########################################
#Written by David Tam, 1996.           #
#davidkftam@netscape.net Copyright 1999#
########################################

David Tam
Tuesday, December 3, 1996.

                             Business Press Review
                             =====================

McKenna, Barrie. "Tech firms answer Quebec's call". The Globe and Mail.
Saturday, November 30, 1996. B7.                    ------------------

    In the area known as Silicon Valley North, the province of Quebec is seeing
success in its attempts to lure small, high-technology companies to locate
across the river in Hull, Quebec.  Cities such as Hull and neighboring Aylmer
are beginning to see the migration of companies from Kanata and Nepean.  For
instance, ShowbaseMedia Inc. will be relocating on the Quebec side because of
the generous grants offered by the Quebec government, research and development
tax credits, an abundance of local venture capital, and cheaper rents.

    This growing region, known as the Outaouais region, is currently home to
approximately 60 high-tech companies, employing 1000.  By comparison, the
Ottawa-Carleton region houses roughly 700 companies, employing 40 000 people.
Despite this comparison, the Outaouais region is aggressively pitching Quebec's
advantages to companies in the Ottawa region.  Also, despite political
uncertainties in Quebec, many high-tech companies do not see this as an issue
because of the highly mobile natural of the high-tech business.  Many say that
the R&D tax credits and other financial incentives far outweigh any long-term
risks.

    In further support of this opinion, many also claim that they view the
entire region encompassing Ottawa, Carleton, Kanata, Nepean, Hull, and Aylmer
as one large community.  Because of the proximity of these cities to each
other, there are no real geographical differences.  From an international
perspective, these companies are still considered to be in the Silicon Valley
North community.  As Mr. Desautels, president of ShowbaseMedia, states "We
could have been on the Ottawa side or in Kanata, but it's just as easy to
attract good people over here.  We are close to other companies [in the
industry]."

    Locating in the province of Quebec has many advantages.  The city of Hull
offers up to a two-year tax holiday on municipal taxes. A company in Quebec
with annual sales of $200 000 or less is refunded 82 cents of every dollar
spent on R&D (by piggybacking federal and provincial R&D tax credits).  In
contrast, this only amounts to 50 to 60 cents in Ontario.  The Quebec
government also offers loan guarantees that target R&D startups, expansions or
modernizations.  The guarantee covers 60 % to 90 % of a bank loan.  Venture
capital sources, especially for small companies who seek $200 000 to $300 000
in capital, are also more readily available.

    This article presents a concrete example of the importance of "location,
location, location!".  In my opinion, this situation presents opportunities for
entrepreneurs who wish to start high-tech companies.  They can locate their
companies in the Silicon Valley North community (receiving all of the
benefits), and also take full advantage of the financial benefits offered by
the Quebec government.