Samsung Canada's new Vancouver R&D centre reflects B.C.'s changing economy

Samsung Canada has become the latest high-tech giant to expand its footprint in Vancouver.

On Thursday (November 28), it announced its first Canadian research and development centre has opened in the city.

It comes not long after Microsoft Canada opened a new store in Metropolis at Metrotown. Perhaps not coincidentally, that's where Samsung launched its first Canadian retail outlet last year, which came after an Apple store was established.

Meanwhile, Vancouver-based social-media analytics firm HootSuite has been on a hiring spree after raising $165 million in the summer.

Facebook also set up shop on West Pender Street earlier this year.

Each of these are indications the broader changes taking place in the B.C. economy.

An SFU report earlier this year noted that professional, scientific, and technical services made up $10.3 billion of B.C.'s gross domestic product in 2012.

That has left previous economic mainstays in the dust.

Agriculture, forestry, fishing, and hunting—which were central to economic life in the early 20th century—only amounted to $3.4 billion of provincial gross domestic product in 2012. That's less than a third of the value of the sector comprising high-tech companies.

The Samsung Canada research and development facility will provide global technical support for the B2B [business to business] customers.

According to H.T. Kim, the president and CEO of Samsung Canada, B.C. has become a hub for technological innovation.

"With a skilled Canadian talent base to draw from, the team will help Samsung continue to lead the industry—both at home and abroad—by driving product innovation," Kim said in a company news release.

Meanwhile, BC Stats released a report in October tracking 41 business and economic-climate indicators that can influence the growth of the province's high-tech sector.

In many areas, B.C. is performing very well in comparison to other provinces, notably in its "strong educational attainment in the general population".

In 2012, 84.8 percent of British Columbians 15 years and older had a high-school diploma, which was the highest ratio in the country. Ontario and Quebec were only at 77 percent and 81.7 percent, respectively.

B.C. universities have done well in securing technology licences and patents, with UBC leading the country in the amount of income it generates from this area.

The province ranked third in business research and development spending in proportion to gross domestic product.

On the downside, B.C.-based businesses have not fared as well as counterparts in other provinces in obtaining patents.

And the number of B.C. graduates in architecture, engineering, and related technologies is still below the Canadian average.

The high-tech sector is known for its volatility. As HootSuite was expanding in October, Pixar Canada was shutting down its operations in Vancouver.

The local video-game industry has also gone through booms and busts, most notably with the flight of jobs to places like Montreal, where the provincial government is less greedy in taxing this sector. And the SFU report indicated that there is still a small pool of executive talent and a lack of critical mass in the overall B.C. technology sector.

But the report also noted that there is an opportunity to build a comparative advantage in the green-clean tech industries. That's been a priority of Mayor Gregor Robertson.

In the meantime, giants like Facebook and Samsung seem to have discovered something worthwhile in Vancouver, justifying substantial investments.

That's more than can be said for most other cities in North America.

Comments (16) Add New Comment
Arthur Vandelay
"The local video-game industry has also gone through booms and busts, most notably with the flight of jobs to places like Montreal, where the provincial government is less greedy in taxing this sector."

So Charlie, I take it your position is that corporate taxes are too high in BC and this is scaring away jobs to other jurisdictions? Was this your position with say, the HST? Or is that one not a job repellant? Or are you saying that the provincial government should have corporate tax credit scheme for every possible industry sector or any group organized enough to come looking for government concessions? This wouldn't be considered the "corporate cronyism" that I read about in the GS ad nauseum? Like ELectronic Arts is some sort of corporate charity case that can barely feed itself?

This is why nobody believes the left on taxes or economic matters in general.
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Charlie Smith
Arthur Vandelay (which I'm sure is a pseudonym),

If you've read my articles over the years, you will see that I've always been much more critical of the low marginal tax rates on high-income individuals.

The capital-gains taxes, which largely benefit the rich, are also skewed.

Corporate profits are either taxed, reinvested, or paid out as dividends to shareholders.

If capital gains were taxed on a level playing field with employment income, there wouldn't be as much need to jack up corporate taxes.

The HST was a monumental tax shift from the corporate sector to individuals.

