In the last 18 months, I’ve received hundreds of trade-related inquiries from Canadian businesses, asking about everything from tips on how to work with a U.S. distributor to finding tariff rates under CETA.
My role at EDC is to help answer those questions by tapping into our world-wide network of resources and contacts.
With this regular blog, I hope to share with you some answers I have gathered for both the common and the more unusual questions I’ve received. I’d also like to hear your suggestions on topics you’d like to see covered—more about that later!
So what’s the most popular type of question we receive? It may not be what you think. The most frequently asked question is not about the U.S., as I would have expected, or even Europe, even though both markets rank near the top. The #1 topic is actually a request for more market intelligence on countries in the Asia Pacific region.
This keen interest is justified, as there are many attractive markets worth exploring in the region, including Japan, Vietnam, Malaysia, Singapore, Australia and New Zealand. This region represents a consumer market of 800 million people, generates 40 per cent of the world’s economic output, and has a GDP of $28.5 trillion. That doesn’t even include the immense Chinese market, which I’ll discuss in more detail below.
You can learn more about this large and varied market region by getting the insights you need on edc.trade. One example is our growing series called Market Entry Advisors, where you can get insights from key experts, as well as helpful facts and stats on India and China – and more markets are being added.
Sheer numbers make the Chinese market attractive to Canadian exporters. Who wouldn’t want to tap into 1.3 billion consumers? Moreover, a growing middle class, rising incomes, and an economy that is still growing respectably despite a slowdown in recent years, has led to increased consumer, business and government spending.
Other recent events are also making it easier to do business in this complex market. Canada’s renminbi trading hub, for example, opened in Toronto in 2015, the first in North America. This brings new opportunities because it allows Canadian businesses to deal with Chinese companies that are not prepared to do business in foreign currencies.
Another growing opportunity is coming out of China’s appetite for online shopping, which is experiencing double-digit growth. According to China’s National Bureau of Statistics, 2016 online sales in China reached $752 billion in 2016, up 26.2 per cent over 2015. Food products were an especially popular online purchase, with growth at 28.5 per cent.
Nine out of ten stores in China are online, and Chinese consumers tend to flock to online “shopping malls” or markets. An Introduction to E-Commerce in China by the Trade Commissioner Service is an excellent guide to help companies compare popular e-commerce platforms, get tips on managing logistics, and more. For a primer on how to set up an online presence, read our three-part series on how to leverage an e-commerce site for success.
And here’s a special tip: Chinese holidays are huge for online shopping. For example, Singles Day in China, which occurs in mid-November, is celebrated by singles buying online gifts for themselves. This day racked up $14.3 billion U.S. in 2016, breaking previous records. To find out more, see page five of EDC and Google Canada’s Export Business Map for insights on Chinese consumer behaviour such as holidays and Internet purchase behavior.
Nevertheless, the Chinese market comes with a word of caution. If your company has never exported before, China probably shouldn’t be your first international market. It takes a considerable investment in time and money to establish and build relationships there, as well as to gather the essential market intelligence to decide if your company and its products or services are a good fit. The Chinese market is also extremely complex and is made up of several very different regions. A product that succeeds in one of these regions may not succeed in others.
Although market conditions are improving, there are still challenges to doing business in China, such as regulatory complexity and risks of corruption and fraud, as well as a need to protect your intellectual property such as trademarks and copyrights. Some insight can be gained through the World Bank’s Ease of Doing Business rankings, the World Economic Forum’s Global Competitiveness Index, and EDC’s Country Risk Quarterly.
Still, if you are familiar with China and ready to make a strong commitment, exporting to the Chinese market may work out very well for you. To get a better sense of the steps you’ll need to take, check out EDC’s guide to Doing Business in China. Another good resource is The Canadian SME Gateway to China by the Trade Commissioner Service. This online portal is designed to help you navigate the business environment in China and has multiple articles on topics such as investment, IP protection, and more. You’ll want to see the section on Due Diligence for articles on best practices for evaluating potential business partners.
Whether you are looking to export to the Asia-Pacific region or elsewhere, there are plenty of resources available to you online. Here are just a few:
- EDC’s Country Info Pages list key industries and provide a short overview of the business environment in each country.
- EDC’s Country Risk Quarterly provides indicators on the commercial and political landscape for each country.
- Our Market Entry Advisors series has insights from in-market experts on top export destinations.