1. Realize a World of Opportunity
The presentation is intended to be about how financial institutions can use us – and not just about what we can sell to them or their clients.
Emphasize at the outset:
We are looking to partner with the financial institutions.
We are not looking to compete with them.
We want to help them meet their targets by providing security.
We want to help our mutual clients do more with the financial institutions.
Presentation to Kawartha Manufacturers Association September 23, 2008

2. EDC’s Global Footprint
CANADA: St. John’s – Moncton - Halifax
Quebec City - Montreal
Windsor - London – Mississauga - Toronto
Calgary – Edmonton – Vancouver - Winnipeg
MUMBAI
MOSCOW
SHANGHAI
NEW DELHI
WARSAW
OTTAWA
BEIJING
MONTERREY
SANTIAGO
ABU DHABI
SÃO PAULO
MEXICO CITY
Brief intro to EDC’s global footprint:
Head office The head office and executive offices are located at 151 O'Connor St. Ottawa, Ontario, K1A 1K3.
Global reach EDC has offices from coast to coast across Canada as well as international representations in seven countries: Brazil, Poland & Central Europe, China, India, Mexico, Russia & CIS, and Malaysia & Southeast Asia. EDC provides services to Canadian exporters and investors in up to 200 markets.
SINGAPORE
RIO DE JANEIRO

3. Expanding Canada’s Global Trade
In 2007, EDC …
Served 6,963 customers …
84% of which were small- or medium-sized businesses
Operated in 183 markets
Facilitated $77.7 billion in global trade …
27% of which was in emerging markets
PRIMARY MESSAGE: EDC is a global player – and financial institutions can use us as leverage to augment the support they can offer to their clients
ADDITIONAL MESSAGE: EDC is looking to partner with financial institutions, and NOT to compete with them.
Benefits to the financial institution of partnering with EDC:
Complements the financial institution’s offerings to its customers, especially where customer needs stretch the financial institution’s ability to cover off additional or specific risks
Strengthens the financial institution's offerings by broadening & enhancing its range of solutions to serve customers – while at the same time helping to manage its own risk
Differentiates the financial institution in a competitive market by creatively leveraging EDC solutions to provide greater value added to your customers
Helps to grow prospects, increased share of customers' wallets, and/or its portfolio - customer retention and growth through enhanced value-added
The Case Study can be used to walk through the ways in which the financial institution can use EDC

4. The Integrative Trade Model
Canadian Company
Foreign Customers
Export Sales
Canadian Foreign Affiliate
Imported
Inputs
Outbound
Direct
Investment
Foreign-sourced
Foreign Suppliers
Imported Inputs
International trade was traditionally been thought of as the exchange of commodities and manufactured items between countries.
Global economy trade is
Merchandise
Trade in services – legal, management, banking, consulting, training, warehousing
Technology
Investments
Financial transfers
- RIM example
Affiliate Sales

5. Knowing the Game: International Trade Rules
International Trade Terms – Incoterms (International Chamber of Commerce)
Dispute Settlement
Negotiation, mediation, arbitration, litigation
Technical Standards
Safety
Packaging
Labeling
Quality
Health and Environmental Regulations
Documentation

6. Global Logistics Transporting goods – ocean, air, rail, truck, train
Custom clearance
Documentation
Storage
Delivery
Transporting Goods - India
Custom clearance – give fish story to Egypt
Documentation - Export permit, certificate of origin, packing list, carnet, inspection certificates, bill of lading, consular invoice, insurance certificate, certificate of origin… etc.
Storage – do the facilities have security, fire proof, who is responsible for loadind/unloading, insurance, tracking
Delivery – responsibility - Incoterms

7. Market Entry and Market Distribution
Product
Place
Price
Promotion
Distribution channels
Plant and warehouse locations

8. Legal Considerations Dispute resolution Limitation on damages
Location of arbitration or court proceedings
Intellectual property – Patents
Civil Law, Common Law, Religious Law (i.e. Sharia Law)

