Why Mexicans Don't Drink Molson. Andrea Mandel-Campbell

technology it developed to convert conventional films to its format. The new owners, a pair of New York investment bankers, have signed licensing agreements with theatre operators around the world. There are now 366 big screens running in thirty-six countries, from Russia to Kuwait, while China is the company’s biggest market outside the United States, with twenty-five theatres set to open by 2008.

      John Mendlein, an American biophysicist and lawyer who spent four and a half years working in the Toronto biopharmaceutical sector, traces Canada’s limp salesmanship back to another duo: Fredrick Banting and Charles Best. In 1921, the two Canadian doctors discovered insulin, the lifesaving secretion used to treat diabetes. The Nobel Prize–winning find is one of the greatest medical discoveries of the twentieth century, yet the two doctors never attempted to cash in on their work, considering it “culturally unacceptable,” says Mendlein, to commercialize science.

      A group of Danish scientists, however, were not bothered by similar concerns. On hearing of the Canadian breakthrough they immediately got to work producing insulin, and in 1923 — just two years after the initial discovery— they launched a company and began treating patients. That company, Novo Nordisk, is today a world leader in diabetes treatment, employing twenty thousand people in seventy-eight countries.

      Canada, in comparison, while having made world-leading advances in diabetes and stem cell research, is nowhere on the pharmaceutical industry map, according to Mendlein. It has been outmanoeuvred by everyone from Sweden and Denmark to India. “If you look at where you are on the level of research and biological science, you are probably in the G3,” he says. “But Canada doesn’t even make the G8 of pharmaceutical countries. It’s tragic.” While small towns like Indianapolis, Indiana, and Thousand Oaks, California, have spawned world leaders like Eli Lilly and Amgen, Toronto, which is home to Canada’s largest cluster of biotech firms, has failed to produce a single stand-alone biotech company or blockbuster drug.

      Canada doesn’t even boast an insulin manufacturer; the original University of Toronto laboratory where diabetes was discovered was spun off into Connaught Laboratories, which busied itself with maintaining a domestic monopoly while handing out international licences to the likes of Eli Lilly and Novo Nordisk. It eventually lost its ability to even supply the Canadian market, and was taken over by the federal government in 1972 before being sold to a French pharmaceutical firm. Absorbed into the massive ranks of the world’s number three drug company, Sonafi Aventis, the “Connaught campus” in north Toronto is the only remaining vestige of Canada’s contribution to diabetes treatment.

      “Canada has some software and electronics companies, a little aircraft, but no consumer goods, or cars, and it’s not really happening for computers or pharmaceuticals,” says Mendlein. “You could be the Norway in North America and rely on commodities, but you are not going to be Sweden, which is home to the top-selling drug in the world and probably the car you drive. The question is, where does Canada, which is a much bigger and much more powerful country, fit in?”

      It’s a good question. To answer it, I asked four related questions about the largest supposedly “Canadian” companies to the gauge the country’s entrepreneurial drive and managerial capacity — the basic requirements for creating globally competitive companies:

      1. How many companies were founded by immigrants?

      2. How many had American or other foreign management?

      3. How many were actually subsidiaries or spin-offs of foreign companies? (to be dealt with in Chapter 3)

      4. How many, despite a listing on a Canadian stock exchange, had a CEO and/or a head office located south of the border?

      The answers lead to an astonishing conclusion: an economy on cruise control, with foreigners and foreign-born Canadians at the wheel, while native-born Canadians snooze in the back seat. To begin with, almost every significant high-tech firm to come out of the Ottawa area, known in better times as Silicon Valley North, was started by a clutch of British entrepreneurs. The list includes Cognos, Corel, Zarlink Semiconductor, Mitel Networks, Tundra Semiconductor and Newbridge Networks. The exception — JDS Uniphase — was started by the beret-wearing Slovak, Josef Strauss.

