Canadian small businesses turn to exports for new revenue channels
January 11, 2012
Governments throughout North America have been urging private businesses to ratchet up their exporting activities as a means of procuring new revenue streams. While the United States has launched its Export Initiative with the intent of doubling national exports by 2015, Canada has been less formal in its efforts.
However, a survey released this week by UPS Canada found a considerable proportion of small and mid-sized companies are planning to expand into foreign markets this year. Specifically, more than one in five surveyed SMBs - 21 percent - will consider initiating business in emerging markets such as China, India and Mexico, with some looking to broaden their export practices as well.
The viability of such endeavors will be supported by emerging middle classes in these markets. Nearly three-fifths of respondents - 59 percent - believe these growing middle-income earners will have an "appetite" for Canadian goods. Interestingly, two-thirds of respondents are skeptical whether Canada can remain a global competitor if exports come mainly from large businesses, highlighting the important of small companies in driving national export activity.
"There's definitely been a positive shift in small businesses' perception of global trade," said Nicolas Dorget, vice president of UPS Canada. "Hopefully the trend will continue, because the Canadian economy needs more businesses - regardless of size - to be engaged in building the country's international trade presence beyond North America."
Recent research from Export Development Canada projected a 7 percent surge in exports this year. Longer term prospects were more modest, as only 8 percent plan to begin exporting in 2013 and only 5 percent in 2014.
"We're seeing an emerging disparity among [SMBs] in Canada," Dorget added. "There are those who are beginning to realize that taking advantage of emerging markets is extremely lucrative and not nearly as complex as they had previously thought, and then there are those who are withdrawing or who feel there's no demand for their product or service beyond Canada's borders."
Last week, the Canadian Federation of Independent Business reported an uptick in small business confidence for December. According to analysts, the optimism index is approaching "normal" levels.