Exporters: get ready to take on the world
While international trade has slowed due to the pandemic, now is the time for Québec entrepreneurs to explore their export opportunities. With a little planning now, they'll be ready when the global economy reopens its doors for business. Here, two Fonds de solidarité FTQ experts share their perspective on the opportunities to come.
" Many companies don’t make it in foreign markets because they didn’t do their homework properly," said Sylvain Lemarbre, Senior Marketing Advisor, Market Analysis and Development. "Good planning maximizes the odds of success and mitigates the damage in case of failure."
As an export project financing specialist, he has used his expertise to develop a free checklist of key questions for any company exploring the export market. Among the factors to consider: markets to target, products to offer, operations, financing, etc. These are crucial, he advised, because "it's cheaper to do the numbers on a spreadsheet and pick up your phone than to invest your money too quickly."
The pandemic has certainly taken its toll and done its share of damage, but the vaccination rollout will pave the way for good business opportunities. Call it the calm after the storm.
"Many businesses have felt the pain of the pandemic, so there will be lots of needs that didn't exist two or three years ago," added Michel Dorion, Senior Legal Advisor at the Fonds.
"Telecommuting and a renewed interest in the outdoors have already had an impact on consumer behaviour. Now, the Biden administration’s stimulus package will put money in consumers’ pockets. New legislation in Cuba recognizing private business ownership will encourage foreign investment. And there’s a growing transition to renewable energy. These are all new opportunities for domestic companies to develop their market and increase sales."
According to Dorion, pent-up consumer demand could precipitate all these events.
"When I hear people say they’re going to eat out every day as soon as things re-open, it tells me that consumers are eager to move on after the pandemic," says Dorion, an admitted optimist.
While it’s always better to buy and produce locally for both environmental and socio-economic reasons, exporting can be the perfect complement.
"We encourage local self-sufficiency in the supply chain, but gaps in the local market can be filled through export overseas partnerships. For example, offering some of our partner companies the opportunity to offset seasonal downturns by making their facilities available to other markets. This also helps keep jobs in Québec," Dorion added.
"Quebec entrepreneurs and workers have every reason to be proud of their home-grown products. That’s why we encourage our partner companies to develop partnerships and adapt their products for foreign markets. This pushes them to explore new avenues of growth and helps them to better protect their domestic market. Exporting is a two-way street."
A world beyond the U.S. border
According to both Fonds experts, the greatest market potential lies in Europe and the Asia-Pacific, not in our neighbour to the south. The United States already buys three-quarters of our exports, but Canada has signed trade agreements in the last few years to facilitate the movement of goods. Each of these markets has a similar-sized population as North America, but they don’t buy much from Québec.
"The United States is not part of these agreements, leaving the field wide open for our companies to get a head start,"added Lemarbre.
Some of our contacts like doing business with Canadians for cultural reasons or share a language with Quebecers. "Customers from French-speaking countries like to do business with other French- or Latin-speaking countries; the same goes for some entrepreneurs in Québec. This gives us an advantage in certain markets," said Dorion, who describes these markets as "fertile ground."
"Going overseas can be intimidating, but a thorough feasibility study of the market can determine the risks and rewards of a project," added Lemarbre.
As well as new agreements with the 27 European Union countries and the 11 Asia-Pacific countries, Canada has many other trade and tax agreements to cut through the legal red tape and help exporters set up shop abroad.
"These agreements include recourse in the event of a dispute, who to contact in each situation and more. Once you decide to target a region of the world, you should consult these documents," Dorion continued.
Most of them are easy to find online (Ottawa has posted a list of tax treaties, for example), as well as other essential information on each market, such as Export Development Canada's country risk analysis or statistics compiled by national agencies. You can also invest in studies by private firms, which are useful because they’re written from a business development perspective.
Understanding and adapting
Beyond the numbers and legal documents, each market has its idiosyncrasies.
"Exporting means doing the same work as always, but doing it in someone else's country," Dorion observed. "For example, in some African countries, the personal touch seals the deal, including long meetings with key contacts and visits to their families. But in California, where our methods are similar, we don't need to meet in person… and business can be wrapped up in 30 minutes."
As a general rule, Dorion advises: foreign customers respond better to locally relevant, environmentally friendly prospects that stimulate local economic activity and job creation.
"It's the best outreach we can hope for our companies, but it takes real presence and sustained relationships. That means making sure that products are compatible with the local language, culture and regulations," he added.
Support and tools
To make the initial contact, the Fonds supports its partner companies’ discussions with Canadian trade commissioners or Québec government offices abroad. They’re well placed to assess the economic and political environment in the field, point to local assistance programs, or recommend trusted partners.
On the financing side, institutional investors, like the Fonds, are always looking for promising projects, while our provincial and federal governments also offer assistance programs, sometimes in specific sectors. They are listed online by the governments of Québec and Canada, but our two experts recommend that you call these agencies to discuss the details in person.
Insurers also offer products for exporters, whether it's to cover the risk of a political crisis or fluctuating exchange rates.
"Don't try to take on the whole world. Be present. Be relevant. And above all, be patient."