign about beginning to brand Canada and India. I thought it was great. It had the maple leaf, the flags and it was simplistic. It was about countries working together. They had enough money to do it for a year and then the money dried up and it was gone.
As you well know, doing branding is about consistency of message and delivery. It cannot be a short-term effort. This would have to be a very long-term campaign. If you are planning to do it over four months and then quit, please do not waste my money. However, if you are looking at a five-year positioning, please go ahead.
I remember the Davos conference three or four years ago, when India exploded in the market. If by no coincidence, I have titled this "Canada Now," and India branded that Davos conference "India Now," as you may recall if you happened to be there at the time. It was powerful. They did that by having their Prime Minister and their business leaders present. They had videos. They found a forum in their target audience. Their target audience were world leaders. News media was constantly looking for a story. Not every newspaper picked it up, but it was news. Why? What is this all about? It was the beginning of a campaign, and that is the closest I have seen to a country from a standing start on the economic side doing a pretty good job.
As far as Canada and India is concerned, we can work through our diasporas; we can work through our existing businesses; we can extend funds that are for promotional purposes with our High Commissioner in the trade offices. It is about visibility.
I am not anticipating that the local merchant will understand Canada. That is not the target. However, there are probably a hundred thousand people in India, and we want them to think of Canada as an alternative. We want to become part of the choice because currently, we are not part of their choice. That is what I mean by the branding, so we obtain a sufficient knowledge to make that happen.
Senator Di Nino: I, too, extend my welcome. I found your comments very encouraging and simply state that I support them.
I have had some experience in India. I have been there eight times, always as a private citizen. I am as excited about India as you are, and I am delighted to have you put your thoughts on the record.
I will ask a couple of pointed questions about issues that come up all the time. You talk about corruption. Do you believe that you can do business in India without being involved in corrupt practices?
Mr. Comerford: Yes.
Senator Di Nino: Do you feel strongly that India is a place where you can do business without having to be concerned about corruption?
Mr. Comerford: I referred to Porter's value chain, and I will go back to that. In the particular business I deal with, reinsurance or direct life insurance, we control the value chain completely. The example of Birla Sun Life is a good one. We designed the product internally, we have our own sales force, we choose our own bank as partners, we do all the administration, pay the claims et cetera.
If I am building a bridge in Gujarat, it is different; I have to deal with local politicians, permits, cement manufacturers and local small industry that are laden with opportunities for inappropriate behaviour. That situation would be much more difficult to do business with, and that must be recognized. That does not mean that you have to compromise your principles to the point of being inappropriate.
There was an incident, one that I could see coming. I was at a meeting early on when a list was presented to me and told my name, being the company's name I was representing, was not on the list. My heart was in my throat. I had never experienced this before. I did not know what to do. I am sitting there scared to death. They leave the room. Vijay was with me. He looked at me and I looked at him. I said, "Are we leaving?" He said, "We are leaving right now." We never went back. This was a very well-placed high individual. I am sure that everyone that went in did not have their name on the list. It was a game.
I have always worked for companies where it was unquestioned what I was to do. That is so important. The clarity of the message I had was that it is not an option for me as an individual, and it is not an option for me as a corporate executive. The value you bring is important because you never get it back. Once you lose it, you do not get it back.
Senator Di Nino: I totally agree with you, and I just wanted you to put that on the record. I appreciate your response.
We heard from the Minister of Road Transport and Highways, Minister Nath, a few weeks back. In response to a comment I made, he said Canada may have awakened but has not risen. Could you comment based around the things you think we are doing right and the things you think we are doing wrong?
Mr. Comerford: Minister Nath is one of the greatest advocates of Canada. I remember being in Montreal with Minister Nath and Premier Charest at a meeting three or four years ago. The discussion was around the same issue: Where are you, Canada? You are not visible enough.
I forget exactly the relationship, but if I recall Minister Nath, they were using the educational facilities in Montreal to advance the knowledge and education of his children. I remember there was a linkage there. He went out of his way to say, "We want to embrace you, we want to do business, but you are quiet." As he would say, "You are still in bed." That was several years ago. We articulate what we should do, but we have to get up and do it.
