Achieving Diversification for Canadian Trade: Making the Case for Strategic Consultants
15 July 2019
(Excerpts from letters submitted to the Ministers of Small Business and Export Promotion and International Trade Diversification on some effective strategies for accelerating diversification for Canadian trade)
Give kudos where it is due
It is no longer a secret that Canadian trade urgently requires the oxygen of diversification to shake off its current structural challenges to survive and thrive well into the future. Navigating this tricky terrain, as we approach a new decade calls for a huge dose of fresh and constructive thinking of the ‘outside the box’ variety. This article, presents a quick reality check, and also puts forward a few bold ideas that our policy framers may find useful.
First, we must applaud specific initiatives designed to encourage small Canadian businesses venturing into new markets such as the CanExport Program whose funding base was recently increased to enable more companies partake. This is a positive step in the right direction.
The same goes for the strategic framework of working with other trading blocs that led to the recently signed trade agreements with the CPP. These should however be expanded to include India, Africa, and South America, even as tough question marks remain over Europe and China.
The rubber isn't meeting the road... just yet
But beyond these efforts, our policy makers need to set fairly aggressive targets (between 25% to 45%), of total volume of Canadian exports for diversification away from the US markets over the next few years to provide more opportunity and choice to our exporters, making the Canadian economy more resilient to shocks from across the northern border.
One way of accelerating this growth initiative is by introducing juicy tax incentives for first time exporters who make any of these newer markets their destination of first choice. Tax incentives may be one of the effective ways to wean Canadian exporters away from focusing exclusively on the US markets, and by so doing, sending our goods across many more markets all over the world.
Second, we make the case for the appointment of Strategic Consultants to represent Canada within some countries in these trading blocs, and complement the work of the regular Trade Commissioner Services (TCS). While this is in no way an indictment of the fantastic job the TCS are doing, we believe the rubber isn’t yet meeting the road; and our policy makers deserve constructive feedback from the market as to how things may be done better.
Mind the gaps please!
The gaps have to do with the way the TCS tends to network mainly with the biggest and best local companies and their key personnel, particularly in the emerging markets, and the tendency to pursue and capture only big ticket transactions, while many of the much smaller deals fall through the cracks. Unfortunately, most local overseas businesses fall into the small player category, and this is the engine room of any economy.
In virtually all emerging overseas markets, the small and medium scale enterprises collectively represent the biggest market of value to Canadian exporters because they constitute about 75% of the local economy. But there have been documented instances where because these companies are relatively unknown to the TCS, they have willy-nilly been unsuccessful in connecting to Canadian exporters and vice versa, thereby leaving very significant trade opportunities (about 60%) on the table.
To be fair, it is impossible for the TCS to know all the good local players in every single sector of any economy, but If we really want to succeed at diversifying and ramping up trade, we need to do things differently by finding ways to bring this very important market segment into serious play with their Canadian counterparts, in the most cost effective and beneficial manner; which is why we propose appointing strategic consultants.
Play to your strengths, coach
Canada welcomes immigrants from different parts of the world each year, many of who come with the requisite skills sets, and possess a deep understanding of the economic, political and cultural dynamics of their home countries; and may also possess strong ties to business, trade and family relationships there.
These skills and knowledge are usually evergreen and can be put to good use for Canada’s quest for boosting trade. Strategic Consultants can be found among those who have settled down legally and successfully here in Canada and have over the years assimilated its values, ways of life, mannerisms and mode of doing business.
They must also be strategic thinkers, able to connect the dots back to the business environment back home, and serve as the bridge over which their local business communities and Canadian exporters can link up successfully within defined rules of engagement and risk management.
They may be career civil servants, but preferably professionals with rich and polished business and private sector backgrounds whose target will be networking at ground zero level with the brightest and best small businesses in their local overseas markets.
Who says you can't have your cake and have it too?
Many TCS offices try to bridge this gap sometimes by recruiting locals from within the host country to work as liaisons between the TCS and the local business community. The problem is that these individuals have little or no real experience of Canadian values beyond what they encounter at their local embassy, and are not heavily invested in the Canadian project beyond a regular paycheck.
The Strategic consultants would have enjoyed the best of both worlds, living and working here as bona fide Canadians; and also armed with In-depth knowledge of the economics, politics and trade dynamics of their country of origin, which can be turned into creating positive synergy between Canadian exporters and their overseas counterparts.
This arrangement is most advantageous to Canadian exporters because not many small businesses can focus on growing their business in more than one overseas market at a time due to several constraints. This is perhaps one of the many reasons they tend to go for the low hanging fruit that the nearby US markets represents.
However, partnering with a strategic consultant with requisite skills and strengths in certain overseas markets can make a major difference in giving our exporters the leverage to compete in more than one market at once, thereby accelerating the growth trajectory of Canadian trade.
Don't wait for the tide to come in
We agree that adopting this strategy may raise several other questions about form and substance; how things should play out, what mechanisms we need to build to make it safe and fool proof and so on; but those finer details can be properly articulated after everybody gets on board with the bigger picture.We make the point here that the most compelling reason for pushing this strategy is that it will ensure nothing is left on the table for Canada in terms of trade.
The competition is on for gaining advantage in trade, and is becoming so fierce among top nations of the world today. It is the reason an American President would keep throwing his weight around to secure the best deals for his countrymen. It is the reason the Chinese Government would back its entrepreneurs financially to arrive in a target market with a small backpack, and in a matter of 3 short years control whole industries in that market.
Canada needs to wake up to the reality that it can no longer push the conservatism envelope it once did because the world as we all once knew it changed after President Trump got elected.
Our policy makers should consider these proposals along with others already on their radar. The task of diversifying and ramping up trade with the rest of the world is an urgent one. Elections are around the corner, and questions will be asked regarding the handling of several aspects of the economy.
Many business owners cum exporters are still recovering from the aftermath of the yet to be ratified NAFTA trade renegotiations. Factor in China, Saudi Arabia and Brexit, and the bigger picture is that we appear to have become so vulnerable to the caprices of the politics of international trade, with very little wiggle room, and that is indeed a scary place to be.
Diversification will ultimately help limit our dependence on a singular market; and by using the strategies proposed here, we will signal to the world that Canada is ready to compete successfully for trade in several parts of the world, and not just North America.
Hope someone out there is listening!
Senior Vice President
16413 65 Street, NW Edmonton
T5Y 3J3, Alberta, Canada