Canadian companies still have a long way to go to become global economic players.
While some might have international profiles in such sectors as mining and resource extraction, far too many are still content to remain on the sidelines in the international market game.
As documented in Selling to the World: The Keys to International Business Success, a new Conference Board of Canada report commissioned by HSBC Bank Canada, foreign sales to most companies in Canada is a foreign concept.
That bodes ill for an economy whose merchandise and commercial services exports grew by a tepid 11% from 2005 to 2013, while the value in the global trade of goods and commercial services almost doubled.
It’s also bad news for a country with an aging demographic and a consumer debt load last seen eclipsing $1.5 trillion.
Canada’s economic future is in the wider world. But as the conference board report points out, while the country now has more than 40 free trade agreements, only 10% of Canada’s 1.1 million small and medium-sized enterprises generate foreign sales. The lion’s share of those sales – 70% – comes from 550 companies.
There’s far more at stake in the pursuit of foreign sales than higher revenue for adventurous Canadian entrepreneurs. Competing globally forces companies to innovate, increase productivity and develop a “global competitive advantage” (GCA).
According to the conference board report, that requires four fundamental resources: skilled executives, foreign market knowledge, innovation capabilities and international networks.
The hard truth for local companies is that all four fundamentals are in short supply, as is the willingness to take risks, which is not traditionally part of Canadian corporate DNA.
The good news, as the report documents, is that some companies in B.C. and elsewhere in Canada have developed GCAs and are reaping their benefits.
Better news for the rest of the economy would be more bold companies in every sector willing to invest the time, energy and resources to follow their lead.