Once a year, I do a presentation to a large group of high school students. I am a Rotarian, which I have been for 30 some-odd years. It is called Camp Enterprise. The presentation I give to these kids is about getting on the bus. I say, "Kids, when you were six years old, if you did not get on the bus, you would not begin your education. Your parents saw to it that you got on the bus, but now, as emerging adults, if you do not choose to get on the bus, you will not enjoy the life you could."
We have to get on the bus. We talk about the bus. We line up for the bus. We say it is a great bus. We have to get on it, but it does not just happen; we must make a deliberate effort. I said this to 17-year-olds three weeks ago. If I may share the same thing with you, we have to get on the bus.
Senator Robichaud: Getting on the bus leads me to my question, which you partially answered to Senator Mahovlich, with respect to a visit to India. We are presently considering writing a report, and we are discussing the merit and the timing of a visit to India. Would we miss the bus if we did not go?
Mr. Comerford: Absolutely. More importantly, it is the manifestation. This is but another drop of water towards the building of a lake, but it is a very important drop. Politicians and political centres of influence will respect the visit enormously. With regard to the fact we have not done so, you will take some criticism. You will be welcomed, but you will be asked, "Where have you been?" As long as you understand that it is kind of like a big brother saying it is okay but not to do something again, that is fine.
Absolutely, you should go. However, it must be orchestrated to a sense of understanding how you can contribute and how you can advance the file. It is not just taking a bunch of corporate guys like me along to educate them about India. We have done that.
What value-added could you bring? Is it on free trade? Is it in launching the Canada brand? What is it? I would suggest that you link yourself with a specific positive event that causes the welcoming to be bright.
Senator Stollery: Would you recommend the Commonwealth Games, for example, on October 2 in Delhi.
The Chair: To follow up on that, are you saying that there should be a specific objective in going to India so that it is not what a prime minister can do, such as a photo op or opening doors at a higher level, et cetera, but to have some specific reason to go?
One of the difficulties is that India is a whole continent. Where would we maximize our efforts as parliamentarians, for example, if we were to go as a group? What would you say that the value-added to what has been done by the Prime Minister, by businesses, councils and foundations, where would you go and what where would you place the emphasis?
Mr. Comerford: There are many alternatives. My first reaction would be Delhi in order to embrace the work of High Commissioner. I think political influence is something that you could have, particularly with the free trade. There are the FIPAs and other trade organizations that are still negotiating. The length of time it is taking us to close these up is too long. If you can close these agreements, I urge you to do so. When Prime Minister Singh visits, if we can close the atomic issue, that would be positive. If you as senators visit, that is another step forward. We knock off the free trade issue and it is done, but it is not taken as the final step; it is just the beginning.
Respectfully, I think you have to determine what is best. The more you can do to show you are serious and it is different, the more impact you will have. If you visit the Taj Mahal, if you want to see an Indian fort, one of the board members on Birla Sun Life happens to own one and a visit to the Maharaja can be arranged for you. It is a lovely tour. However, that will not promote trade. I would absolutely encourage you to visit the Taj Mahal because it is an Indian icon and it is respectful. Certain things you do because they are respectful; other things you do because you are trying to move the file along. Respect is very important in India.
My wife has never been to India and we are invited to a wedding in October. Kathy is nervous about going. She is like I was on my first trip. I told her we have to go to the Taj, and she gets it. In many respects, it is part of their heritage and they are very proud of it.
Understanding the culture and what needs to be done is a little complicated, but it can be figured out. One of the kids asked me a couple of weeks ago, "How do you deal with these different cultures?" I use one word: respect. If you show respect, it is amazing what you can get away with when you make mistakes. Canadians were taught that; that is part of our DNA. That is something that is very important.
To me, it would be like 60-40 and 70-30; the emphasis is Delhi and then Mumbai because it is an important business capital.