9. Business Cultures Phone vs. face to face
Traditional vs. non-traditional
Verbal communication vs. non verbal
Language and interpreters
Hospitality and gift giving
Art of Negotiating
Traditional – asian, middle east
Non-traditional – North America, Europe
Negotiating – Japan example of staying quiet. “perhaps, maybe, we’ll consider it” usually means No in China

10. Political and Financial Risks
Currency fluctuations
Currency conversion
Payment methods and techniques
Performance bonds
Cancellation of import/export permits
Expropriation
AND MOST IMPORTANT OF ALL……

11. Getting PAID!!!!

12. Why Go Global? Opened doors to unprecedented opportunities
Access to global supply chains
Producing for a world market instead of a merely local one
a manufacturer can develop economies of scale
lower production costs
lower prices
mitigate risk
Diverse trading partners helps safeguard against an economic crisis i.e.. “Credit Crunch” in the U.S.)
Where is your competition?
Trade is responsible for 1/5 of the jobs in Canada.
- Countries trade b/c it enables them to acquire goods they cannot produce themselves. As a a result of trade they can specialize in areas where they enjoy a competitive advantage, and sell their expertise to those that need it.
companies that aggressively construct global supply chains of their own, and actively participate in those of others reap the greatest rewards
“Going Global” is the way to take advantage of the opportunities; it provides a stmulus to companies to increase their competitive advantages

13. Case Study - Kawartha Export Inc.
Electrical control equipment for water treatment industry w/world-class software to manage the system
Sales: $8 million / Equity: $3.2 million / Op LOC: $2 million – OK for normal day-to-day ops
Situation
US$2 million contract to supply a system to a buyer in Brazil. This is 2x the size of normal contract, but standard technology
Terms: 85% net 60 shipment / commissioning + delivery of a 24-month warranty bond
Buyer has requested 5-year financing
Chinese subcontractor needs advance payment & payment by ILC before starting
Manufacturing costs = $1.25 million
Cash flow over 9-month manufacturing period = - $1.25 million

14. Delivery and Installation
Kawartha Export Inc.
Delivery and Installation
Manufacturing Period
Pre-contract
Period
Credit Period
Warranty Period
Final
Payment
Shipment
Contract Signing
9 months
60d
Non-payment
Risk (15%)
Risk (85%)
Warranty
Bond
Buyer
Financing
time
Cash
flow
ILC to
Chinese
supplier
Advance
Payment
Slide opens with just a blank timeline to provide the option of talking through the risks and solutions the financial institution would face if their client came in with this situation. Alternatively, you can immediately launch the contract details graphics and start to build the situation with the bubbles.
WIP
LOC
F/X Risk

15. Kawartha Export Inc. … 2010 Final Payment Shipment time 60d
Opportunities - and Risks - Abroad
Follow-on foreign investment opportunities may arise related to export transactions
Integration into global supply chains
Establishment of off-shore production facilities
JV or other investment partnerships
But with opportunities come risks and the need for financial support
Final
Payment
Shipment
60d
Canadian
Direct
Investment
Abroad
time
Canadian Direct Investment Abroad
A wide range of products can contribute to an overall solution
The Export Guarantee Program can be used to guarantee the financial institution up to 100% on loans extended to acquire assets abroad
A Financial Security Guarantee to the financial institution can backstop domestic guarantees issued to help a sub located abroad obtain an LOC from a foreign financial institution
Political Risk Insurance can protect
The investor against in-country political risks like expropriation, transfer & conversion problems and war damage
The financial institution on project loans in developing countries
To name a few …

16. EDC Solutions – Buyer Risks
Who Pays?
Buyer becomes insolvent
Accounts Receivable Insurance
Contract Frustration Insurance
Single Buyer Insurance
EXPORTProtect
Exporter
Buyer defaults on payment
Buyer cancels contract
Buyer is a sovereign entity
Political Risk Insurance
Buyer makes a wrongful call on a contract bond
Performance Security Insurance
Buyer needs vendor financing
Foreign Buyer Financing
Buyer

