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According to Edmée Métivier, Executive Vice President, Financing and Consulting for BDC, Canadian manufacturers can be broken into three basic categories. There are those born as exporters; those who grow to be exporters and those that have exporting thrust upon them.
What all share is a basic understanding that the nature of doing business in Canada is changing, in some cases changing dramatically. Markets are increasingly global, she says, as is competition.
"In past the traditional path was to serve a local or regional market and then to expand perhaps across Canada, perhaps into the United States or even into Western Europe," she says. "While those types of companies still exist, there are those new companies, especially in technology and bio-medicine that are born global.
"Even among existing companies there is a fast growing number who have found Canada a small pond, a limiting environment for growth. In past the natural path led to the United States, today it leads all over the world, China, India, the former Eastern Bloc countries."
Stick a pin in a world map and you are likely to find one of BDC's clients doing business in that country, she says.
Making the switch from domestic to international trade can be a difficult transition, she warns. Success will depend on intensive research, a detailed go-to-market strategy and a willingness to monitor activities regularly and adjust operations according to changing circumstances.
For most Canadian companies, heading south to take advantage of the 10 times greater US market has been the most popular path to exports. Those that have taken that route have found out that the United States is not just one foreign country but 50 different jurisdictions.
"For all practical purposes, that is true," says Jeffrey Brown, leader of KPMG's multi-state tax practice. "Each state has its own laws, its own approach to taxation, its own regional consumer preferences, its own approach to the labour force and its own ways of doing business."
The value of intensive research can not be overestimated no matter where expansion takes place, says Ms. Métivier.
"You absolutely have to know everything you can. Who your customers are? Who the competition is and what are their advantages? What can you offer that will give you that necessary edge over entrenched competition," she says.
Then there is the key matter of management. Managing a $10 million company in a domestic market demands different skill sets from managing a $20 million company with half those sales coming from exports, she points out.
"The most successful companies have gotten to know and understand local customs and preferences. They have created a network of informed advisers who know the markets that have been targeted. They have also recruited key local managers then ensured that they were aligned with corporate goals and culture," she continues.
The process usually demands the business owner do first person research as well as recruiting experienced professionals, Ms. Métivier says.
"Nothing can substitute for first hand knowledge and feel."
The form the foreign operations take will also be one of the keys to success, suggests Neil Sheehy, a partner at Goodmans LLP in Toronto. "It could be an agency, a division or a separate corporation or corporations," he says.
"Unless there is some pressing reason against it we most usually recommend a separate corporation. We also think it prudent to have the foreign operation look like a local company rather than a Canadian corporation," he says.
At the same time, many Canadian corporations have started by dealing through local distributorships and then moved on to local partnerships and even wholly owned local subsidiaries as volumes of business grew and economics demanded.
Each of those forms of doing business will come complete with its own set of risks and rewards, adds Ms. Métivier. The goal is to analyze each and determine what best suits corporate needs.
"Every decision has to be made in the light of the best foreseeable risks versus rewards," she says.
But, at the same time, remember that nothing is set in stone. Success in the highly competitive, fast changing world of global business demands management stay nimble.
"Nothing stays the same," Ms. Metivier says. "What you have to do is stay on top of trends and changes at both the micro and macro levels. Then have in place strategies to meet these challenges.
"While the risks may be great so too can be the rewards."
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