Why Europe Should Be Your Next Export Market
With the relative weakness of the Canadian dollar against the U.S. dollar, many Canadian small businesses have ramped up exporting activities south of the border. The lower costs of buying from a Canadian company has made it very attractive for American businesses to purchase from Canadians. This trend is even impacting consumer markets with many U.S. car buyers purchasing from Canadian dealerships. While the American market is strong and vibrant, it might also be worth developing a European export market strategy.
More Diverse Markets with Less Competition
The Canadian dollar’s weakened state is a major benefit to Canadian exporters. As of the time of writing this post, $1 CAD is worth $0.72 USD. This confers a benefit to Canadian exporters as it becomes more attractive to work with Canadian companies where their money will go farther. The Euro is worth slightly more than the US dollar, but Canadian exports have a similar advantage in E.U. countries. While Canadian companies maintain a logistical disadvantage, this may be offset entirely by exchange rates.
By shifting focus to the European market, companies have access to a much more diverse market space and one that is potentially less saturated by competition. In the U.S. industries tend to cluster in certain areas – while this is helpful and can help reduce exporting costs by concentrating in one geographic range, it also saturates competition. If a company is exporting in one industry they now have the ability to move into different geographic markets as they grow in Europe. Additionally, less saturation may make it easier to gain visibility and a reputation in the space. Couple this with a FOREX advantage and it starts to become a very attractive situation for Canadian businesses.
Improving Canadian-European Trade Conditions
At the time of writing, the Canadian European Trade Agreement (CETA) is still under negotiation. With the recent change over of the federal government, the Liberals felt as though they needed to complete due diligence before agreeing to terms that the previous government set. Nonetheless, most industry analysts agree that CETA will be ratified in some form. While the specific conditions and terms are not finalized, the agreement will help reduce barriers to trading in Europe. This will help open up the market to Canadian companies.
Related Blog: Comprehensive Economic and Trade Agreement Reached Between Canada & EU – This article identifies the impacts of the Canadian European Trade Agreement. How will CETA impact your business’ exporting strategy?
Additionally, through the implementation of international standardization programs, many Canadian companies will be able to sell their products as is or with slight modifications for the European market. Yes, marketing materials and packaging will need localization, but Canadian standards and certifications are being increasingly accepted in the international marketplace. Applying for local certification is becoming a much more straightforward process.
Canadian Government Grants for Exporting Success
Entering a new export market can be quite costly – there are translation costs, market development activities, market research, product testing/modification to meet local standards, etc. Many of these factors deter companies from entering export markets. However, companies who have no experience exporting in a new market, such as Europe, can benefit from a range of government services and Canadian government funding programs.
Develop Your Small Business’ Export Strategy
To begin planning your business’ international expansion strategy, small businesses can access a free white paper, the Canadian Business Guide to Export Expansion. Here, business owners and executives will discover market and trade data, trade show resources, export tools, and financing options.
Posted: February 26, 2018 by Rob Maciel. Updated: July 5, 2018 by Jeff Shepherd.