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A Profile of Small and Medium-Sized Exporters (SMXs)
in British Columbia - 2002
Overview
For the purposes of this report, an exporter is defined as a business enterprise that ships merchandise to an international destination. Exports of products to other provinces within Canada are not included in this analysis and exports of services are also excluded. Exporters are subdivided into three size groupings of small, medium and large.3 A small exporter is defined as a company that ships under $1 million of goods to international destinations annually. Medium exporters are those that ship between $1 million and $5 million worth of commodities, and a large exporter is a company that exports over $5 million in a year. Small and medium-sized exporters are grouped together and are called SMXs; therefore, SMXs are exporters that ship under $5 million worth of goods annually to international destinations.
In 2000, the average SMX in British Columbia
- shipped $608,142 worth of merchandise
- exported mainly to the United States (80%)
- was concentrated in wholesale and retail industries as well as "other" manufacturing (i.e., excluding food and beverage, primary products and computer and electronic product manufacturing)
- shipped mainly machinery and equipment and base metals
By comparison, the average large exporter
- shipped $54.4 million worth of merchandise
- exported mainly to the United States (63%) and Asia (24%)
- was concentrated in wholesale and retail, "other" manufacturing, and wood and paper manufacturing industries
- shipped mainly wood products and machinery and equipment
There were a total of 4,548 small and medium-sized exporters in British Columbia in 2000, which is 1.3% of all businesses in the province. Of these, 3,690 (81%) were small exporters shipping less than $1 million worth of goods. SMXs comprised 89% of all exporting establishments in the province. Since 1996, the share of exporters represented by SMXs has declined by over one percentage point as the number of large exporters has grown faster than that of SMXs.
Number of Exporters in BC by Size 1996 2000
Source: Statistics Canada In British Columbia, growth in the number of medium-sized exporters outpaced both large and small-sized exporting establishments from 1996 to 2000 and, as a result, the proportion of medium-sized exporters increased from 13% in 1996 to 17% in 2000. For Canada as a whole, the number of large exporters increased faster than that of the small and medium variety. In both cases, the number of small-sized exporters declined over the period (possibly expanding to become medium-sized exporters). All growth in the number of SMXs in British Columbia (+0.4%) was due to the increase in medium-sized exporters. For Canada, the decline in small-sized establishments outweighed the increase in medium-sized exporters and SMXs consequently declined in number over the period, falling 0.2%. |
Growth in Number of Exporters by Exporter Size, BC and Canada, 1996-2000
There are several possible reasons why medium-sized exporters in British Columbia grew faster in number over the 1996 to 2000 period. Increasing globalisation of world trade may favour larger exporters and encourage consolidation of smaller companies into larger companies. British Columbia has few large companies to begin with, so it is the medium-sized exporters that benefit the most. Another possibility is due to a limitation of the definition of small, medium and large exporters. Inflation could push an exporter into a different size category even if volumes shipped remain unchanged. If price changes affect commodities shipped more often by one category of exporters than another, this could alter the composition of exporters by size even further. Large exporters ship by far the majority of merchandise exported from British Columbia. In 2000, almost 92% of all exports from the province were from establishments that shipped in excess of $5 million annually. Medium-sized exporters were responsible for 6% of goods exported and small-sized exporters shipped the remaining 2%. SMXs shipped almost $2.8 billion worth of commodities in 2000, compared to $30.2 billion for large exporting establishments. |
Value of British Columbia Exports
Source: Statistics Canada |
The value of goods exported by SMXs in British Columbia grew by over $640 million dollars between 1996 and 2000, an average annual compound growth of 6.8%. This growth exceeded that of total exports, which expanded at an average annual rate of 5.2%. Medium-sized firms (+8.3%) were responsible for most of the growth in value of exports of SMXs, but small-sized firms, despite shrinking in number, also experienced an increase in value of shipments (+3.3%).
By contrast, for Canada as a whole, the rate of growth of shipments for SMXs was slower than that for total exports. While SMX exports grew at an average annual rate of 4.3%, the value of total shipments surged ahead at a rate of 10.0%. As was the case in British Columbia, small-sized exporters increased the value of shipments (+2.0%) despite declining in number. This could be due to efficiency improvements, but is also probably, at least partially, the result of inflation (i.e., such that the value of shipments went up due to price changes, rather than increased volumes).
The reason SMX exports in British Columbia grew faster than large exporter's shipments while the reverse was true for Canada may have to do with the commodity mix of goods exported. In British Columbia, exports in the forest sector grew much more slowly than overall exports. The forest sector is far more significant for British Columbia than it is for Canada as a whole, so companies in British Columbia are more likely to be affected by the slower growth. Additionally, larger exporters are far more likely than SMXs to be shipping wood and paper products (see page 13 for commodity details). Consequently, it makes sense that, in British Columbia, SMX exports are growing faster than shipments by large exporters.
Growth in Value of Exports by Exporter Size,
Source: Statistics Canada |
3 See technical note #8.