Despite economic difficulties at home, Canadian businesses have a chance to grow by taking advantage of opportunities in the global marketplace, and utilising their global competitive advantage. “The world needs more Canadian business(es)," said David Watt, chief economist at HSBC Bank Canada. “We have to go out there and work for it. If we wait until conditions are better, then somebody else is going to move in first."
Watt addressed business leaders from British Columbia at the Connecting for Growth event in late September focused around insights on global opportunities for Canadian businesses that were supported by HSBC Bank Canada and researched and written by The Conference Board of Canada.
Watt told the audience that the Canadian economy's prospects from 2015 through 2016 are not strong. His growth forecast for Canada this year is slightly above 1 percent because of lower oil prices and the weakening of the Canadian dollar.
According to an interactive poll taken at the event, 72 percent of British Columbia business leaders in attendance were having trouble growing their businesses within Canada.
One business executive in attendance, Bruce Wells, CEO of Vancouver-based Endeavor Design, Inc., told HSBC that while his snowboarding business is growing in B.C., the lack of snow in the province last winter had an impact on the company's profitability, along with the strong U.S. dollar.
While a weak currency tends to favor export-oriented firms, Watt noted that companies seeking to pursue new opportunities or grow their businesses outside Canada must understand how the global marketplace has changed so that they can make the most of today's international opportunities. Traditionally, the construction, insurance, financial services, mining, and oil and gas sectors have led the way among Canadian exports. “Now, arts and entertainment, information technology, and culture need to step up," Watt said.
The percentage of Canadian companies involved in exporting is less than 4 percent, Watt explained, with less than 2 percent of small and medium-size enterprises (SME) exporting. In comparison, the percentage of German SMEs exporting is around 20 percent. “This is Canada's opportunity," Watt added. “Canadian companies need to take advantage now or we'll get steamrolled."
While the United States is a stepping-stone to the rest of the world—and the traditional top trading partner for Canada—Canadian firms need to look beyond the United States for opportunities all around the globe today, Watt emphasized.
Sharpen Your Company's Global Competitive Advantage by Selling to the World
Recent research conducted by the Conference Board of Canada and commissioned by HSBC Bank Canada sought to understand how Canadian companies can succeed in global trade by studying organizations that are currently doing well outside Canada. The common thread that ties these firms together, the Conference Board found, was each company's global competitive advantage (GCA)—or its unique ability to create value for its customers.
This and other results of the research were published this year in the report Selling to the World: The Keys to International Business Success Canadian companies must take action now, and utilise their global competitive advantage.
“We are at a turning point of Canadian growth," explained Kristelle Audet, senior economist at the Conference Board of Canada and author of the report. “The economy may contract, and this is not good news for Canadian businesses."
“Companies that go international grow faster," noted Linda Seymour, executive vice president and head of Commercial Banking at HSBC Bank Canada. “Companies need to look outside Canada and focus on innovations to be successful."
According to Selling to the World, four resources are essential to building a GCA:
Skilled Executives are innovative, entrepreneurial risk-takers willing to go outside their comfort zone.
Innovation Capabilities show a company's knowledge of its international customers' specific needs—which result in new and improved products. Ongoing investment in R&D and staying at the forefront of technology are the keys to standing out in the global marketplace.
Foreign Market Knowledge is a reflection of a company's market orientation. Successful global companies deepen their understanding of new markets through market research, surveys, hiring people locally, drawing from international contacts, and making the most from available government resources. This needs to be part of the company culture.
International Networks comprise customers, suppliers, trade organization, banks, and other local organizations that can help the Canadian company build expertise in the new market.
B.C. Business Leaders Explain How Going Global Changed Them
Executives in B.C. take pride in the entrepreneurial spirit evident in Canada's West Coast province, including the CEOs of Vancouver-based Conifex Timber, Energold Drilling Corp., and Global Relay. They said this is the time to promote this spirit around the world by getting on a plane and connecting face-to-face with both clients and prospects.
"Conifex always had international markets as part of our DNA," said Ken Shields, chairman, president and CEO of Conifex Timber. He said his business was put to the test when the U.S. economy collapsed at the start of the Great Recession in 2008. “Fear drove us to grow," he continued. Conifex identified China as a target market because of its breakneck urban growth.
“Every business is different," explained Warren Roy, CEO and founder of Global Relay, a company that archives data messaging for global clients in the financial sector. Global Relay “couldn't get the support in Canada, so we needed to go across the border to the United States." Roy said Global Relay initially sold its services to a bank in New York, which then deployed the company's technologies in other countries where the bank operates.
Fred Davidson, president and CEO at Energold Drilling, took the helm in 2001. He said he wanted to establish a presence in emerging markets in Latin America and Africa with energy drilling. “We employed locals, and then became a part of the community," he said. “In manufacturing, if it moves, [then] we move."
Roy noted that while it is important to hire locals in a foreign market, a company should send its best people to build relations and establish trust. “Senior executives [on the ground] will build the corporate culture and must show they will be [in the country] for the long haul."
All of the chief executives agreed they changed as leaders once they entered new countries and cultures.
Davidson said the working culture is different across continents—Latin America's leadership revolves around the “jefe" (boss), while in Europe, committees steer the ship of their businesses. “You need to move and change quickly," he advised.
“If I stop growing, then my business is done," Roy emphasized. Establishing business internationally “is an education that never stops. I'm growing up and serving my clients better."
All of the executives underscored the importance of motivating their employees to embrace change. “People make lumber; machines and trees don't," Shields said. “It's easier to fix the iron, not people."
Rewards Are Worth the Risk
Taking the leap out into the world is risky, all executives on the panel agreed, but they also said that the rewards are worth it.
“If you are successful in Canada, then you can be successful abroad," Roy said.
“Know your market," Davidson added. “Explore [the market], then make your commitment."
During another interactive poll, most of the executives at the event seemed to agree, with 63 percent saying they plan to pursue global opportunities in the next six to 12 months.
The HSBC event gave Endeavor Design the confidence to continue—with some fine-tuning—the company's approach to export, Wells explained. “Listening to and working with like-minded businesses is important to us, but finding new ways [to conduct business] is equally as important."
Endeavor Design entered the snow action sports industry in 2002 with a fearless approach and confidence in its brand. “We found success working with smaller markets initially, made mistakes and gained knowledge," Wells added. “Then we took on the larger markets with more experience and professionalism."
Canada's biggest export is being Canadian, said Raman Rai, senior vice president and head of global payments and cash management at HSBC Bank Canada.
“We are lucky to represent a country that is trusted, respected and admired in other markets," concluded by the Master of Ceremonies of the event, Ron Tite, CEO of the Tite Group in Toronto.
To learn more about how your company can “sell to the world” by sharpening your global competitive advantage, download Selling to the World: The Keys to International Business Success, a new report commissioned by HSBC from the Conference Board of Canada.
To read about how Global Relay uses HSBC’s International presence to build its own, click here.
Source: Selling to the World: The Keys to International Business Success, June 2015
Issued by HSBC Bank Canada ("HSBC")
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