The global market place is making room for some new tigers. Markets in Asia and Latin America are growing at an unprecedented pace, which has spurred demand for value-added goods such as industrial machinery and transportation technology. Small and medium sized exporters stand to be the primary benefactors of this phenomenon—but they’ll need to be forward thinking, and understand which sectors are growing in which markets.
Ben Arber, Head of Global Trade and Receivables Finance with HSBC Bank Canada, sees a huge opportunity for SMEs to advance globally over the next 20 years. “It’s critical to be as international as possible,” Arber says. “There’s a wide and supportive infrastructure for Canadian companies through public and private bodies here and on the ground in emerging markets.”
For Arber, China and India remain the most attractive markets for entrepreneurs looking to capitalize on countries’ increasing need for more sophisticated commodities. “There is a desire in China and India for technology,” he says. “They need transportation infrastructure, and Canadian companies are world-beating in that sector. Supply chains related to aerospace and rail—there is an extremely high demand for all these things.” In fact, HSBC predicts that Canadian exports to China, and Vietnam will increase by 14% annually between now and 2015 while exports to India are expected to grow by 16%. That kind of growth is anticipated to continue until 2020, with increases to India anticipated to drop slightly to 14%.
Another important market for Canada is Argentina, which has intensified its focus on transport equipment and industrial machinery. With its sophisticated resources and highly educated workforce, Canadian entrepreneurs have an opportunity to specialize and innovate, creating even higher value commodities for export.
While still important to Canadian businesses, Arber has witnessed a decline in exports to Europe. “Europe has got some major structural challenges,” he says. “You see the usurping of many European countries from Canadian export tables.” For example, China replaced the U.K. last year as Canada’s second biggest export market after the U.S.
Just five years ago, the United States represented more than 85% of Canada’s export base; today, it’s down to 72%. “It’s going to be well over a decade before any market comes close to the level of exports sent the U.S.,” says Arber. “But if our total exports to the U.S. go down to 50% by 2030, it will be a positive picture—diversifying diminishes the risks associated with being over-dependent on a market as volatile as the States’.”
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Arber’s key advice for companies in the export market is to be creative. “If you’re selling into China,” he says, “why not offer your customer the ability to pay in RMB [Chinese currency]?”
Global success requires global thinking.