Global Business: Building Relationships

You have likely seen Freshwater Fish in the news recently.

It seems the Canadian Taxpayers Federation and some commercial fishers are not happy with the cost of doing international business.

Freshwater has aggressively increased its prices internationally, entered new markets (Russia, Romania) and launched value-added products (pike caviar, perch fillets), all with a focus to offset the strong Canadian dollar and eventually raise prices to fishers.

The sales and marketing costs of Canadian food companies with significant export sales will typically be 10-11% or more. Freshwater spends 9-10%, which is at the low end of the range for this expense.

One of Freshwater’s so-called ‘questionable expenses’ is a $2,435 hotel bill from Paris, France, the centre for five of Freshwater’s customers. Paris hotels with four to five stars have rooms ranging anywhere from just over $1,000 to almost $3,000 a night. A $2,435 bill for five nights definitely doesn’t mean luxury in Paris.

Wining and dining customers is also an area of concern as our critics are outraged that Freshwater expenses include thousands in $100 per person dinners. Meals are perhaps the most common and accepted form of business entertainment because they precede or follow business discussion.

Customers who have been treated to dinner or entertainment by Freshwater feel they have a close relationship with the Corporation. This keeps them loyal to us, even when we notify them of a price increase.

Freshwater has a strict travel and entertainment policy that meets Financial Administration Act (FAA) requirements and all travel and entertainment expenses are audited annually by the Office of the Auditor General of Canada.

Ultimately, the measure of how well money is spent is in the profitability of the business and returns to fishers. The fact is Freshwater has been working to a plan designed to offset the damage done by the strong Canadian dollar. After several difficult years of implementing the plan, sales prices are up, margins are up and Freshwater is expecting this will contribute to more positive financial results for the fiscal year closing April 30, 2012. For the season beginning May 1, 2012, prices to fishers have been increased for a few species and size grades; the increases are small but it is a start.