Globalization And Canada: ‘Resistance Is Futile,' EDC Tells Business Leaders
With the loonie near parity, transportation costs climbing and protectionist trade provisions on the table in Washington, Canadian businesses can be forgiven for questioning the logic of global expansion.
But according to Stephen Poloz, president and CEO of Export Development Canada (EDC), such thinking is ill-advised. Irrespective of the current global economic turmoil, he says, globalization is here to stay.
Speaking at the Toronto Board of Trade on Wednesday, Poloz made the case for expansion in the face of uncertainty, highlighting the increasing importance of emerging markets to the survival of Canadian businesses.
“Globalization is just a force of nature. If this were a Star Trek episode, you would say, ‘Resistance is futile,’” he said, drawing laughter from the Bay Street crowd. “It’s like water running downhill. It’s just not going to stop.”
It’s a message that Poloz says Canadian exporters are increasingly taking to heart.
As he points out, the past decade has seen more and more Canadian wares finding their way into emerging markets: from 2000 to 2010, the proportion of Canada’s exports to the U.S. fell from 87 per cent to 73 per cent; exports to emerging markets, meanwhile, grew from four per cent to 11 per cent.
“If that trend continues, and that’s what we expect to see, then in the next five years, you’ll see emerging markets get up to 20 per cent of our trade. Go ahead another 10 years and you’re up to 30, 40 per cent. And, of course, you’re locking in something that’s growing much faster than traditional markets,” he said. “Arithmetically, the rate of trade growth for Canada could double in that 10 or 15 year period.”
Already, he says, transactions in places like China, Brazil and India account for about one-third of the business that EDC -- a Crown corporation that provides financing and expertise to Canadian exporters -- facilitates.
Characterizing the global economic trends that have emerged in the so-called recovery as “the new normal,” Poloz outlined how the most successful Canadian multinationals are forging ahead -- or, as the presentation was entitled, “Doing business where business gets done.”
In addition to stress-testing their business plans, looking to emerging markets to diversify their customer bases, integrating foreign suppliers and shoring up their assets against risk, Poloz noted that “companies have learned that foreign buyers don’t buy out of a suitcase anymore.
“There was a time where you would go out there and travel around for two weeks and come back exhausted, with a suitcase full of money, lots of orders. But today it doesn’t seem like that’s as common,” he said. “What you see much more of is foreign buyers looking to your presence in the market place. It’s more of a relationship kind of business.”
But despite recent progress, when it comes to the amount of activity Canadian companies are doing globally, Poloz says there is plenty of room for improvement.
“The United States has globalized probably four times as aggressively as we have,” he said. “I’m confident that we are doing it -- we already are doing it -- but we do have catching up to do.”
So where should Canadian companies export to? Here are the world's fastest-growing economies over the past five years: