IS CANADA MISSING THE EXPORT OPPORTUNITY?

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By Bob Elliott

When I meet with our Canadian customers, the first thing I hear from each of them is that, like most companies, they want to grow their business and become more successful. With competition at every corner, from the local startup to the global conglomerate overtaking the market, a lot of companies are struggling to remain relevant.

Some reports are pointing to the fact that Canadian businesses are lagging behind the rest of the world when it comes to exporting; however, it seems that small and medium enterprises are starting to close the gap.

I’ve talked about the productivity crisis over the last year, and further insights from  SAP’s  survey of small businesses and a C.D. Howe Institute reportare pointing to other parts of the problem in our struggle for economic growth.

SAP recently surveyed 2,100 small and medium sized businesses in 21 countries around the globe.  The findings showed that although three-quarters of SMEs globally generate revenue through exports, only 26% of Canadian small businesses are exporting products outside of Canada. In fact, larger businesses in Canada fared even worse according to the survey.

A study published by Deloitte underscores this trend and demonstrates the fact that Canadian companies have a reputation for failing to follow even successful global trends. Peter Brown, a senior practice partner with Deloitte, says that Canadians, and Canadian businesses, tend to shy away from exporting, likely because of their aversion to the risks involved with exploring new markets despite evidence that exporting is good for business. “Companies who export survive…Exporters have much more lasting power in business.”

It’s not just a cultural phenomenon that keeps Canadian businesses from being on the leading edge; it’s also that Canadian businesses are lagging in the business investments they make for their employees.

Although business investment is critical to economic growth and innovation, a C.D. Howe report released this month shows that Canadian businesses investments per worker is lower than the average spent amongst OECD countries, and that the rate of spend is falling drastically behind countries such as the U.S. and Australia.

The trend is concerning for the entire country, but especially for Ontario and Quebec where many of Canada’s largest companies are based.  Forecasts for investments per worker for these two provinces in 2013 and 2014 are at their lowest level in 10 years, despite many businesses in Canada sitting on larger cash reserves due to tax relief programs, and Quebec’s spend is particularly startling as it will be the lowest business investment in the last 30 years of data collection.

Even Western Canada, which has benefitted from business investments in the energy and natural resources industries in the past, is showing trends of stalled and negative growth in the recent report.

The bright spot in the report is that the Atlantic Provinces seem to understand the principle of making investments to ensure growth, particularly in Newfoundland and Labrador as the province’s economy grew faster than China in 2013.

So, my response to customers when I meet with them is simple: Invest now to grow your business and be innovative, and don’t be scared to take risks and try new things.  All of Canada’s greatest innovations came from people who weren’t afraid to dream big and build for the future.

Jarrett Neil Ridlinghafer
Founder & CEO/CTO
Synapse Synergy Group, Inc.
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GenRxHealth.com
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jarrett@synapsesynergygroup.com

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