Small Canadian Businesses Say They Like Globalization...

Small Canadian Businesses Say They Like Globalization,

Yet Shun International Trade

(CanWest News Service)

Many smaller Canadian businesses are reluctant to go global, even though most say the globalization of commerce is a positive trend, survey results suggest.

"Canadian small- and medium-sized businesses (SMBs) say they are hesitant to expand their business beyond Canadian borders," said the analysis of the results of the survey conducted for UPS Canada by pollster TNS Canadian Facts.

The spring survey of 637 executives at such firms found that 37 per cent believe they have enough business to deal with in Canada, while an additional 17 per cent say global trade is out of the question until they expand their business domestically.

Only one in five sells outside Canada.

"This is disconcerting when one considers that SMBs make up 98 per cent of Canadian businesses," said Mike Tierney, president of Canadian arm of the international parcel-delivery firm. "Canada runs the risk of being left behind in the increasingly competitive global market unless there is a shift in the practices of our entrepreneurs to capitalize on the international trade opportunities available to them."

Global trade

Those firms that have chosen to conduct cross-border and international trade see the benefits of doing so and intend to continue the practice, according to the survey, which found almost half planning to expand their workforce in the coming 12 months, nearly double the 26 per cent of businesses that do not participate in international trade.

Though they are reluctant to dive into global commerce, the vast majority believe globalization to be positive or neutral, with only 15 per cent viewing it negatively, the report said.

While nearly two thirds of importing firms and 56 per cent of exporting ones view globalization positively, a little more than half of the non-importing, non-exporting firms are undecided about whether it is a good or bad trend.

"There is a discrepancy between the actions of SMBs to expand internationally and their positive perception of Canada's future position in the arena of global commerce," said Tierney, adding that if businesses are to achieve the successes they expect, must take a determined approach to global trade.

"However, many feel challenged on how to begin international trade," he said.
The survey found that hooking up with trustworthy suppliers and understanding complex trade practices are major barriers keeping firms at home.

Considering expansion

However, Garth Whyte, executive vice-president at the Canadian Federation of Independent Business said that while a little more than half of SMBs have no interest in going global, the survey results also suggest close to half were at least looking at trading internationally.
"That's darn good," Whyte said, noting that there are some smaller businesses, such as local retailers, that have no reason to look beyond their local or domestic market.

Also, the strong dollar and shortages of labour may be deterring some firms from looking at expanding into foreign markets at this time, Whyte added.

The survey, meanwhile, found that most smaller businesses are also optimistic for success at home, believing the Canadian economy is more likely to grow than that of rapidly expanding markets such as India, the analysis said, noting that two-thirds expect to see Canada growing economically over the next three years, second only to China in terms of economic growth.
Meanwhile, 22 per cent see the U.S., which is Canada's largest trading partner, declining economically over the next three years, while 24 per cent see the Middle East losing ground as well.