The first in an eight-part series of challenges facing Canada’s foreign trade: Understanding how the world has changed.
The world of business is evolving rapidly, and woe to those who are unaware. One of the key challenges facing Canadian business on the world stage is understanding and adapting to the more globally integrated, fast-moving environment. For those who do adapt, it means enormous opportunity – global trade has nearly quadrupled from 1993 to 2009 because of a huge flow of foreign direct investment, trade liberalization and advances in transportation and electronic technologies. But those who fail to adapt may be in trouble, says William Polushin.
Prof. Polushin is the founding director of the Program for International Competitiveness at McGill University’s Desautels Faculty of Management. He is also the president of AMAXIS Inc., an international business-development services firm with headquarters in Montreal. He has decades of experience in the trenches of international business.
What should Canadian business people know about how the world has changed?
We’ve seen an explosion in the degree of global integration. We’ve seen the development of global supply chains and, following that, global value chains. The other part of it is technology. We’re moving from what has been the Industrial Age model toward a true information age or digital age. Well, how do we do business? The traditional market economy hasn’t changed. What has changed is the how-to and the speed and integration. The concept of a multinational organization – it isn’t just a game of the big companies any more. An enterprise can really go global from birth now. Just think about any Web development company.
An example is Skype. I go to India to do some business. Does my Canadian client know where I am? Does he care? No, it doesn’t make a difference. I’m dealing with Mexico and can be based in India. I can now communicate in a very cost-efficient way with the rest of the world. The concept of location starts changing. Do you need to be right there?
The cost of doing business internationally for a small company was prohibitive. I couldn’t think of trying to develop multiple markets at the same time. How much time does it take, how do I follow up, what are the means available to me to manage those markets? If I’m in Outremont and I’m a two-man operation and want to set up a Web development company, I can access global markets through my home office now.
How well do Canadians understand those things?
From what I’ve come across? Not too well.
Let’s understand some of these great forces that are changing the environment. The small or medium-sized guy has much more ability to act in international markets, but larger companies like a Bombardier, a Magna, an SNC-Lavalin, are also taking advantage of that reality. A lot of the small- and medium-sized guys who grew up on the backs of our ‘Canadian champions’ like Bombardier or Magna are being told, “OK, we want you to continue to be a good supplier to us but just beware, our supply network now is also much more global. We’ve set up operations in Mexico, Europe, Asia. We will select suppliers from around the world that will enable us to be most competitive. So yes, Canadian suppliers, we want you to continue but you better be ready to compete at a world class level.”
What should business people know about Brazil, Russia, India and China – the BRIC countries?
On the one side it’s opportunity, on the other it’s a threat. China’s economy, if they continue on as is, will be larger than the United States’ by 2025, and India will be larger than the U.S. by 2050. It’s a threat if we maintain the status quo. You see a greater degree of competition around the world. Not only is there contraction in our traditional sectors like clothing and furniture but the challenge reaches into advanced sectors such as pharmaceuticals and aeronautics. These countries are, like us, investing in innovation, research and development. They’re not just interested in being the contract manufacturers of the world but in becoming global players in their own right.
