A sluggish U.S. economy and burgeoning new markets elsewhere are nudging Canadian companies out of the domestic comfort zone in search of global opportunities. But the globe’s a big place and full of unknowns. It’s often difficult to know where to start, especially for small and mid-sized businesses.
But help is at hand, both from government agencies and industry associations.
A good starting place is Export Development Canada, a Crown corporation that operates as a bank and insurance company rolled into one.
“If your business crosses borders, we’ve got pretty much everything that you need,” says acting president Pierre Gignac. “We can help you win business, complete business or protect your business.”
One of EDC’s most sought-after services is risk reduction. A popular product is accounts receivable insurance, which guarantees 90 per cent of the value of a contract. If a customer doesn’t pay on the date specified, EDC will issue the funds.
This guarantee can keep things running smoothly, especially for companies that rely on large payments from a few customers. And the collection rate is higher than it would be for a company on its own.
“When the government of Canada comes calling, generally it carries a bit of weight,” Mr. Gignac says.
Another popular EDC offering is political risk insurance, which protects the value of assets and investments against events such as government seizures and war.
EDC also has a key financing role to play. Say a Russian farming concern wants to buy $2-million worth of equipment manufactured in Canada but can’t secure a loan. The EDC, often in connection with a Canadian bank, can provide a loan to finance the deal, with the equipment as collateral.
For Canadian companies with a certain amount of export business, it is also a source of capital for operating loans. And it is more likely to back business in parts of the world where commercial banks fear to tread.
The EDC also provides venture capital to Canadian startups, focusing on key areas such as information technology and oil and gas. It also helps them connect with global venture funds, and it lends to foreign multinationals with the hope that financing relationships will lead to contracts with Canadian suppliers. Over all, EDC says, a dollar lent leads to $1.42 in new business for Canadian companies.
A recent matchmaking success was bringing together China Gas and a Canadian concern specializing in clean technology. “We open doors,” Mr. Gignac says.
The provinces are also busy supporting companies that want to expand to other countries.
The Ontario Ministry of Economic Development, Trade and Employment, for instance, recently announced a strategy that will focus on helping small and mid-sized firms increase their reach. It will work with industry associations and other branches of government to focus on key areas such as the European Union, India, Japan and South Korea.
The ministry is also opening an international marketing centre in Sao Paulo, Brazil, to help Canadian companies connect with customers and investors in Brazil. It’s already on the ground in Mexico, Chile and the United Arab Emirates, and has most recently established a presence in Southeast Asia.
This is in addition to its support of exporters to the United States and core offerings of trade missions, seminars and one-on-one market consulting designed to help exporters navigate new terrains.
The ministry provides financial support through the Global Growth Fund program administered through the Ontario Chamber of Commerce. It includes the Ontario Exporters Fund, which defrays the cost of hiring an export manager for up to two years.
The Canadian Manufacturers & Exporters is another place to find assistance with global expansion plans.
The CME, which has about 10,000 members across the country, sees itself as a “concierge service,” providing links to government agencies and lending institutions that can help companies, particularly those seeking to diversify beyond the United States, says Jeff Brownlee, vice-president of public affairs.
With Canada’s trade agreement with the European Union coming into effect, the association is working hard to help its members prepare for new opportunities there.
The CME is also the Canadian representative of the Enterprise Europe Network, which now includes 54 countries. The network maintains a website, focused primarily in the tech sector, that brings together buyers and sellers. If a Canadian company spots an opportunity on the site, the association will contact the representative in that country and together they will determine whether there is a good fit.
This sort of due diligence stops companies from wasting time on cold calls and business they may not be right for, Mr. Brownlee says.
Mexico is another target for the CME, especially in aerospace and automotive. “They’re saying, ‘We want your companies to come down here,’ ” Mr. Brownlee says.
The Canadian brand has more value in foreign markets than people realize. “The problem with Canadian companies is that they’re too Canadian,” he says, referring to the often-cited aversion to risk.
“When we travel, we realize that Canadian products are much more sought after than people know because Canada means quality and dependability.”
That is a huge competitive advantage, and we should tap into that, he says. “We have to pound our chest a little bit.”
Special to The Globe and Mail