How to do business in Ecuador: successful Canadian companies absorb the local culture

Successful Canadian companies absorb the local culture

Mining, oil, construction and telecommunications comprise the most important sectors of Canadian investment in Ecuador, according to Leslie Smith, second vice-president of the Ecuadorian-Canadian Chamber of Commerce. Smith, who runs an environmental and remediation company in the nation's capital, Quito, says bringing on a good local partner is one of the keys to business success. “It is important to get an Ecuadoran partner that can basically provide you with political insurance so that when you have contractual difficulties with the government–and there almost always are those–there are people who can go and sort it out. But to ensure his loyalty you almost always have to give him a small stake.”

Companies often have to sort out other kinds of problems themselves, says Smith, such as invasions of mining concessions by local prospectors and non-governmental organizations. “A common tactic is to go in by force and stop operations by setting up roadblocks,” he explains. “There's a big confrontation; you try to get the police to go in and resolve the situation and they typically don't do anything, so you have to learn how to deal with the locals yourself. You have to deal with the locals a lot, and Canadian mineral explorers are becoming more competent at this.” Smith notes that the six most advanced mining projects in Ecuador are all controlled by Canadian companies.

Canadians are also involved in the construction of a new Quito airport a few kilometers outside the city core. The project is headed by Canadian Commercial Corp., a crown corporation with a mandate to facilitate international trade–especially with foreign governments. The CCC has acted on behalf of a consortium of Canadian firms, led by Toronto-based Aecon Group Inc. (TSX: ARE), that plans to have the facility ready in 2009.

Ecuador may be a small country of just 13 million inhabitants, but Smith advises Canadian businesses to think twice about planning to expand to neighbouring Colombia and Peru. “I wouldn't recommended trying to work in the Colombian countryside while the war is going on there. As for setting up in the service sector here and trying to also work in Peru, it is slow and difficult to move your equipment back and forth across the border.”

Smith does encourage Canadians who plan business projects in Ecuador to learn Spanish, to have a fluent staff and to become as familiar as possible with the country. “The successful projects that have been completed by Canadians are the ones where the Canadians come down and learn to live the project, live the life here, and become totally immersed in the culture.”