Living/Working November 17, 2017

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South Korea eyes artificial intelligence partners in B.C.

Country’s AI industry looks to Canada in quest for alliances and global market share
Future Robot’s latest model at the company’s headquarters in Seongnam, near Seoul, South Korea. The company creates “social AI”: robots that interact with people by interpreting emotional responses, either through facial expressions or tone of speech, and then respond with emotive answers | Chuck Chiang

At Seoul’s Incheon International Airport – one of the world’s largest international flight hubs – two new “stars” are capturing the attention of passengers who cross their paths.

They’re not stars of “K-pop,” South Korea’s increasingly ubiquitous cultural exports of boy bands and girl groups that are now household names in most of Asia. Rather, they are robots – one that guides passengers to their flights by scanning their boarding passes, another a giant Roomba-like floor cleaner that asks politely, in Korean and English, to pass pedestrians in the machine’s cleaning path.

“Where are you going? Have a nice flight!” the robot says cheerfully when a passenger leaves the view of its camera, while another group of travellers inevitably blocks the robot’s path and starts a new wave of photo-taking and hand-waving. (The scene bears a striking resemblance to one of the futuristic scenarios introduced in the Vancouver International Airport’s solicitation for public opinions for its 2037 master plan, although airport representatives said no robots are planned at this time.)

This is the next industrial revolution as envisioned by leading observers around the world: the advent of artificial intelligence (AI) not only in people’s daily lives, but also in the overall global economy. And South Korea, deeming itself several years behind industry leaders like China and the United States, is looking for like-minded partners such as Canada to help it get back in the race.

“It’s very hard for Canada and Korea to develop [large-scale] AI technologies in isolation from other markets,” said Kim Deogtae of the Korea Artificial Intelligence Association, who is also a university professor and president of his own AI tech firm DTWARE Inc. “But I do think that there’s an opportunity for companies on the two sides to co-operate, preferably with corresponding government support.”

That partnership can happen in a number of ways, Kim said. Either Canadian investors can bring Korean-developed technologies like Incheon airport’s robots (made by conglomerate LG) to the North American and European markets through the North American Free Trade Agreement and the Canada-European Union Comprehensive Economic and Trade Agreement  or B.C.-based AI developers and startups can use South Korea’s market access to China, Japan and Southeast Asia to expand.

B.C. and the rest of Canada can also be the answer for South Korea’s lack of AI-development talent. Kim said the East Asian nation struggles in that area because its traditional education system focuses on memorization rather than critical thinking.

Canada, in turn, could be a partner in directly supplying AI developers or providing adequate space for Korean students to study the technology.

“It is difficult to develop high-level AI in the Korean educational environment,” he said. “But Korean students are diligent and fast-learning; that is our strength. So if there’s an environment to learn AI, I believe Koreans will be fast to adopt and excel … and we have to look overseas.”

The key, Kim said, would be to join forces to overcome each side’s smaller domestic market for sales, capital and talent when compared with the aforementioned “big two,” China and the U.S.

There are already cases happening in other parts of Canada: a month ago, Korean conglomerate Samsung (KRX:005930) announced it will open its own AI research laboratory in Montreal after three years of working with Canadian teams.

Major players from other countries have also started moving into Canada to mine its AI-technology talent. Google’s (Nasdaq:GOOGL) DeepMind research team – based in Great Britain – chose Edmonton as its first international lab in July. All this is happening with the backdrop of $125 million in earmarked Canadian federal funding for attracting AI development to Canada, as outlined in the federal Liberal government’s 2017 budget.

Most of Ottawa’s effort is concentrated in three metropolitan areas: Edmonton, Montreal and Toronto-Waterloo. But one executive from a Vancouver financial technology (fintech) company that uses AI in its proprietary platform connecting lenders and borrowers said B.C. does have its niche in that sector, and it is up to B.C. companies to spearhead collaborations in markets like South Korea.

“It’s important for anyone who’s not well known in the global market to go out and explain the model and its value proposition,” said Alex Mateesco, CEO of Lendery, which plans to open an office in South Korea to expand its lending platform to Asia.

“I don’t think we should expect other people to know us more than what we know about ourselves. We have to do our own parts to be present internationally … because if we don’t take initiative on that market [fintech], someone else will go carve it out.”

