The 2022 Key Small Business Statistics reveal the critical role exports play in Canada's economy. They drive economic growth and are strongly correlated with real GDP growth. Exports offer a strategic opportunity for businesses to grow by expanding their market beyond Canada's relatively small domestic market.
Canada is well-positioned, with 15 free trade agreements (FTAs) in place, covering over 51 economies globally. Key agreements like NAFTA, CETA, and CPTPP facilitate trade, reduce tariffs, and provide better market access for Canadian exporters and foreign investors in major global economies.
However, less than 5% of Canadian businesses are currently engaged in international trade. Among those export-ready, nearly 80% target only the U.S. market. As businesses increasingly recognize the risks of over-dependence on the U.S. market, they see the need for market diversification beyond North America and reduced reliance on specific Asian countries. This awareness presents opportunities to promote export and FDI activities across regions like the Indo-Pacific.
There are six essential domains to consider when designing and formulating your international trade strategy. These domains encompass critical aspects that impact your success in the global marketplace. By understanding each domain and incorporating them into your strategic planning, you can create a comprehensive and effective approach to international trade:
Pre-entry planning: In this stage, businesses evaluate their export readiness, assess market feasibility, conduct competitor reviews, analyze trade policy, and identify potential risks. Comprehensive research in this phase is crucial to ensure preparedness.
Strategy formulation: Use the insights gathered during pre-entry planning to decide the most cost-effective and efficient way to enter foreign markets.
Business model adaptation: Regardless of your domestic market success, international expansion will require adjustments to your product, ingredients, packaging, or marketing materials.
International financing solutions: Entering competitive foreign markets can be costly. Securing international financing can ease cash flow pressures and help you seize once-in-a-lifetime business opportunities.
Supply chain management: Understanding trade documents and Incoterms rules is vital for efficient operations in international markets.
Overseas operations management: In addition to replicating domestic sales strategies, businesses must learn to navigate intercultural business management and communication challenges.
Regardless of your export business's maturity, considering these factors will help Canadian businesses better assess opportunities and risks, and determine which aspects of their business model need adaptation to remain resilient in the face of uncertainties. This approach introduces the process and procedure of international trade planning, demystifies the complexity of international business expansion strategy development, and provides a practical self-evaluation tool to identify areas requiring focus and improvement.