The Brexit referendum and its subsequent effect on the Canada-Europe Union Comprehensive Economic and Trade Agreement (CETA) has reminded us all that we are currently living in the most challenging economic time since the 2008 recession.
Governments and central banks around the world are taking unprecedented steps to stimulate national economies in ways that they hope will bring sustainable economic growth and prosperity. Private sector companies are working hard to re-assess their commercial strategies in order to come up with winning solutions, which would allow them to gain access to new markets and to manage risks related to their business expansion plans.
Beyond the broader macroeconomic picture, it is important to ask a more specific question as to how Canada’s small and medium-sized enterprises (SMEs) – those companies that represent over 98 percent of Canada’s enterprise base – are responding to these tumultuous times. Is the European market still a viable destination for Canadian SMEs, which are so critical to Canada’s economic success?
Gauging the European waters for Canadian SMEs
In the news, we hear a great deal about the ebb and flow of our industrial mega-players, such as Air Canada, Bombardier, Blackberry, CAE, Barrick Gold, and Suncor Energy, among others. But what about our small and medium-sized of companies?
Omar Allam, CEO and founder of Allam Advisory Group (a Canadian-based global business, strategy and commercial diplomacy consulting firm), has recently published opinion pieces in Profit Guide and The Globe and Mail on the subject. He points out that all companies interested in the European markets should accept that after Brexit and CETA-related uncertainties “things will never be the same”.
However, in an ever-transitioning European economic space, times have changed. Regardless of the final outcomes of Brexit and CETA, the European economies have been and will continue to be a market for Canadian SMEs to succeed beyond their own “safe conventional borders”.
Here’s why it still makes sense to look to Europe
Based on my research and consulting work in the Canadian SME community over the past 25 years, I see a lot to be positive about when it comes to Canadian SMEs’ ability to improve their standing in the European exporting arena. The key advantages which will allow Canadian small businesses to continue to reap the benefits of exporting to Europe are:
- A trade environment that includes a weaker Canadian Dollar, a weaker Pound-Sterling, lower energy prices and the steady economic recovery of the Eurozone;
- Strong demand from European customers for Canadian goods, products and services in certain areas, such as: seafood and agri-food, consumer products, technology and innovation, and professional services (as identified during the CETA negotiations);
- Increasing level of Canadian SME managers with international experience who perceive internationalization as an opportunity;
- Privileged access by Canadian SMEs to human resources of European extraction, generated by various waves of immigration;
- Availability of various export incentives, financial services and training to help SMEs expand globally offered by public-sector institutions like Export Development Canada (EDC), the Business Development Bank of Canada (BDC) and Canada’s Trade Commissioner Service (TCS);
- Availability of direct financial assistance to Canadian SMEs seeking to develop new export opportunities, such as the CanExport program;
- Privileged access to the EU opportunities and partners via the Canadian Manufacturers and Exporters (CME) Enterprise Canadian Network website.
Opportunity is out there for companies willing to seize it
The real challenge of getting more Canadian SMEs to consider opportunities in the European markets lies in their tendency to be overcautious and to underestimate their own export potential. As analyzed by the Conference Board of Canada (Macmillan, 2008), too many Canadian business executives have the perception that their products or services may not be “exportable”.
In addition, they often perceive these markets as being too risky, as they do not feel they have the skill and resource capability to internationalize. They are not ready to expand their customer base because they wish to stay small and keep their operations “manageable”.
A panel of experts gathered in May 2015 at the Toronto Region Board of Trade to share thoughts on ideas on how to better engage Canadian companies – and particularly SMEs – into the exporting realm, brought some interesting perspectives. The panel included: David Rawlings, CEO, JPMorgan Chase Canada; Dianne Craig, President and CEO, Ford Canada; and Sam Sebastian, Managing Director, Google Canada. The panel was assembled as the Board unveiled its new Trade Accelerator Program (TAP) GTA, which was designed to assist businesses looking to get into exporting.
It seems that the solution in many of these instances lies in getting more of the small to medium-sized enterprises to think about the real advantages of doing business in the European context, and go after the opportunities which these markets represent.
What Canadian SMEs have to offer is often far more important than even they themselves may believe. In addition, the market conditions should inspire Canadian SMEs who want to accelerate their growth.
I would then leave the SME business owners who have maybe been holding back on the idea of exporting to European markets with three key recommendations:
1. Immerse yourself in your target market
Solid in-market engagement is necessary to establish the relationships, trust and brand awareness critical to building a sustainable market presence. Meetings with prospective customers and connections with potential investors and partners come much faster when you are in close proximity to the people you want to meet.
2. Invest your efforts in product validation and exposure to local competitors
Acquire awareness of the local business culture and the competition to be faced. Use the time in-market to vet and validate your product – this experience will really build your confidence.
3. Take advantage of online, technological tools to enhance your company’s marketing efforts
It is no longer about taking out an advertisement in the Yellow Pages or the local newspaper – a plethora of opportunities has opened that was not there in the past and is now right at your fingertips.