Focusing on a niche market to excel is a good idea for Vancouver’s AI sector, said the CEO of one of South Korea’s leading AI startups. Song Sekyong, who has built Future Robot Co. Ltd. from its launch in 2009 to a company with a market valuation of US$20 million this year, said it was able to succeed by carving out a space within AI that’s underserved by American and Chinese companies, which tend to focus on massive, cloud-storage-based systems that process an enormous amount of data over a wide network. Two examples of the latter are Google’s AlphaGo and Amazon’s (Nasdaq:AMZN) AWS.

Song’s company, however, found its market in creating “social AI”: robots that interact with people by interpreting emotional responses, either through facial expressions or tone of speech, and then responding in kind with emotive answers. In some cases, these “soul-ware” robots even have animated faces to respond with their own emotive reactions.

Up to 30 of these robots will be deployed at the 2018 Pyeongchang Winter Olympic Games. Other applications could include seniors care, personal organizer/living assistance and front-line customer service in various retail settings.

“Most people think of AI as one thing,” Song said. “But that’s not true. It’s a lot more than just Amazon and Google, and there are a lot of variations within the potential market. What interests us is how we can apply AI so that people and AI live together and having the technology fill a very human need – a ‘warm’ technology, if you will.”

Song, whose company employs approximately 35 people, is anticipating Future Robot’s valuation to double next year and hit US$100 million by 2025.

He is also eyeing an initial public offering in a western market – again, an area that could bring Future Robot’s brand to Canada. But Song also noted that he and other AI developers are aware of some people’s fear of AI and its potential to eliminate human jobs. To those concerns, Song said it’s not that jobs will disappear with AI, but rather they will transform.

“If you look at history, technology shifts and labour trends have always happened in tandem,” he said, noting AI will require a large number of programmers and technicians to maintain. “A robot can replace human labour, but it can’t replace a human being.”

Lendery’s Mateesco added that any B.C. companies looking to jump into transpacific AI co-operation deals must always consider the human element to achieve market acceptance.

“The mistake a lot of companies make is to push a technology and make it a top-down decision, which can be hard on consumers who are not ready. The point of technology is to serve people, to make lives more comfortable; so you have to let people decide what makes them comfortable.”


Note: Some interviews conducted for the story were completed at Invest Korea in Seoul, for which the reporter’s airfare and accommodations were provided by the Korea Trade-Investment Promotion Agency.


Infographic: The dos and don'ts of naming your business

What are some of the points to consider when coming up with a name for your business? This infographic also breaks down some famous examples ...

Infographic by: The Business Backer. Infographic source: Visual Capitalist .


Vancouver’s sensational sommeliers

Keep your glass topped with some of the city’s top wine pros
Vancouver's top sommeliers (left to right): Lisa Haley, Jesse Walters, Bryant Mao, Jill Spoor and Jason Yamasaki | Photo: ViranllyLiemena / Allison Kuhl / Contributed

Dining out in Vancouver has never been better. We are spoiled for choice of great restaurants serving every type of cuisine imaginable. What really impresses me, though, is the critical mass of the top-notch wine pros who are managing lists and keeping my glass topped up. Here's just a few of the who's who that should be on your radar and why.

Hawksworth wine director Bryant Mao is one of the pillars of the industry and has received many deserving accolades. His service is impeccable and knowledge vast. Despite an affable personality, he lets the wine take the spotlight rather than stealing it for himself. He also gives due credit and opportunity to his fine sommelier team. And Mao always makes sure I have my glass of Champagne within seconds of sitting down.

Jesse Walters is the sommelier at Burdock & Co., which won a Platinum Award for Wine Program Excellence at the Vancouver Intentional Wine Festival this year. The wine list is tiny and focuses exclusively on natural wines. But it’s not just about the selections; it's also about how they are presented. Walters is 100 per cent passion and enthusiasm, zero per cent pretention. He wholeheartedly embraces the list’s philosophy and gives context to each of the wines. It is absolutely impossible not to feel charmed and comfortable in Walters' presence.

As group sommelier for the Joey Restaurant Group, Jason Yamasaki is on fire. After being named Best Sommelier of B.C. in 2015 he continues to challenge himself in wine competitions while mentoring others. He was recently named Chianti Classico Ambassador for British Columbia after coming out on top in a blind tasting and oral exam. Besides his eloquence, ability and understanding of the wines and the region, it was his humility that impressed the jury.