The Chair: You have said that Canada should brand India as its first, above all other countries. How would you build a rationale on that from a political point of view to the government when we are next door to the United States and everyone else is saying China is the most important partner on which to focus? Many are going toward regional groupings such that Australia picks Asia because of its geographic proximity, and we have Central and South America as part of our hemisphere.
How do you build the case that it should be India and not the other areas that also have trade opportunities and that we also rely on for our multilateral relationships, security issues, et cetera? How do we make that case?
Mr. Comerford: I put it there to stimulate debate. I put it there because it is probably politically impossible.
Senator Mahovlich: You do not want to put all your eggs in one basket.
Mr. Comerford: I am not advocating putting all the eggs in one basket. When I write a strategy for international expansion, I use the expression, "We are planting flags." That is, you are opening offices in many places around the world and how do you support them? I call it supply lines, very simply. I learned quickly in business, again in my world of financial services, that fewer is better. As I was targeted and deliberate and through the resources en masse to be successful, I was far more successful.
At one point, we had a strategy to look at multiple new offices in places such as Peru, Chile, China and India. We picked two of those, China and India, focused on those, drilled down and put the resources out that were required. That was my business training and my business approach.
That did not mean I was abandoning all the other offices I was doing business. It took an extraordinary focus and effort on those two markets. Right now, I think there is a better opportunity for Canada to focus on India. That is my biased opinion, having done business in both countries. It is easier and more opportunistic to focus on India; it is a choice. What we are doing right now is not a political issue; it is an economic issue. Building businesses is about choice.
When I read Margaret Thatcher's memoirs, they must have been 850 pages long, if you remember. Somewhere around page 550, I got to the definition of a compromise: When two intelligent people cannot agree on the right answer, they agree on the wrong answer. I am saying that compromise can be politically fine, but in this particular case, if you want to be successful, you have to make deliberate choices. That will take political will.
Senator Downe: My question is about the conditions for business. You mentioned that Sun Life had been in India since 1892, and then in 1956 they were nationalized. Now I understand from your testimony that there is a cap of ownership of 26 per cent.
Are you concerned about the political climate changing and your investment being lost? Is that a concern for Canadian business, or are those days behind us when dealing with India?
Mr. Comerford: It is all about measuring risk. Today, the political risk level in India is relatively low. It is the world's largest democracy. If you look at the parliamentary system and the coalition governments, I do not recall exactly how many different parties there are, but historically there have been 18 or 20 different parties. They manage to bring this together and make things happen. You have the Congress, the BJP and others of significance, but they have to work on a compromise. They have managed to do that.
I was in Britain last week and we spoke about a hung parliament, where nothing is done. In India, it is slow and methodical. Had we thought that the 26 per cent would be taken to 49 per cent or 50 per cent long ago? Absolutely. However, you must be respectful that it is their country and they set the rules, just like you as legislators set the rules for Canada. Therefore, you have to choose whether the rules that are being set are appropriate. We chose that we could build a sustainable business that way.
Over the time I have been there, everything has shown that India has political stability. I sometimes refer to it as consistency of legislation. Businesses find it hard to work internationally when there is inconsistency—the change of governments and the rules change. However, in India, the rules do not change. You may not like that, but they do not change. They are basically what they are and they evolve. In business, you can choose to deal with that consistency. Compared to many countries, India is better. I would just as soon leave it at that rather than do a comparison with other countries.
Senator Downe: I appreciate you may not know this, but if India has done any free trade agreements with other countries, then the rules would be changed and be more flexible. For example, if Canada were to do a free trade agreement with India, the conditions for the companies coming to Canada would be the same as the Canadian companies going to India.
Are you aware of any free trade agreements that have opened up any opportunities for companies? For example, you hoped your 26 per cent would go to 49 per cent or 51 per cent and that has not happened. Have you seen any improvement in trade negotiations with India?
Mr. Comerford: I am not qualified to speak on that subject. I apologize.
Senator Downe: I appreciate that.
