How To Get SMEs Exporting
President & CEO of the Ontario Chamber of Commerce
bh IN BRIEF
The Ontario Chamber of Commerce (OCC) is an independent, non-partisan business network.
Its mission is to support economic growth by defending business priorities and advocating for pro-business policies.
For more than a century, the OCC has provided its members with practical supports, advantageous network opportunities, and access to innovative insight and analysis.
The OCC represents local chambers of commerce and boards of trade from communities across Ontario.
Through this network, it is the voice of 60,000 members that range from small businesses to major corporations and industry associations.
Together, its members employ two million people and produce nearly 17 percent of Ontario’s GDP. Across the country, Chambers of Commerce in every province and territory support businesses of all sizes and advocate for a strong, competitive economic environment.
Learn more about the Ontario Chamber of Commerce’s Export Market Access Program at www.ontarioexporters.ca.
It’s no secret that the Canadian economy was hard-hit by the 2008 financial crisis, especially Ontario’s manufacturing sector, and that it continues to struggle to find its economic footing—even after six years of recovery. A relatively high dollar, a struggling U.S. economy, and shifting global growth patterns have all contributed to a decline in the traditional economy. In this economic transition, identifying new opportunities for growth is extremely important. Increasingly, these opportunities are present in new and emerging economies.
This is why the Ontario Chamber of Commerce (OCC) is working to strengthen Ontario through closer ties with our current trade partners and new partnerships with emerging global players.
The economic benefits of an open, diverse trading economy are clear. In 2011, the total value of imports and exports in Canada was $1.1 trillion (that’s $31,600 per Canadian). In that year, economic activity as a result of trade made up 63.3% of the country’s total GDP.
Despite these figures, Ontario’s trade statistics reveal an economy that remains rooted in its traditional partnerships: over 78% of Ontario’s exports are bound for the U.S. and 35% of the province’s exports are autos and motor vehicle parts. Exports to emerging markets are comparatively small, with only 0.3% and 1.4% destined for India and China, respectively. As a result, the value of Ontario’s exports has stagnated over the past decade, and remains well below pre-recession levels.
National figures tell a similar story. Over 75% of Canada’s exports are destined for the U.S. and only 11% to emerging economies. If Canada had the same level of export penetration as the U.S., its GDP would grow by $60 billion and Ontario’s GDP would grow by a whopping $25 billion.
As we look to new relationships to help grow our economy, the OCC has focused its efforts on encouraging increased export activity among Ontario’s SMEs, which represent almost 90% of total private employment and one-quarter of the province’s economic activity. The export profile of small businesses is encouraging. According to Industry Canada, about 90% of Canadian exporters are small businesses, and small businesses tend to disproportionately export to non-traditional trading partners like India, Turkey and South Korea.
In Canada, less than 2% of small businesses currently export. Potential SME exports could significantly boost the Canadian economy. That said, we recognize that SMEs face a number of barriers to exporting that larger businesses have an easier time overcoming, including: difficulty identifying new market opportunities, a lack of knowledge of new markets, a lack of expertise, regulatory and trade barriers, difficulty finding business partners or financing, and others.
Through our Export Market Access program, the OCC is breaking down these export barriers by providing SMEs with the financial means to conduct market research, develop marketing tools, attend trade shows, and bid on foreign projects. Through this program we have provided $4.8 million to over 665 firms, which have in turn generated over $209 million in export sales. But there is more to do—the success of this program underscores the incredible demand in Ontario’s SME community for these types of services. This demand is likely consistent across the country.
What can we do, as a province and as a country, to improve our trade balance and drive growth via new opportunities with our international partners?
To foster an export-oriented culture, particularly at the SME level, we must first address barriers to internal trade at home. The regulatory differences between provinces and territories that add unnecessary costs and complexities for doing interprovincial business must be reduced and eliminated, where possible.
Second, we agree with the University of Toronto’s Mowat Centre that Canada must learn to leverage and capitalize on its greatest asset: its diverse population. Among OECD countries, Canada has the highest proportion of immigrants, and most of our immigration is from emerging economies. Canada must mobilize its diverse immigrant talent and explore ways to leverage their global networks.
Third, continued support must be given to programs like Export Market Access, which break down the barriers that SMEs face in exploring export opportunities and entering new markets.
Finally, and most importantly, Ontario’s and Canada’s business community must step up to the plate. Through growth, national brand recognition, and spinoff opportunities, businesses of all stripes reap the benefits of a successful exporting community. Larger businesses with trade expertise and related competencies should mentor smaller businesses. We can create a stronger, export-driven economy to capitalize on global opportunities, and drive Ontario and Canada to a more prosperous future.