For Canadian firms seeking growth through international exporting, India and lesser-known Southeast Asia markets are worthy of consideration.
That’s the recommendation of Stephen Callaghan, a regional vice president with Export Development Canada (EDC).
He says evolving global trade dynamics means integration into supply chains connecting Asia, the Middle East and Latin America is critical to Canadian exporters.
Emerging markets – which now account for 12 per cent of Canadian exports, up from four per cent in 2000 – are now projected to represent 30 per cent of Canadian exports by 2025.
Among key growth markets, Mr. Callaghan says India is a strong focus, noting that while Canada-India trade is currently valued at $5 billion, DFAIT forecasts this to be a $15-billion bilateral trade relationship within the next five years.”
Infrastructure, automotive and clean technologies are among the sectors where Canadian firms have strong potential.
“India plans to invest over
$1 trillion in infrastructure,” says Mr. Callaghan. “The Government of India’s biggest mission today is to improve roads, highways, ports and airports and increase energy production.”
He adds, “India’s growing middle class, and its desire for more consumer goods including cars, means that automotive is another big focus too. Ontario auto parts makers can leverage their significant expertise and technologies, and tap into supply chains that are now expanding.”
Within the clean-tech sector, which refers to products and services ranging from pollution control systems and other environmental solutions to green energy technologies, Mr. Callaghan says India’s market for renewable energy systems alone, including wind and solar energy products, is estimated this year to be $17 billion. “It’s among the top four countries in the world for renewable energy capacity.”
While the notion of tapping into such growth is heady, Mr. Callaghan says that seizing such opportunities relies on clearly defined, pragmatic steps.
For example, rather than small and medium-sized enterprises (SMEs) attempting to secure work directly on large projects, a better entry strategy – one that can help mitigate risk and improve the chances of success – is to act as a sub-supplier or sub-contractor to international firms that have experience and have been successful in the Indian market.
“Working with the right partner is an effective entry point for many SMEs,” he says.
Even before working to build or otherwise leverage such relationships, however, he says SMEs should first develop a comprehensive market entry plan.
“Don’t just follow leads; you need to have a plan that identifies all of the dynamics at play – not just the opportunities, but the challenges as well.”
For example, Mr. Callaghan cautions that India’s bureaucracy is significant and tricky to navigate. As well, he notes that India should not be viewed as one large market, but rather a host of regional markets, each with its own complexities and rules of engagement.
“It takes patience to learn your way around and build relationships with people who can help, but the payoff can be significant. Having a solid plan at the outset will help you make local connections with people who know the market well.”
Participating in officially sanctioned trade missions and trade shows such as those led by EDC, the Canadian Trade Commissioner Service and provincial trade organizations such as Ontario’s Ministry of Economic Development and Innovation, as well as others involving reputable groups such as the Canada-India Business Council, are among the better ways to make inroads into new markets, including India.
“Participating in activities like these is ideal for companies that want to test the waters and look for local partners. Trade associations in Canada can be very helpful in making connections with Indo-Canadian businesses. It’s all part of networking and adapting to a new market.”
In India, EDC works closely with the Canadian Trade Commissioner Service (www.india.gc.ca) whose representatives can suggest local contacts such as legal and tax advisors, accounting firms and potential partners.
Ultimately, any investment in India should be with a view to a long-term strategy and backed by appropriate staffing on the ground. “Companies that are in market, or are contemplating going into India, need a full-team approach – marketing, legal, logistics, etc. – not just one or two people on the ground.