Evaluation of the Canadian Trade Offices (CTOs) in China - Summary Report

Evaluation of the Canadian Trade Offices (CTOs) in China Full report

Why is it important?

In 2007 and in 2013, Canada expanded its Trade Commissioner Services (TCS) with the creation of two-person Canadian trade offices (CTOs) in emerging markets of China, Brazil and India. The CTOs expanded Canada’s presence in order to help Canadian firms identify and seize business opportunities in key secondary markets.

• The ten CTOs located across China have had a structural deficit annually since FY2010/11.
• This is the first evaluation of the CTOs in China since the Canadian Commercial Corporation (CCC) took over their operations in FY2009/10.

This evaluation focused on the performance in China with secondary observations from India and Brazil.

What the evaluation assessed:

• CTOs’ effectiveness in contributing to the promotion and growth of Canadian trade and investments.
• The efficiency of CTOs approach to resource utilization.
• The efficiency of the governance and organizational approach of the CTOs and its Trade Commissioner Services (TCS).

The evaluation questions that were asked:

The extent to which the CTOs are effectively contributing to the promotion and growth of Canadian trade and investments.

• Have the CTOs achieved their expected results?
• Have CTOs been able to responded or seek opportunities in the second tier cities?

The extent to which the resource utilization approach of the CTOs is efficient.

• Have the mission and CTO network been allocated resources efficiently?
• Has the current CTO model been able to adjust to changing circumstances?
• Are there other approaches to delivering the TCS in second tier cities?

The extent to which the governance and organizational approach of the CTOs and its trade commissioners are efficient.

• Is the CTO model efficient in supporting the TCS in the country?
• What types of support and how much of it is needed from GAC headquarters and the missions in China?

• Evaluation Scope: 2011/12 – 2016/17
• Total funding from the Grants and Contributions System (GCS) and Global Markets Action Plan (GMAP): $9.550M
• Additional funds from the Asia-Pacific Branch (OGM) (deficit): $2.740M
• Data Sources:
  • Interviews (n=114)
  • Site visits (n=13 in China and India)
  • File and document review
  • TRIO2 database (2013 forward)
  • TCS Client Satisfaction Survey
• Evaluation Completed: April 2017

What the evaluation found

Performance

• The CTOs make a positive contribution to Trade Commissioner Services in China. However, their contribution to the growth of Canadian trade and investment cannot be accurately quantified as the information has not been consistently or completely captured. Performance results showed that their services focussed on the basics of the Trade Commissioner Service (TCS) and they did not rely on outcalls to generate leads. Overall, there was a high level of client satisfaction for their work. The planning of their expected results—Key Performance Indicators (KPIs) have yet to be aligned to the business plans for the individual CTOs. Further, the successes achieved by each CTO were not consistently captured in recent fiscal years. The China Trade Network has captured successes more broadly than GAC’s trade performance systems and analysis unit’s definition to include Opportunities Pursued as successes.
• CTOs value extends beyond services and results defined in KPIs. TRIO2 (GAC’s client relation management system) only partially captured the TCS work of the CTOs. They have supported high-level visits; authenticated local contacts which can require significant efforts; and regularly sent market intelligence to Canadian missions in China. Working to support broader needs of other Canadian mission in China is not captured in TRIO2. Moreover, China’s business environment significantly values relationships and networks. Thus, having CTOs in second tier markets is essential as it takes effort to establish and maintain those relationships. This was reflected in the types of outcalls CTOs made to private, government and non-governmental contacts.
• Some of the challenges of China’s CTOs are systemic. The China Trade Network has additional risks and challenges that will remain without tailored solutions to address them. It is worth noting that some steps have been taken to adjust operations, which demonstrates efforts to improve the use of resources in selected areas. This includes a decentralized management in 2016 and assigning assistant trade commissioners to support the education sector. Nevertheless, opportunities to find solutions to some of the challenges have yet to be maximized.
• There has been a deficit in operating the CTOs. The actual costs of the CTO Program in China have exceeded the available funding since inception. Increasing program costs were due to several factors including inflation, exchange rate fluctuation, increasing salaries and management fees. The Program filled the funding gap through the reallocation of internal resources while it sought more sustainable approaches to addressing the deficit. This included working with CCC to reduce costs, obtaining Quasi-Statutory Framework status (the standard for missions abroad to protect against fluctuations in exchange rates and inflation) and seeking additional funding.
• Global Affairs Canada has pursued a two Locally Engaged Staff (LES) model which is considered to be standard with little change over time. While the CTO model is perceived as nimble and flexible, there has been little flexibility and nimbleness observed in practice. Of note, a number of like-minded countries offer similar commercial services in China’s second-tier markets. Most of their trade offices were generally concentrated in the same locations. While all models have advantages and disadvantages, stakeholders stated that Canada’s current model compared favourably.

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