Mr. Comerford: Someone was talking about that not too long ago. Something makes me think there have been discussions. I do not know if there is a free trade agreement. I would have to go to an expert on that.
Senator Downe: I do not know myself. That is why I asked the question. We will find out.
Senator Stollery: I have one question that came from your question about South America and the hemisphere, et cetera, as against India. You said that you looked at Chile.
Mr. Comerford: I have spent a lot of time in Chile.
Senator Stollery: I spent 25 or 30 years in much of South America. I speak and read Spanish fluently, and I have studied some of those countries to great length, so I understand the system pretty well. My conclusion is that all of these countries are different. There is an element of erratic behaviour in quite a few of them and their economies are not particularly great.
I went with a friend of mine to his bank in Central Colombia, a place called Nueva. He did not have his bank account, so he took $2 out of the ABM. I have never seen anyone take out only $2. The size of the economies and the markets, for example in life insurance, they would differ, but they are small when you get right down to it.
I am curious about your comment compared to a market like India with how many million people emerging into the middle class.
Mr. Comerford: Depending on the yardstick, 350 to 500 million people are moving into the middle class.
Senator Stollery: Excluding Mexico, but in Central America, such as Colombia, Ecuador, Chile — I always exclude Brazil because, as you all know, it is Portuguese speaking. I can read Portuguese, but I do not speak it. It is a separate item. I am talking about the other places aside from Brazil.
Mr. Comerford: I have been sending teams down to Brazil.
Senator Stollery: Brazil is a different story.
Mr. Comerford: It does bring up a whole new set of issues. If I may speak to my experience in Latin America, when I was first put in the international operation, Sun Life had hired an individual to run our operation in Peru. I thought that was a good idea. It was friendly, a good regulator, et cetera. When I did my sums and the business analysis, it was to be about equivalent to one of our branches in Scarborough. The front-end work to write that first life insurance policy is the same whether you are going to India or to Peru.
The same thing is true as far as a trade focus, in that it is hard in Latin America to have a focus on them because they do not think that way. They think very much individually.
Senator Stollery: There is no place such as Latin America; it does not exist.
Mr. Comerford: It does not exist. Therefore, the kind of campaign you need to get the critical mass is more difficult. That does not mean we should not have a trade relationship. I am not saying that. I am asking whether it is primary on your radar.
Even when you are doing business, for example, with part of an acquisition I was involved with in Chile, it was wonderful. The currency fluctuations took a good investment and put it on the other side of being appropriate. Brazil is always the next emerging market.
Senator Stollery: They have been saying that since 1958.
Mr. Comerford: I had a team doing an investigation of the market there. Other markets in the Middle East, India and China, it is a natural river of activity in my business to get on the raft and ride it. I am not seeing that in Brazil, and that is the best market.
If I choose, as I choose Latin America, the resources required to penetrate all of those markets the way I require is expensive and absorbs a huge amount of management time. Often when you do this, it is a distraction. I think it would be the same for the Canadian government. Pick your bet. That is what we need to do right now. Spreading it out in fairness will not get you the results that a selective strategy will get you.
Senator Finley: I was recently reading in the Economic Times about the tremendous explosion of infrastructure in India and the potential opportunities for Canadian businesses in that country. I also note that one of the sponsors of the Canada-India Business Council is Bombardier.
Bombardier has acknowledged the potential size of the Indian market, with a potential for anywhere up to 850 airplanes over the next 20 years. They say much of this will be based on a realignment of the Indian aviation market and transport business. Do you have any familiarity with that subject?
Many years ago, I was in the aviation industry and worked in India, by the way. There was a constant demand that X number of the product be produced in the country that you are selling it to. It used to be called offsets, but I do not know what they are called now.
Could you speak about doing business in that kind of industry as opposed to the financial services industry? How easy is it? What kind of unique things does one have to do to get into that marketplace?
Mr. Comerford: It is hard for me to speak on all aspects of that subject, but I can speak from a user perspective and from that of the person on the ground.
