GIA Geographies Bulletin: North America
Canadian Companies Are Tapping Emerging Market Opportunities

Bank of Canada Governor Carney recently said that a focus on emerging markets should not be a temporary solution while the United States is recovering or while the Canadian dollar is high. He considers it a long-term solution. “Emerging markets represent the greater opportunity for Canadian exporters. Since the recession, these economies have accounted for roughly two-thirds of global economic growth and one-half of the growth in global imports,” said Carney. He thinks that the opportunity for growth in the “post-crisis world” lies in these rising markets.

What’s holding Canadian companies back?

Carney blames Canada’s “deteriorating export performance” on what he believes to be a combination of overexposure to the U.S. markets and underexposure to faster-growing emerging markets - a belief that is shared by Prime Minister Stephen Harper, who said “For us, the United States cannot be our only export market. That is not in our interest.” According to Statistics Canada, North America accounted for 76.1% of Canada’s exports in 2010, down from 87.1% in 2001. During that same time period, the share of exports going to Asia and Europe nearly doubled.

“When speaking to Canadian companies that are interested in international trade, we often hear that the U.S. is a market that they know about, they understand, and they know how to engage in business with” says Rahul Dhingra, Senior Consultant at GIA North America.

“However, when it comes to looking beyond the U.S., Canadian firms are more hesitant because the nature of those markets is simply unknown to them. For example, we hear questions and comments such as: “How do we determine the price benchmarks for our products in Latin America?” “We want to understand what the local and international competition is in Brazil before we decide to enter that market.” “We know this type of work is performed in China, but how do we find the best resources there?” Gathering information about the competitive landscape, the best approach to market entry and finding the most appropriate international trade partners can help to reduce the ambiguity, and therefore the risk, for Canadian firms investing in trade with emerging markets,” continues Dhingra.