Economy

Your Next Big Thing: The world's biggest

Written by Laura Pratt and Deena Waisberg

All the world’s your stage
Globalization is transforming business. What’s in it for you?

Globalization is the trend to beat all trends. This broad term — covering everything from ever-freer trade to overseas outsourcing to the opening of new markets — is the leading force influencing business today.

Steve Strauss, a San Francisco-based consultant, author and advisor to entrepreneurs, calls globalization “a potential boon for small businesses everywhere” because it’s fuelling the growth of a sizable middle class in countries such as India. That offers an opening to supply a vast array of goods and services of the sort consumed by the middle class anywhere.

Tyson Johnson, president of Vigilint Strategic Partners, says joint ventures are the key to taking advantage of globalization: “Small and mid-sized Indian and Chinese firms might have the distribution network, but [not] the innovative product. Then you have the Canadian small business that has the product, but doesn’t have the distribution model into these markets.” The current hot spots, says Johnson, whose Mississauga, Ont.-based firm advises companies on strategies in global markets, are in infrastructure, energy, packaging and auto parts. As well, call centres remain big, and Canadian expertise is well-respected worldwide.

“There’s no business that couldn’t benefit from globalization,” says Peter Dawes, managing director of Toronto-based Warrington International Inc., an international trade consultancy specializing in SMEs. “If you’re a small company making any kind of widget, globalization allows [you] to be able to source the equipment that you need to compete against much larger firms without any difficulty whatsoever — literally, around the world.”

Dawes says Canadians should be competing globally in biotech and software services: “In some cases, we’re leaders in the field, but we’re a bit timid about going out and partnering with other companies in other jurisdictions.”


It’s a Wal-Mart world
The low-price crusade continues — leaving opportunity in its wake

Need a plastic tablecloth or lawn troll? Look to Wal-Mart. Need a formula for a successful business venture? Look to Wal-Mart. With US$256 billion in annual revenue, the world’s biggest company has grown 64% since 2000, and is still expanding at a spectacular rate. Where Wal-Mart innovates in retailing, others follow, producing powerful ripple effects across the economy upon which you can capitalize.

Sell to Wal-Mart: Retail specialist Len Kubas, president of Toronto-based Kubas Consultants, cites the example of Krave’s Candy, the Winnipeg-based maker of Clodhoppers, which got its big break in 1998 when Wal-Mart agreed to carry the unproven brand: “Wal-Mart took a flyer on them, and now [Krave’s is] a multimillion-dollar business.” And Wal-Mart Canada is keen to find new suppliers. At its first-ever new supplier fair in October in Toronto, it invited non-suppliers to pitch their stuff and learn the Wal-Mart way.

Copy Wal-Mart: Robert Slater, author of The Wal-Mart Triumph, says the company’s success flows from dedication to a few principles that entrepreneurs can easily adopt. Utmost is its dedication to beating everyone on price. It does so in part by endlessly pressuring suppliers to cut costs. But, as Wal-Mart Canada spokesperson Kevin Groh says, sharing information is also crucial: “Our suppliers see very detailed sales information that allows them to plan and deliver in a manner that not long ago simply didn’t exist.”

Exploit Wal-Mart’s latest moves: Whenever Wal-Mart adopts a new business practice, things start to happen. Its insistence that its top 100 suppliers become RFID-compliant by January, and all the rest by 2006, will greatly speed adoption of RFID, transforming inventory management by using radio-frequency ID tags to track products. That means opportunities to develop RFID chips — which will spread faster once they’re much cheaper — and to help firms integrate them into business processes. — LP


The big red machine
China is hungry for commodities, credit cards — and kayaks

China is everyone’s favourite market these days. Imports by the world’s second-largest economy soared 40% last year. The country’s immense appetite for raw materials to build factories, office towers and apartment buildings has been a boon for Canadian exporters of industrial materials, which, led by metals, make up 45% of our sales to China. The sectors in which opportunities in China are “very high,” according to a September report by Caldwell Securities Ltd., a Toronto-based investment adviser, are power generation, natural gas, insurance, credit-rating services, telecom, railways, shipping, fertilizer and natural resources.

Some other opportunities may come as a surprise. Future Beach Corp., a Montreal-based manufacturer of non-motorized beach products, just sold $200,000 worth of pedal boats, kayaks, rafts and slides to beach-concession operators in northern China. The end-users will be members of China’s burgeoning middle class, which was almost non-existent 20 years ago. By next year, forecasts China’s State Information Center, the segment will comprise 200 million people who can afford a Western standard of living in cars, housing and leisure travel.

China’s emergence as the new global centre of low-cost manufacturing — the “workshop of the world” — is creating opportunities for more than exports. Randall Chan, director of the Chinese services group at Deloitte in Toronto, says more entrepreneurs should aim for a piece of the action in sectors in which China is a major force, such as manufacturing bicycles and promotional items. “Any small business that has a significant labour component to it could probably be replicated in China more cost-effectively than over here,” he says. That could mean opening factories in China, alone or with local partners, or striking deals to import low-cost Chinese products into Canada.

© 2004 Laura Pratt and Deena Waisberg

Originally appeared on PROFITguide.com