When I first went to India in 1996, there was one airline I could fly on, Jet Airways, and it was just starting. They hired young, well-groomed university graduates and called them the young and restless. It was a stark difference from Air India or Indian Airlines. The planes were safe.
The airports, as you walked through them, were a mess. They were horrible. I wish I had taken videos of the first couple of times that my baggage arrived in Mumbai. It was insane. The people and baggage were piled up. Chaotic is the only word to describe it.
When I was there last time, I landed at the same airport. It has new turnstiles, et cetera. It is the same old building, unfortunately, where they have plastered over the marble. It looks great, but as far as being as efficient, that is another question.
The number one issue at Indian airports right now is that there are not enough landing times. The demand is for people to move from A to B. You are right that there will be a huge demand for fuel-efficient, modern aircraft. That is at the forefront of the type of business activity that is happening.
India needs modern airports and control systems. In Bangalore, that is happening. That will happen. As that infrastructure happens, it is like Canada 150 years ago with the railways. It opened the country. India did not have paved roads linking their major cities. Minister Nath claims they are doing 30 kilometres an hour or something. I said to Jim Bradley, "Could you do the 30 miles by the Queen Elizabeth by my house first? It has taken us 10 years."
Things happen so much faster. The opportunity, senator, in my mind, is absolutely there. In Canada, we have superb technology with Bombardier. You referred to aircraft. I do not know if you have ever had the pleasure of being on a railcar in India, as I have. May I say that they could use some modernization?
Senator Stollery: Were you on the roof?
Mr. Comerford: I was never on the roof.
Senator Di Nino: That is because he paid.
Mr. Comerford: It is unbelievable. That is the system that does link the country together. Whose railcar will it be? Will it be Bombardier or a European manufacturer? What can we do to ensure that Bombardier is in the front of the line? We have those Bombardier cars, Bombardier airplanes and SNC-Lavalin trucks putting the paved roads down, and by having the delight of seeing RIM launched in India. It is Canadian technology in India. I took great pride in rubbing this in with my Indian friends. We can do it, and we have the technology. We just have to get to the head of the line.
Senator Finley: We have to get on the bus. Thank you.
Senator Di Nino: Minister Stockwell Day opened up a trade office in Gujarat, and I was delighted to see that. We still have some issues with that state. Have you done business in that state? How do you think we should deal with that irritant?
Mr. Comerford: Yes, I have opened up offices. I have been there myself many times. I was in India for the Gujarat earthquake many years ago. There are many benefits of having Canadian businesses there. Many Canadian businesses, including Sun Life, made a substantial donation to the victims of the Gujarat earthquake at the time. Our Canadian companies are going there, and it is not all one way. It is through ventures like that that you build relations.
Looking at political unrest, from the information I read, outside influences often target India for various reasons. I was there when the attack took place on the railway system a number of years ago. It was frightening. I remember the first phone call I got was Don Stewart, CEO of Sun Life. "Where are you?" It was on the world news. It was frightening, as was the incident with the Taj Mahal Palace and the Oberoi Hotel and other locations a year and a half ago. It is concerning.
When I was in Mumbai, scores of people were killed. At the time, I was CEO of the asset management company, and our employees coming to work used the railway stations that were bombed. There was an incredible resiliency. Life went on. That is the attitude you have to take. There will always be negative influences. We talked about political risk in a country. We can talk about terrorist risk. At the Sun Life Centre, where I was, supposedly someone was backing a truck full of fertilizer next to the stock exchange, and it certainly would have taken out my office if they had done that.
We live in perilous times, but we cannot stop doing what we need to do. We need to be respectful. More is accomplished by doing business and having an engagement than by having an isolationist policy because you may disagree with a particular aspect. It is important that it is noted, but it is more important that we have dialogue and that we not isolate particular regions.
The Chair: Mr. Comerford, you can see how much interest you have generated. You are an excellent salesman for India, for your company, and especially for Canada. We thank you for coming and sharing your experience and your ideas with us.
Mr. Comerford: Thank you, senators.
The Chair: Senators, we are adjourned until next Wednesday.
(The committee adjourned.)