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By James Careless
Canada’s exports to regions other than the United States have soared in the past decade
Numbers don’t lie. According to research compiled by Export Development Canada (EDC), Canadian goods and services exports to Asia between 2004–2013 grew by 89 per cent. Close behind in export growth for the same period were exports to Oceania (including Australia, Japan, and South Korea) with an 84 per cent increase, Africa and the Middle East going up 65 per cent and Europe with 45 per cent growth. The complete data set, which is part of the Institute for Research on Public Policy (IRPP) book-in-progress entitled Redesigning Canadian Trade Policies for New Global Realities, can be found at http://irpp.org/wp-content/uploads/2015/05/AOTS6-koldyk-et-al.pdf.
“The world is buying Canadian exports on an ever-increasing basis,” says Todd Winterhalt, EDC’s VP of international business development. “Moreover, there is lots of room for sales growth in specific areas of the globe for our country’s goods and services.”
Winterhalt points to Europe as the Next Big Market for Canadian exporters, thanks to the Comprehensive Economic and Trade Agreement (CETA) negotiated between Canada and the European Union (EU). CETA is now in the process of being ratified by all parties with an early 2017 deadline. “When CETA goes into effect, Canadian exporters will have access to a market that is bigger than the US or China,” he says. “We see potential for our European exports growing in volume by 30–50 per cent.”
The Greek economic crisis which has dominated recent headlines has overshadowed the rebounding financial health of the EU, says Winterhalt, and the continent’s growing demand for Canadian exports of all kinds. “Obviously our commodities are much wanted by European buyers, but so are our agricultural products, finished goods and business consulting expertise,” he tells 20/20 magazine. “With the reduction in tariffs in such a big market, Europe offers our exporters more opportunities for growth than NAFTA has.”
A second region that offers Canadian companies the chance for huge export growth is southeast Asia. “In countries such as the Philippines and Indonesia, we are seeing a huge increase in the size of the middle class and their buying power,” says Todd Winterhalt. “To put this potential into context, Indonesia’s population is 252 million, not much smaller than the US and its 319 million people.”
In the next five years or so, EDC expects to see export opportunities improve in areas of Africa, particularly in Angola, Nigeria and South Africa. “Here, the demand will be for infrastructure renewal and power generation projects,” Winterhalt says. “These are areas that Canadian firms excel in.”
Clearly, there are all kinds of opportunities for Canadian exporters to prosper in the non-US global market. “But it is not enough to recognize where these opportunities lie,” says Danielle Goldfarb, associate director of the Global Commerce Centre at the Conference Board of Canada. “You have to have what it takes to capitalize on them.”
Specifically, what Canadian exporters need to succeed internationally is a Global Competitive Advantage (GCA); according to the HSBC-commissioned Conference Board report Selling to the World: The Keys to International Business Success. A GCA is a Canadian exporter’s ability to create superior value in the goods and services it sells to its international clients, compared to similar offerings from the exporter’s competition.
“A GCA is not about price alone,” says Goldfarb. “Rather, it describes the entire package that an exporter is offering — the overall value in quality, performance and reliability that the international client is getting for their money.”
Available online at www.hsbc.ca, the HSBC/Conference Board report offers examples of Canadian companies that are successfully leveraging their GCAs in the global export market. Their ranks include Ag Growth International (maker of superior grain handling/storage products), Clearwater Seafoods International (high-quality shellfish), Hammond Power Solutions (cutting-edge electrical equipment), DIRTT Environmental Solutions (customized commercial space interiors) and Westport Innovations (natural gas engines and vehicles), among others.
“All of these Canadian companies offer goods and services that offer real value for money, giving them tangible GCAs,” says Danielle Goldfarb. “They are among the vanguard of Canadian exporters who have gone beyond the Canadian and US markets to become truly global companies.”
These Canadian exporters have the strategic planning, local partners and deep pockets required to master the often-long international sales cycle. “These companies are also attuned to what their international clients want,” says EDC’s Todd Winterhalt. “In particular, these firms have adapted their goods and services to meet the varying needs of their regional clients, and they take pains to keep these goods and services fresh through ongoing improvements.” Many of these companies also take advantage of the export support services offered by EDC, including insurance to protect exporters’ Accounts Receivable payments from non-Canadian clients.
The bottom line: “The non-US global market is one that all Canadian exporters, large and small, should be taking a long, hard look at,” says Philip Turi, CME’s general counsel and director of global business services. “The long-term opportunities here are very real, and very big.”