      Hungarian-born Peter Munk founded Barrick Gold, while compatriot Frank Hasenfratz heads up Linamar, Canada’s second-largest auto parts company. Only Magna, the parts giant founded by Austrian-born Frank Stronach, is bigger. Two Germans, Klaus Woerner (now deceased) of ats Automation Tooling Systems, a maker of manufacturing equipment, and Husky’s Robert Schad, round out Canada’s contribution to the tool and die industry. Says Schad of the preponderance of European immigrants:

      “We had a good technical education and then flourished in this country because there was no competition.”

      The field was equally unencumbered for brash and innovative entrepreneurs like Isidore Philosophe, who emigrated from Beirut, turning a basement business into Cinram, the world’s largest manufacturer of cds and dvds; Aldo Bensadoun, the Moroccan-born owner of the Aldo shoe chain; Karl Kaiser, the Austrian co-founder of award-winning Inniskillin wines; Peter Nygärd, the high-flying Finn who launched a textile empire from Winnipeg; and Robert Friedland, the American hippie turned promoter behind the Ivanhoe energy and mining ventures. Moses Znaimer, the architect of the Toronto-based CITY TV media group, was born in Tajikistan, the son of holocaust survivors. Saul Feldberg also survived the war in Poland and went on to found the Global Group of Companies, one of the world’s largest office-furniture manufacturers. German-born Stephen Jarislowsky, the flinty-edged octogenarian heading up the multibillion-dollar investment boutique, Jarislowsky Fraser & Co., escaped from France just as the Nazis invaded in 1941. Even Galen Weston, the grocery scion, was born in Britain, whereas Mike Lazaridis, co-founder of the country’s high-tech darling, Research in Motion, was born in Turkey.

      In perhaps the most telling example of all, Canada’s most iconic brand, Roots, was started by two Americans from Detroit. In the seemingly rare instances in which companies spring from Canadian-born loins, they are rarely managed by Canadians. Scratch beneath the surface of many a Canadian company and you will likely find an American. The elite fraternity oversees such national icons as Air Canada,* CN Rail, Saskatchewan Wheat Pool,† and, until 2006, Canadian Tire.‡ Other alumni include oil company Suncor Energy, electronics manufacturer Celestica, forestry firms Abitibi-Consolidated, Tembec and West Fraser Timber, Magna International and Nortel. Our southern cousins also oversee the mining interests of Cameco, Potash Corporation of Saskatchewan, and INCO, until it was acquired by the Brazilians. Even Stelco, since emerging from bankruptcy protection in March 2006, is run by the American-born former CEO of International Steel. British-born executives run McCain Foods and Talisman Energy, while an Australian headed up Ontario’s Hydro One, the government-owned electrical utility, until resigning over a scandal involving expense accounts in December 2006.

      Some companies are even double dippers. CN, Cott,* Lions Gate Entertainment, NOVA Chemicals, Brookfield Properties (which built the iconic Montreal Forum) and Thomson Financial are not only American-run, but their CEOS all live in the United States. ati Technologies, one of the world’s largest 3d-graphics-chip designers, has the distinction of being a triple dipper. Founded by Kwok Yuen Ho, the son of a wealthy Chinese family dispossessed by the communists, ati’s top management is American, including CEO David Orton, who commutes to work from California.† It seems only fitting, then, that the Canadian Council of Chief Executives, the country’s leading corporate organization, is headed by American-born Chairman Rick George.

      ‡ To foreigners this is striking. “Canadians don’t have confidence in their own abilities. They often bring in Americans to run their companies,” says Boris Rousseff, a European trade consultant to Canadian firms. “It’s an issue of corporate culture. Canadians try to pretend they are not who they are.”

      And therein lies the root of the dilemma. Canadians are ensnared in a kind of Gordian knot: because their economy is essentially run by foreigners, they necessarily downplay or underestimate their own abilities, and by extension their own Canadian brand. And the fact that there are no Canadian brands reinforces Canadians’ suspicions that they have no value. Why is it, asks Andrew Stodart, vice-president