Posts Tagged ‘EDC’

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December 16th, 2011

Exporters, are you still optimistic about 2012?

Last May I published a blog about renewed enthusiasm for exports. Unfortunately, the economic news have been anything but good since then: the financial crisis has deepened in Europe, U.S. unemployment is at a standstill, the financial markets are collapsing, the U.S. is again contemplating a “Buy American” clause in its new recovery plan, a double-dip recession is a growing possibility, the Canadian dollar is anything but stable, and the list goes on. It’s hard to be optimistic these days.

I was therefore rather surprised to read the EDC’s fall 2011 global export forecast in which Peter Hall and his team maintain their bullish spring outlook for Canadian exports for both this year and next. EDC predicts, among other things that “the world economy will capitalize on the current increase in underlying activity, and continue to find remedies for the shocks and weaknesses that beset near-term growth, tiding the economy through to better times” (page 5). As such, EDC is projecting positive growth for global GDP and for Canadian exports in 2011 and 2012. Thus, Canadian exports will increase by 12% in 2011, the same as in 2010, and 7% in 2012. The figures for Quebec are 4% for this year and 7% in 2012. (more…)

June 2nd, 2011

Follow-up on Let’s Talk Exports

For those who could not attend the presentation Let’s Talk Exports we held on May 31 in collaboration with EDC, and for those who simply want to view it again , here’s the video starring Peter Hall, EDC’s chief economist, which was presented at the event.

I retain two ideas. First, Mr. Hall explains why exports are now the central element of future growth in Canadian GDP, reviewing the GDP calculation formula in an accelerated session of economics 101. Then, Mr. Hall discusses the importance that emerging markets will have for Canadian exporters by 2025, a subject I already covered in a previous post on how enthusiasm about Exports is picking up.

I take the occasion to thank, on behalf of the LAVAL TECHNOPOLE International Business Centre’s team, Mr Hall, EDC and all the people who attended the Let’s Talk Exports conference. The success of the event, held for the first time in Laval, has been beyond our expectations and we hope to repeat the experience next year.

Bruno Séguin

May 19th, 2011

Enthusiasm for exports picks up

Canadian exports have been hard hit in recent years. The U.S. recession and the strong loonie made it much tougher for our SMEs to carve out a place on international markets.

In light of the situation, experts encouraged exporters to diversify their markets and to develop emerging markets, where economic growth was still robust. However, many hesitated  to venture into these more far flung, hard to reach places. Since it takes time and a long-term commitment to develop international markets, those who took the leap had to wait a while before seeing significant results. During this time, the export situation in Canada continued to deteriorate and the recovery was slow to take root.

Still, three recently published reports signal that the efforts made by Canadian businesses to diversify their export base are starting to pay off and that Canadian SMEs are increasingly open to internationalization.

First, on May 11 Statistics Canada released the country’s international merchandise trade figures for March. We find that Canada’s trade surplus increased from $356 million in February to $627 million in March, fuelled by quicker growth in exports than imports. These are extremely encouraging figures given Canada’s huge trade deficit in 2009 and 2010. Another noteworthy observation concerns U.S.-bound exports, which only rose 12.3% between March 2010 and March 2011, compared to 21.6% for all other markets. In March of this year, the U.S. accounted for just 72.6% of Canadian merchandise exports, versus 81.8% in 2005.

Separately, a day earlier EDC unveiled its spring export forecast. The inspired title of the report, The Diversification Dividend alludes to the fact that Canada’s rebound in exports is largely due to a sustained new market development effort that is starting to pay off. According to the report, from 2001 to 2008, although emerging markets accounted for just a small segment, their annual sales rose more than 12%, versus just over 1% in traditional markets. EDC also says that if this trend continues, emerging markets will account for 20% of Canadian exports in 2016 and almost 30% by 2020. If these forecasts are correct, in the next two years, Canadian export growth will be fuelled by shipments to emerging markets.

Finally, a study conducted by Angus Reid for UPS Canada reveals that 73% of the 546 SMEs surveyed feel that Canadian businesses should disregard the current strength of the loonie and put more resources into international trade and almost two thirds said they were worried about the country’s ongoing trade deficit. A fair number suggest reducing trade barriers with other countries to encourage international trade. These results are quite different from those obtained in a similar survey conducted by Léger Marketing last fall, also for UPS Canada, in which Canadian SMEs were skeptical about international trade, market opening and opportunities on emerging markets.

In conclusion, it’s encouraging to see that exports are once again playing an important role in the country’s economic growth, that Canadian exporters are much less dependent on the U.S. market and that SMEs are finally planning to take advantage of this turnaround. The next few years should be interesting indeed.

Bruno Séguin

May 17th, 2011

Let’s talk Asia

A few weeks ago I attended a conference on Asia, organized by Export Development Canada (EDC)  and the  Canada China Business Council (CCBC).

