Do your homework. It may seem simplistic, but when breaking into a new international export market, in-depth knowledge will enhance the value you provide to customers and boost your company’s competitive advantage.
“Research is critical to success internationally,” explains EDC’s Regional Vice-President of Latin America, Nathan Andrew Nelson. “Companies need to be focused and take a targeted approach to find a niche in a specific market that presents potential opportunity.”
Canadian exporters struggle to find new global opportunities, however. According to a 2017 EDC survey, more than 60 per cent of Canadian business leaders highlighted connecting with customers as a major challenge in expanding to international markets.
Develop your export IQ
Overcoming that challenge hinges on the ability to develop a savvy export IQ for potential target markets. Acquiring market intelligence in terms of overall business environment, market dynamics (including potential risks), and demand for a specific product or service creates the foundation for the development of a solid value proposition.
Going global is becoming a necessity for Canadian companies, according to Amélie Manseau, senior associate of EDC’s Export Help.
“Many entrepreneurs begin exporting because the Canadian market is relatively small—Canada’s economy represents only 1.5 per cent of the global economy—so ambitious business people look beyond our borders,” she says. “Branching out from Canada’s relatively small consumer market makes Canadian companies more productive, profitable, innovative and resilient.”
Canada’s population is approximately 37 million. As a result of The Canada-European Union Comprehensive Economic and Trade Agreement (CETA), Canadian companies now have unfettered access to a market of 500 million–a major difference in terms of market potential.
Company pursues larger markets from day one
For Silver Crystal Group, a Toronto sports jersey customization company, tapping into a larger market has been part of the business plan from day one.
“Canada has the same population as the state of California and nine professional sports teams. There are more than 300 million people in the U.S. and 125 professional teams,” explains co-CEO Jeff Crystal.
When you do the math, exporting was a necessity for our long-term success.
Take the first steps to a new market
Identifying a potential global market is the critical first step when looking to expand internationally. Narrowing down more than 190 potential markets requires a lot of in-depth analysis, but it can begin with a quick Google search. After finding initial markets with potential, two excellent resources to further screen those markets are the EDC and Trade Commissioner Service (TCS) websites. EDC’s Market Entry Advisors can also connect you to in-country experts who can help you navigate the local business environment. Trade associations can also be a source of good information as many have networks in particular markets. You can access links to trade associations on EDC’s web site, and a list of Canadian Professional Associations, updated regularly, can be found here.
Key considerations for potential markets include if the country has a free trade agreement (FTA) with Canada, and growth trends in the specific industry, as well as overall market potential such as opportunity risk and competition.
Nelson says being strategic when conducting market research is key.
Canadian companies can’t take a shot-gun approach when seeking a new potential market,” he says.
“They need to identify where there’s opportunity and where they will not be at a disadvantage. The message is do as much homework as you can and be as specific as you can.”
That includes internal analysis of a company’s specialized capabilities, he adds.
“Canadian companies need to take a look internally and identify their competencies. Then, they need to right-size what their company can actually do and determine if it will provide a competitive advantage,” Nelson says. “One issue that many companies overlook, but is crucial to success, is creating a business development budget.”
Expect to visit the export market
While the technological age has made it easier to source out potential clients or partners in a market and develop a relationship, signing a contract usually requires a number of in-market visits.
“In-market visits are crucial and it’s unlikely that a company will generate business after one visit,” Nelson adds. “If a company is on a limited budget, far off markets such as Asia may not be the best target. That’s why it’s imperative Canadian companies choose a market that is in-line with their budget.”
Nelson says that Mexico is a good option for Canadian SMEs with a small business development budget who want to branch out globally, beyond the U.S.
“For many SMEs looking to export for the first time, Mexico is great market to consider,” he says. “It’s growing, it’s close and it offers a lot of opportunity. A company with a $10,000 business development budget would definitely get the bang for their buck.