In an economy suffering from a decline in demand (which is different from the problems of inflation), this was not a smart way to go at that time.

Does that answer your question?

Charlie Smith
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Hazlit
@Arthur Vandelay

Your comment is incoherent. The position on taxes is simple. Companies have a responsibility to pay them. The fact that companies can play locations off one another in choosing where to do business is terrible. Charlie's suggestion is about as good a solution as we're going to get.
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Ben Forester
You reference the opening of a Microsoft store in a mall and then reference the fact that the local tech industry has outpaced such mega-industries as ... hunting? ... as part of an indication of a local tech boom? May as well just compared the tech industries of 1913 Vancouver with 2013 Vancouver. Kudos to any local tech that has some success but look back 12 years or so at the state of the local tech and biotech industries and ask where they are now .. and why.
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tedo
very little to no tech success in vancouver it's a real estate and marijuana town...Vancouverites are all about the quick buck.....the most un-ambitious city in the world
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Alan Layton
Attracting any sector to Vancouver is a tough job because of the extremely high business tax, rents and housing prices. There are a number of suburbs around Vancouver eager to be big players and they are falling all over themselves to steal whatever business they can by offering highly subsidized buildings and infrastructure. I work in high tech and although we are situated in a good location in Vancouver, it is very expensive to do so. The only reason we are staying here is that many of the software developers are young and living in apartments in the neighbourhood. As soon as they start to have kids they'll be moving to places like Surrey to be able to buy a house. Surrey will be the big winner in all of this. You might say who would want to live in a cultural wasteland like Surrey and you would have a good point. However, they only need to hop on the sky train to enjoy what Vancouver has to offer. I worry that Vancouver is rapidly becoming a resort and I hope that council starts to turn this around by building more office space and offering tax incentives to high tech and other businesses.
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Arthur Vandelay
@charlie - all tax rates are paid personally because corporate taxes of any kind flow through to consumers in the price of the product. Further, the "rich", because they consume more, especially more non-essentials, are the primary payers of all taxes. Hence, all tax rates need to be competitive to those of your economic competitors, especially in our now global economy. That's the point I was making with HST. We will be there soon because virtually all of our competitors are. Make no mistake, downtown Calgary doesn't have twice as much office space as downtown Vancouver because corporate head offices like country music. All tax rates matter.

That being said, I am heartened to hear that you are not a corporate hater like the bulk of your party since corporations are kinda important in the global economy. The NDPs urge to milk the cow dry is the biggest problem the party has.

I do however disagree with your description of the Liberal govt as greedy for not pulling thir pants down for the gaming industry. At some point, enough is enough and it's just not worth it. I cannot think your greedy remark was anything than more Liberal bashing, which I don't mind if it's remotely earned.

@Hazlit - run along junior, the adults are talking now.
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Bruce
I have to agree with tedo. This is a town of money from questionable sources. What do we have? Real estate bubble pumpers, financed by half money laundering and half by a suicide pact between CMHC and what remains of the middle class, mining companies which is not all that different, and the drug trade itself, and an Ayn-Randite/cult member's spandex sales outlet.

Pop the RE bubble and commodity bubbles (likely to happen at the same time), legalize weed down south (happening), and a slight change in fashion, and Vancouver's standing as the naked emperor it is.
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Bruce
@ Alan

Your description of the problem and the mechanics of retaining tech workers is sound. Your proposed solution though is hopeless.

The only solution is a painful one for some: stop coddling the real estate sector. More "supply" won't help because it goes hand-in-glove with promotion of Vancouver RE as a valid "investment". Halting all assistance by the city in promoting Vancouver as a resort city for the rich, and forcing unused housing onto the rental market, is the only answer.
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Ben Sili
Charlie, I did not steal the money I make. The top 25% are already paying 80% of the benfits enjoyed by the other 75%.
Make a contribution to the welfare of Canadians: become yourself a high bracket taxpayer instead of hoping some bureucrats will steal from my pocket!
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Alan Layton
Bruce, I understand where you are coming from and agree to a certain extent some of the things you are saying, but your view is extremely cynical and you sound like you have a pretty big axe to grind. I believe Vancouver could attract all sorts of business but the current council may not be the best ones to do this.
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RUK
@Hazlit

I don't know why it is a terrible thing that companies would consider corporate tax rate when deciding where to set up shop.