The keynote speakers included EDC’s vice-president and chief economist, Peter Hall and the CCBC’s chairman, David Fung, who used concrete examples to show why it’s important for Canadian businesses to be present on the Chinese market. He also explained that companies that don’t venture beyond Canada’s borders will have a tougher time dealing with the competition than those that take some risk by seizing the opportunities available on this massive market. Mr. Fung, himself an entrepreneur, advises exporters to step up their efforts to compensate for the weakness on the U.S. market and to capitalize on the fact that Canada is considered a part of the Asian-Pacific Rim.

Peter Hall concurred, adding that other countries in South-East Asia also offer excellent business opportunities that Chinese companies themselves are exploiting. He is also optimistic about the growth outlook after the lull that followed the  pickup fuelled by the government’s stimulus plan during the recession. Questioned about the strength of the Canadian dollar, Hall replied that a strong loonie is just one more reason for companies to diversify their exports, although in his opinion, this situation won’t last long. He believes that by next year, our currency will be trading just below parity. Incidentally, for those who are interested, Peter Hall will be in Laval on May 31 for the Let’s Talk Exports event organized by the International Business Centre with EDC.

However, what most caught my attention was a testimonial by a Quebec entrepreneur who in just a few years succeeded in setting up an independent plant in China that employs 100 workers and that serves the global market, including China’s. Here’s his advice to those looking to establish themselves in China:

1- Create a Chinese rather than a Canadian company. The WOFE (Wholly Owned Foreign Enterprise) model works well here. Avoid joint ventures unless both parties invest an equal amount.

2- Hire a good local manager and pay him well.

3- To avoid excessive requests from officials, avoid dealing with them directly on regulatory matters. A trusted local employee is better placed to do this and will cost less.

4- Fragment and compartmentalize pertinent information in order to protect your intellectual property.

5- Have enough capital available to back your project.

6-  Make sure to have an effective fund transfer mechanism in order to avoid surprises and service interruptions. EDC can be helpful in this regard.

7- Don’t transfer old technology if your goal is to differentiate yourself and remain competitive longer.

8- Since you can never be sure about the environmental liability, avoid buying out another company or an existing plant because you think it’s a good deal. A new company with a foreign name is also more appealing on the Chinese market.

9- Expect the authorities to demand more of you than of a Chinese company regarding compliance with environmental or social regulations.

10- While the ratio of Chinese to Canadian engineers is 40:1, we are way ahead in terms of expertise and capacity for innovation. However, Chinese engineers make up for this by being hard workers.

The Quebec entrepreneur seemed very happy with his decision to set up on this market, something that had become unavoidable since many of his customers had a presence there and he had to get closer to them. The fact is that this happens to many companies, which are increasingly a part of an integrated global supply chain.

In the near future, I’ll tell you about a workshop I attended on India, a market brimming with opportunities but challenges too.

Samir Naoum

December 9th, 2010

The importance of intellectual property in the international marketplace

I recently attended an interesting presentation on the role of intellectual property when breaking into a new market. The talk was given by Me Neil Milton of Miltons IP, a law firm specializing in intellectual property. I’d like to share some of my takeaways with you.

Mr Milton began by saying that intellectual property should be looked at as a two-fold tool because it allows you to avoid losing money by preventing theft, copying and other violations and to generate income by facilitating exporting and the attainment of other business objectives. The second aspect is interesting because we sometimes overlook the fact that it gives a monetary value to an invention or know-how.

By registering a patent, trademark or copyright before breaking into a new market, you are protecting your intellectual property rights and therefore making sure no one uses them other than you. For example, if you neglect to register your trademark on a new market, you’re taking the chance that a competitor or even your distributor or local partner will do so locally. In so doing, they can then market your product under this trademark, preventing you from using it yourself or forcing you to work exclusively with them, in the case of a distributor.

Before venturing into a new market, it is vital that you conduct a thorough trademark, patent and copyright search to make sure your intellectual property does not already belong to someone else locally. A good place to start is the World Intellectual Property Organization site but since intellectual property is a local matter, the search needs to be done country by country.

While it’s important to legally register your intellectual property on a new market, Me Milton also says that in a new market, you absolutely must set up a control system without resorting to the courts. This should be done as soon as you decide to export. For instance, licensing and/or distribution agreements should be ironclad in order to give you legal recourse. Non-disclosure agreements must also be very detailed and contain unambiguous clauses on the procedure should negotiations stall before a genuine business relationship begins. You must also not hesitate to use non-contractual means to prevent a third party from holding on to or using intellectual property, even if the business relationship is severed. For example, it is sometimes preferable to give secure access to a server than to send critical information by e-mail.

To find out more, listen to Me Milton’s presentation on EDC. Registration is free. In his talk, Me Milton goes into detail about interesting topics such as intellectual property on the Internet and in China. I also strongly recommend consulting a lawyer with expertise in international law and intellectual property before exporting abroad because even a single mistake can be very costly. Feel free to contact us for referrals.

Bruno Séguin

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