Why are Canadian companies so afraid to go global?

90% of mid-sized Canadian companies who have expanded outside of North America have found success—so why aren’t more doing it?

 
A container ship at sea

(Lakruwan Wanniarachchi/AFP/Getty)

According to a recent study by Aimia Inc., 80% of mid-sized Canadian companies feel their businesses are “not well-suited” to international expansion. Yet it might be time for those businesses to take a note from their peers who decided to go global—90% of companies who made the move have said that it was a success.

The study surveyed 348 Canadian business owners, C-suite executives and senior managers, at companies headquartered in Canada with 50 or more employees. Participants were sorted into three categories: not considering global expansion, considering, and already global.

The study found that, when it came to businesses thinking about taking the plunge internationally, 46% felt they didn’t have the insights needed to identify markets for expansion, 63% said they didn’t know the steps required, and 24% didn’t even know where to start.  

Rupert Duchesne, Aimia’s Group Chief Executive, came to Canada 20 years ago from the U.K., and says that the thirst for international trade just isn’t the same here. “You see a [Canadian] product and you think to yourself, if you put it in a certain country it’d be a winner,” he explains. “But we have a national view that international trade should be south of the border.”

When it came to companies that reported they weren’t considering international expansion, 60% said they didn’t see the advantage, while 74% reported no long-term desire to expand beyond North America.

Duchesne pushes off the idea that the 80% of businesses that reported they are not “well-suited” to expansion couldn’t thrive in a global market. “I would say that it’s extremely unlikely that the rest of the domestic economy does not have products or services that could be global,” he says. “It’s a combination in some cases of a lack of ambition, and in others of a massive amount of friction.”

“What we’d like to see come out of this study is some really practical ‘here’s what you can do’ steps to realize this ambition if you have it,” he adds.

Duchesne explains that for companies looking to expand outside of North America, there are numerous places they can go for advice and data within the Canadian government. The problem is, most mid-sized businesses don’t have the time and resources to go through the various channels. Duchesne wants to see a single point of contact established on the federal level. “It’s a practical possibility that we could have it for companies that are looking to do this kind of expansion,” he says.

The study identified four major perceived barriers to global expansion: knowledge, talent, resources, risk exposure. Companies considering expansion reported not having the right local insights and partners as a barrier to global success.

Duchesne says bringing a consumer product onto the international market can seem daunting, but that it’s easier than many might think. “Very often it’s all about something that’s not necessarily in the North American mindset—partnering,” he says. He gives an example: “Let’s say you have a new board game you want to sell on an international market—find out where the annual trade show for boardgames is, find out who the main players in the market are, find out which countries are crazy about boardgames, and find someone somewhere who wants to partner with you. That’s you access point: that’s your way in.”

Duchesne says that while it might seem easier to try and sell a product in the U.S., there are plenty of countries overseas with markets more favourable to mid-sized entrepreneurship. “If you want to sell your product in the States, you’re going to need to have a deal with Walmart and Target and what have you,” he explains. “For a lot of other places around the world, you’re not going to need that kind of mammoth access.”

Duchesne acknowledges that a fear of the unknown might be a reason why more Canadian businesses aren’t looking to expand overseas, but he hopes that the results of the study will spark a national conversation about the country’s potential for international trade. “The rest of the world is not that different guys,” he laughs. “I would say from my own experience in business, that people would be surprised that, when it comes to doing business globally, it is the U.S. that is the outlier in how they operate.”

“It’s a fundamental issue for Canada—not to move beyond our resource economy, but to support it internationally,” says Duchesne “At the core of this is ambition and leadership, getting into that global mindset and thinking forward. If we keeping selling our early stage businesses to American investors, Canada’s not going to have the economy it wants in 20 years.”


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