Export trends and tips for small business: why and where do companies like yours export?

Canadian exporters are motivated by two things--a desire to increase their sales and profits and to expand the overall size and scope of their business, according to a recent survey of a cross section of Canadian industry association members. The survey was conducted in late 2006 by Phoenix Strategic Perspectives on behalf of EDC.

These results may be common sense, but the survey also found a more surprising common thread just as the global economy is moderating: most survey participants were optimistic that their foreign revenues will increase in the next year or so. In addition, a full third of the respondents said that international trade allows them to generate half or more of their total revenues.

Entering new markets

While four out of five executives surveyed agreed that it is important for Canadians to diversify their export markets to reduce dependence on the United States, reality tells a different story. Some 92 per cent of the interviewees still rely mainly on the United States as a trading partner.

There are signs that things are changing, in our Canadian economy at least. In 2006, while the pace of exports to the United States slowed down, it picked up in emerging markets. On average, Canadian merchandise exports to developing markets increased by 18 per cent, while export sales into industrialized markets grew by less than one per cent.

More and more, the survey found, exporters are expanding into a second or third market besides the United States. Most popular are Western Europe and Latin America, specifically, Mexico. Half of the respondents said they are looking at adding new destinations in their future business plans.

According to EDC's Economics group, Canada's merchandise exports to the United States declined from 85 per cent in 2001 to less than 82 per cent in 2006.

Meanwhile, our exports to the Eurozone and the U.K., while still relatively small, rose by 13 and 20 per cent respectively last year. Exports to Mexico increased 25 per cent.

Are you prepared to grow?

For small or mid-sized businesses that are not trading abroad yet, you may be like the export-ready firms and former exporters who participated in the survey: 41 per cent of them indicated that their companies are likely to start exporting within the next year. The downside is that only a small number of these firms are well prepared to do so, that is, by having an international business strategy in place and by gathering foreign market intelligence and other trade-related knowledge.

Clearly, while international trade can be exciting it is also intimidating to many. The key barriers that respondents pinpointed are a lack of time or staff to pursue export opportunities and the high value of the Canadian dollar. Ease of access to trade information and services, whether through the Internet, government or industry associations, can alleviate some of these challenges and increase understanding of the paths and rewards of global trade.

EDC.ca offers a one-stop shop of information and services, from expert analysis of international markets to links to government and trade association advice on exporting. Export Development Canada helps Canadian businesses expand their sales internationally and ensures they get paid for them. A Crown corporation, EDC provides trade finance and credit insurance services for its Canadian clients, 90 per cent of whom are small and medium-sized enterprises. To reach EDC, contact 1-866-899-0808.