I think that you really mean that companies should accept the paying of tax and not look for better deals.

The problem is that corporate taxes are arbitrary. The rates fluctuate from jurisdiction to jurisdiction - between 1% and 10% provincial tax in Canada along with about 10% federal tax.

That variability suggests to me that the provinces just charge whatever the market can bear. That is acting more like a vendor, seeking top value, than as a government, which is supposed to be impartial, transparent, and minimalist in the consumption of your tax dollars.

What is fair for a company? Given that every single one of their workers pays income tax, and given that there is tax charged on everything they buy and everything they sell, companies are inherent generators of tax.

They then have to face an additional tax on everything they earn (net or gross according to jurisdiction), which goes back to my point about those taxes being arbitrary.

Don't get me wrong: I don't mind paying tax myself because I believe that there are things that everyone needs, and that therefore should be administered by a public body that has no partiality, and that these things aren't free and therefore the public body needs to get sufficient funding. I'm not a "zero tax" anarchist.

But I do believe that because this is 100% coerced money, a government that can't explain why it needs a higher rate than another jurisdiction has no business asking for it.


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mezzanine
"The local video-game industry has also gone through booms and busts, most notably with the flight of jobs to places like Montreal, where the provincial government is less greedy in taxing this sector"

That's misleading - quebec offers not less taxes than BC, but greater subsidies to its gaming industry. When did the GS start advocating for more corporate welfare?

http://www.theglobeandmail.com/report-on-business/how-far-will-quebec-go...

And i don't think the opening of new retail outlets counts towards growing the local tech sector.
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Hazlit
@Arthur Vandelay,

Not only are your arguments incoherent, they are clearly stupid as well.

@RUK--while we're talking coercion let's talk about the coercion in business; there is no such thing as as a non-coercive business. The role of government is to coerce the coercers.

The problem with business is that it can afford to be concerned with the bottom line instead of with people; what we need is a worldwide global tax--so all corporations should be taxed on their worldwide income, whereever they are based.

A business tax should be based on the degree to which the businesss reduces income inequality--including any independent contractors and subcontractors they employ.
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Metastats
$alary of Tech industry is Vancouver is low compared to how expensive the city is. More so you need Hi-tech talent to be able to come to Vancouver but thanks to long LMO/TFW thats its slow and bad experience. It's way easier for tech companies to hire/train and retain techies in US.

Cut taxes on tech sector for startups (esp when its incubating), be easy on LMO/TFW & have high skilled folks to come in from overseas & encourage academia to work closely with startups.
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RUK
@Hazlit

Interesting thoughts.

"while we're talking coercion let's talk about the coercion in business; there is no such thing as as a non-coercive business."

This is a fantastical statement on the face of it. What if my business is freelance writing, music composition? No people, animals or plants were harmed in the production of my products.

"The role of government is to coerce [...]"

Well, to quibble with semantics, the role of government is 180 degree opposite of what you say. The role of goverment is to help all subjects of the government to be as free as they can reasonably be.

However, to execute this role, the government sometimes is obliged to use coercion as its method. For example, the freedom from being raped may require a police officer to use force to catch and arrest. The freedom from being carelessly poisoned may require food inspectors to use wide powers of audit, inspection, fines and criminal charges. Et cetera.

"The problem with business is that it can afford to be concerned with the bottom line instead of with people."

I would turn this around. The problem facing business leaders is that they are obliged by the stock market to focus on short term profit regardless of the human cost. Many business leaders want to be good or at least seen to be good, e.g. at charity fundraisers where I have seen personal cheques written in the hundreds of thousands.

That's the problem, so I would look at market alternatives in addition to or instead of tax.

"A business tax should be based on the degree to which the businesss reduces income inequality--including any independent contractors and subcontractors they employ."

Operationalizing that would be quite a chore, but I love the idea that there is an actual reason for the tax, not just because the local market conditions can bear it.
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