Being a sommelier isn’t limited to picking cool wines and putting on a dazzling show. Behind the scenes, managing a list is a balancing act with a whole host of challenges. One of them is maneuvering the distribution system to get wine into a restaurant, particularly problematic as of late. Rather than simply griping about it, L’Abattoir wine director Lisa Haley is addressing the issue head on by presenting it directly to Todd Cooper, executive director of the BC Liquor Distribution Branch. She's rallying the troops and encouraging her colleagues to formulate their complaints as well. Her efforts aren’t just for her restaurant but the industry as a whole.

For Jill Spoor, wine director of Botanist at the Pacific Rim, giving back meant collaborating on a wine that was released this year. Crafted with the team at Okanagan Crush Pad, it’s called Terroir and is a fragrant white blend of Riesling, Pinot Blanc, Pinot Gris and Sauvignon Blanc. Sales proceeds go to the BC Hospitality Foundation for their scholarship program geared at industry professionals looking to pursue higher level wine education certification. You can try Jill Spoor’s Terroir by the glass at Botanist.

And the list could certainly go on. It is a great pleasure getting to know Vancouver’s super somms over a glass at their various establishments. Best of all is the palpable camaraderie – rather than rivalry – that exists between them.



Amazon flirtation good practice for B.C.’s high-tech talent pool

Some might criticize Vancouver’s recent bid to land Amazon HQ2, but I’m not one of them. We shouldn’t be disillusioned that Amazon’s decision seems to be rapidly narrowing in favour of northeast U.S. cities, frustrating Vancouver’s already slender chances. That said, our city mounted a worthy effort and can take some valuable learning away from that, win or lose.

With big ambitions like this, it’s all about persistence. Here’s an idea for what we should do next – based on a strength we already have.

Hundreds of small and medium-sized B.C. companies, often in partnership with larger players, are today quietly making our province a global leader in high tech, responsible forestry, mining and oil and gas. These homegrown firms are meeting a local need for innovation and then exporting their hard-won expertise to all corners of the globe as we shift to a more diversified, green resource economy. They are powerful drivers of sustainability, innovation and competitiveness.

You’ll find these small and medium-sized companies in value-added fields like filtration, satellites, GPS, digital analysis and simulation. They are doing things like radically reducing methane emission from natural gas wells, but also helping Vietnam grapple with the historical legacy of Agent Orange.

The oft-heard view that B.C.’s traditional natural resource economy is approaching its end of life, superseded by the rise of a “new economy” based on technology and innovation, is a dogma not supported by the facts.

In fact, the resource sector is a critical part of B.C.’s new economy, and is busily driving new technology and innovation.

In a recent series at Resource Works entitled Naturally Resourceful, we confirmed that the resource-linked value chain story is for real. At Hatfield Consultants, for example, president Grant Bruce showed us that not only are companies like his exporting high-tech solutions, they’re also sharing our environmental rules and regulations. He cited Indonesia, which has recently developed an environmental assessment process based on the Canadian model. Out of all the possible approaches it could have adopted, Indonesia chose ours. That’s good for all of us.

Despite these successes, the British Columbia brand for responsible, green resource technology exports is woefully underappreciated at home.

We obviously have work to do. The question is, what work should we do on this front?

Some forward thinkers are envisioning a program that supports emerging B.C. companies by helping them build relationships with larger companies through technology demonstration, investment and project partnerships.

Significant co-ordination, including the use of market intelligence that government is well suited to gather, is one requirement if B.C. is to get to the next level. Those trying to advance the conversation should be supplied with key messages that allow them to effectively communicate about “Brand B.C.,” and these messages must be targeted to relevant audiences.

Piloting and demonstrating technology capabilities in B.C., as well as in target markets around the world, is a way to build relationships with major resource companies and other key influencers. It will also be necessary to refine our understanding of the clusters of B.C. technologies that can access supply chains.

All of that is going to take a co-ordinated effort by levels of government, industry and thought leaders.

The benefits could be enormous.

Consider how the huge Vancouver-based mining and mineral exploration industry could become a centre of excellence in sourcing rechargeable battery inputs for the coming boom in electric vehicles.

Meantime, local innovation is already part of how liquefied natural gas proponents pursuing export deals that will help reduce greenhouse gas emissions are positioning themselves for big wins. And it is a factor in Canada’s quest for a carbon-neutral barrel of oil.

Imagine if we invested the same enthusiasm and resources into examining the cross-   cutting technology sector as was poured into the recent Amazon bid. We have an opportunity, today, to draw upon our existing strengths in both high tech and resources to create a thriving new sector benefiting people here and around the world. 

