Canadian businesses, including consumer goods companies and brands, have tended to look primarily to the United States for international trade opportunities. Indeed, 71.5% of Canadian exports went to the United States in 2018, which was up from 70.1% in 2009.
The US share of Canadian exports was up even as important new trade agreements—the Comprehensive Economic and Trade Agreement (CETA) with the European Union and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)—were taking shape.
Since CETA took effect in 2017, Canada has seen an uneven performance in tapping EU markets: In 2018, exports to the United Kingdom totalled CA$16.3 billion1, which was down from CA$17.1 billion 2016; those to France over the two years were flat at CA$3.4 billion; those to Germany rose slightly to CA$4.8 billion from CA$4.1 billion over that time period.
Canada has had success over the past two decades in diversifying its exports by increasing the share of Asia at the expense of the United States. But much of that success was based more on the demand for resource goods and less on value-added goods. Canada has also fallen behind other countries on service exports, which have been the main driver behind growth in global trade in recent years. And given that export services are less dependent on proximity than physical goods, they provide Canada an opportunity to penetrate overseas markets, where distance has been a barrier.
The numbers show Canadian companies are lagging on export diversification, even as other countries, such as France, have succeeded in using CETA to sell more products like wine to Canadians. In fact, merchandise imports from the European Union jumped 12.6%2 in the CETA’s first year. With tariffs and other geopolitical concerns creating economic uncertainty and Canadian business leaders signalling rising pessimism, it’s time for our companies to embrace new opportunities to boost their resilience and position themselves for growth by expanding their presence in markets that are part of CETA and the CPTPP. In particular, increasing service exports will be crucial to achieving our diversification goals.
To help companies get a start, we conducted a survey of 3,521 consumers in seven key countries—Australia, France, Germany, Italy, Japan, Mexico and the United Kingdom—on their perceptions of Canada and Canadian goods and brands.
Sentiment toward Canada is positive, with 96% having a favourable view
Awareness of our products is strong, especially among younger groups
While international expansion isn’t necessarily the right approach for all Canadian companies, our survey shows there’s significant demand for our products and brands in important markets where we’ve recently entered into new trade agreements. The Canadian brand has particular strength in important demographic groups—like millennials—and in certain product categories—like food and beverage items—where our reputation for trustworthiness and reliability is a major advantage. But as the trade numbers show, Canadian companies have fallen short on taking advantage of the strength of the Canadian brand.
For companies looking to boost their growth prospects and position themselves for a range of economic scenarios, the current geopolitical environment makes it an ideal time to take a look at their readiness for international expansion. So what are some of the things Canadian companies should be focusing on?
Develop a growth strategy that outlines how international market expansion can support value creation.
Set out the paths, including online and digital channels, to get your products and your brand into international markets. Consistent availability and supply will be critical to success.
Emphasize your strengths. Our survey shows the world wants more Canada, and the positive traits many people associate us with—including trustworthiness, reliability and quality—create a halo effect for Canadian goods. Tell your story, and be up front about your association to Canada.
Explore partnerships, including with distributors as well as local and national retailers, in international markets to help you with access and entry.
Think about how you’ll structure your operations to minimize tax burdens and maximize the return of earnings to Canada.
Explore our interactive map to see how consumers in the seven CETA and CPTPP member countries view Canada and Canadian goods and brands.