Global Commerce Insider occasionally seeks input from leaders on vital issues that affect our businesses and economy in a global context.
With a common language, a shared border and familiar culture, the United States has long been a key market to consider for Canadian businesses looking at expansion or relocation. But it is not a simple matter of moving one border south. The U.S. market has unique characteristics that Canadian businesses ignore at their peril.
Chris Jacobs is one of four partners at Opportunity Northwest LLC, a Bellingham, Wash.-based company that specializes in helping Canadian businesses relocate or expand into the United States, establish market presence, and find employees and key partners. A dual citizen – he originally hails from Oshawa, Ont. – Mr. Jacobs is keenly aware of the business opportunities and challenges that exist for Canadian companies in the U.S. market.
In business for about a year, Opportunity Northwest offers management, public relations and branding strategies to help smooth a new entry into market. The company is currently focused on the Pacific Northwest and Greater Vancouver area, giving Canadian companies access to the Interstate 5 corridor that runs up the West Coast. But it is looking to eventually assist Ontario and Quebec-based businesses in getting access to the Interstate 95 corridor that runs up and down the East Coast.
1. What are the main issues that Canadian businesses face when they choose to relocate or expand into the United States?
One of the big ones is capacity. A lot of Canadian companies that I have spoken with don't understand the magnitude of the market. They also think that it is one market and it's not. You really need to segment and sub-segment because it is so large, and unless you have a million dollars in your marketing budget you're not going to talk to everybody. So understanding the scope, and the effect that that scope has on your production and present processes and systems, is really key.
Another point is the speed at which the market makes decisions down here. I have seen Canadian companies at trade shows work on their annual number of products [produced], let's say it's 100,000 pieces. Going to a show and having somebody say, 'I'll take 50,000 pieces because I've got to do a test' – that magnitude just blows them away. I forget the exact numbers but that was an actual situation in a trade show where the person had no idea how to deal with that kind of scope and that quickness of decision.
2. How well are Canadian companies received in general by the U.S. market and populace?
I think there's a realization here that the market for goods really is global and people are going to choose what fits their needs the best, which is why we work early on in the process to do market research in order to help ensure that the goods that would be coming across or that have the dream of coming across the border here, that they are actually differentiated and would fulfill market needs.
3. Do Canadian companies underestimate the increased level of competition in the U.S. market compared to what they have been used to in Canada?
I do think that in general. Some people do have a really clear understanding, so I would hate to say that about everybody, but in general, walking through both trade shows and after delivering some market research, I think a lot of people are almost overwhelmed with the amount of competition within a specific category that consumers have here.
4. How important is it for Canadian companies to understand the vast diversity and regionalization of the U.S.?
My background was with Unilever, and I dealt a lot with European managers who would come over to the U.S. and they would be dealing with, let's say, seven grocery outlets [in Europe], max. They would come over here and say, 'Wow, now I've got to rate 72.' That was startling. I don't believe there's any other country that has so many choices and so many channels that somebody can reach into.
5. Do you find that Canadian companies have a fear of moving into the U.S.?
Some of them. It's a very complicated process, and you're going to get a whole bunch of paperwork put in front of you and a lot of people are going to say, 'Huh, that looks like a lot, I think maybe I can just go deeper into the Canadian market instead.' That's an off-the-cuff observance – I haven't quantified any of this – but it does tend to be scary. It's a big hurdle unless you've done this before.
6. Have you found that the number of Canadian companies relocating or expanding has been on the rise in recent years?
I know that there's the demand. I don't know if it's always been there or if people are simply becoming more global because they need to.
7. What kind of support does the U.S. provide for foreign companies looking to relocate or expand there?
I would say that one of the best countries in the world for that is actually Canada. You have the Canadian Trade Commissioner Service, which is excellent. So Canada is really good at that. The local governments do have some incentives for companies coming down, more if they are creating jobs down here.
8. How important is it for Canadian companies to differentiate themselves with a unique value proposition?
Manifestly important. I would say that's the No. 1 thing in this marketplace: to have a point of difference that matches a market need. So there's a product-market fit that needs to occur, and once you have that, then you can push it through conventional communication and marketing. Or you can tie in some sort of socialization into the product or into your offer that allows people who do appreciate and need that product difference to tell their friends or community about it, and that kind of growth is what most companies want.
9. Do you have to be of a certain size before deciding to expand?
No. I've spoken to people who are very early on. I would say that a company should be profitable in its market so it has achieved that stability, it has proved its processes at least locally and it has that base to plan from. I say 'plan from' instead of 'grow from' deliberately because the planning really is massively important when coming down into the U.S. market.
Responses have been edited and condensed.