Stewart Muir is executive director of the Resource Works Society.

Tickets for the November 29 Naturally Resourceful lunch event are available through Eventbrite. Business in Vancouver readers get a discount with code BV1129.


How government can help build bigger businesses in B.C.

To build a more prosperous economy, new businesses have to be created and some existing firms must grow. The business world is characterized by a high degree of “churn,” with many new entrants together with lots of exits and diverse patterns of expansion and contraction among the pool of surviving companies. Many new firms don’t have a long shelf life. About half close their doors within five years. Of those that hit the five-year mark, most never reach the 50-employee level.

But those that do grow swiftly tend to make disproportionate contributions to our economy. This is partly because as businesses expand, they become more productive – and therefore, on average, pay higher wages. In addition, as firms grow, they are more likely to export and to take advantage of the economies of scale that come from doing business beyond local markets.

As documented in a new Business Council of British Columbia (BCBC) report on scaling up B.C. businesses (, the province would benefit if we were able to develop more significant-sized local firms.

Today, 404,000 businesses are registered in British Columbia. Of these, 98% have fewer than 50 employees, and more than half are self-employed proprietors with no paid staff. Eight in 10 B.C. businesses have fewer than five employees.

Only 7,900 enterprises in the province employ 50 or more people. Just over 60% of these have between 50 and 99 staff, while 25% have 100 to 199. Just 340 B.C. business establishments have more than 500 employees, while 870 have between 200 and 499.

Many researchers and policy-makers have a keen interest in high-growth companies, sometimes called “gazelles.” There is no agreed definition of the term. Some studies treat job creation as the key indicator. Others focus on revenue growth. Regardless of the definition, only 1% to 2% of companies in Canada can be categorized as “gazelles.” This is the group from which most larger-scale enterprises emerge over time.

Looking at B.C. businesses with paid workers (and thus ignoring the self-employed), those with 50 or more employees account for more jobs (895,500 as of 2016) than their smaller counterparts (635,400).

Since 2011, job growth among B.C. businesses with 50 or more staff has been faster than among smaller firms. The frequently cited claim that micro and other small businesses are responsible for most private-sector jobs, and for almost all net job creation, is not validated by the data. Particularly in a growing economy, all size categories of businesses typically are adding jobs over time.

If governments in Canada and B.C. want to strengthen the “middle class,” foster the creation of higher-paying jobs and stimulate innovation, they need to better align current polices and programs with these objectives. Action is required in several areas.

One is taxation. By 2018, the combined federal-provincial small-business income tax rate in B.C. will drop to 11%. At the $500,000 earnings threshold, the tax rate jumps to 27% – an increase in marginal rates of almost 250%. A smarter approach would be to adopt a tiered structure with a gentler rise in tax rates as business earnings increase. The current Canadian regime of research and development tax credits is also ripe for change. In its present form, it does little to reward medium-sized companies that successfully commercialize new ideas and technologies.

A second area where policy could make a positive difference is public procurement. Innovative Canadian small and medium-sized enterprises (SMEs) find it very difficult to sell to governments and other public-sector customers. The United States and some European countries have moved aggressively to open up public-sector markets to domestic firms with innovative products and solutions. Governments in Canada should do the same.

We also need to encourage more SMEs to participate in international markets by selling abroad and developing linkages into the supply chains of multinational enterprises that dominate global commerce. For a small jurisdiction like B.C., exports are a vital pathway to growth in all industries that produce traded goods and services. Governments can direct resources to enable more companies to become “export-ready” and tap into the unmatched opportunities available in foreign markets.

For companies looking to scale up, often the scarcest resource is the managerial and technical know-how needed to drive growth and penetrate new markets. A strategy to develop a larger cadre of significant-sized Canadian companies must put talent acquisition at its core. Especially in innovation-driven sectors such as IT, life sciences, clean tech and advanced manufacturing, this means accessing global markets to find the right mix of skills, experience and leadership capability. The federal government’s new Global Skills Strategy is a step in the right direction. Closer to home, B.C.’s Provincial Nominee Program is also an effective tool to recruit top-level talent. Both programs should be expanded as part of a multi-pronged strategy to help more Canadian businesses scale up. 

Jock Finlayson is the Business Council of British Columbia’s executive vice-president and chief policy officer; Ken Peacock is the council’s chief economist.


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