17. EDC Solutions – Exporter Risks
Who Pays?
Exporter defaults on its operating loan
Export Guarantee Program
Financial Institution
Exporter defaults on its term loan
Exporter’s contract bond is called by the buyer
Performance Security Guarantee
Exporter defaults on its F/X facility
Foreign Exchange Guarantee
Exporter’s supplier bond is called
Financial Security Guarantee
Foreign financial institution calls standby L/C (i.e., security for foreign financial institution)

18. Our Services Loan Guarantees Financing Insurance Bonding www.edc.ca
Export Guarantee Program offers risk-sharing guarantees to Canadian financial institutions for loan related export contracts or general corporate purpose facilities.
Financial Institution Guarantee Program provides cover to Canadian and international financial institutions financing the sale of Canadian exports to customers in developing markets.
EXPORTExpressCredit offers export credit loans to companies with little access to the cash they need.
Security Compliance Loan is available for up to $150,000 to finance the costs related to becoming C-TPAT compliant
Equity Investments – EDC engages in both direct and indirect equity investments.
Note Purchases involving simple payment terms on export contracts with high-quality foreign buyers.
Canadian Direct Investment Abroad – a wide range of financing structures is available to suit the needs of the investment and to address the ongoing working capital needs of foreign affiliates.
Foreign Buyer Financing solutions provide one to ten-year coverage for up to 85% of the sale.
Lines of Credit to foreign companies who repeatedly buy from Canadian companies and to foreign financial institutions or intermediaries that onlend money to foreign buyers.
Corporate Loan Syndications pull together multiple financial institutioning partners to fund a borrower’s large, medium-term capital requirements.
Leasing - EDC does not act as a lessor but can provide funding to lessors.
Project Finance - limited-recourse financing for large-scale infrastructure and industrial projects.
Account Receivable Insurance covers receivables up to 90 per cent of losses resulting from commercial or political risks.
Single Buyer Insurance covers unlimited sales to one customer for six months on contracts worth up to USD$250,000.
EXPORTProtect covers single export transactions for up to USD$250,000.
Contract Frustration Insurance covers up to 90 per cent of losses for one export contract.
Documentary Credit Insurance covers the financial institution for 90 per cent of losses resulting from commercial or political risks on documentary credits it confirms, negotiates, accepts or pays.
Political Risk Insurance protects overseas assets, including equipment and manufacturing facilities.
Performance Security Insurance covers up to 95 per cent of losses if the buyer demands payment of a bond issued by the exporter’s financial institution without valid reason.
Bonding
Performance Security Guarantee fully protects the financial institution in the event of a call on a contractual guarantee it issues on an exporter’s behalf.
Surety Bond Insurance fully protects a surety company in the event of a call on a contractual guarantee it issues on an exporter’s behalf.
Foreign Exchange Facility Guarantee -gives the financial institution a guarantee in lieu of collateral so the exporter can buy a foreign exchange contract to protect against currency fluctuations.
Financial Security Guarantee -replaces the collateral usually needed to secure a variety of payment guarantees, including operating lines of credit with foreign financial institutions, letters of guarantee for suppliers, regulatory, utilities, etc.

19. Resources Forum for International Trade and Training www.fitt.ca
Export Source
Canadian Trade Commissioner Service
Dun and Bradstreet’s “Exporter’s Encyclopedia”
Product Map and Trade Map
and
Industry Canada strategis.ic.gc.ca

20. Ken Giffen Account Manager 416-640-7611 kgiffen@edc.ca
Involved in an export transaction or investment abroad? Call us. We’d love to talk to you
Update Name, Title, Telephone Number and
Ken Giffen
Account Manager