Canada – The Untapped Exporting Opportunity For U.S. Businesses

Our neighbor to the north offers an accessible and manageable market that in many ways is almost an extension of doing business domestically.

Mnet 193238 Supply Chain
Ed MarshEd Marsh

When manufacturers hear about exporting they often assume it’s a growth opportunity only for large multi-national corporations who can reach customers far and wide. But U.S. small and mid-sized companies do not have to travel far to get started and grow in a foreign market. Our neighbor to the north offers an accessible and manageable market that in many ways is almost an extension of doing business domestically.

For U.S. companies, Canada is a market with a lower barrier to entry than nearly all other export destinations.

But why should companies export at all? Fully 90 percent of small and mid-sized exporters agree that international markets offer significant growth opportunities, according to the recent American Express Grow Global Survey. More than three-quarters of respondents predict their export sales will increase by an average of 30 percent over the next five years. In addition to revenue growth, companies that export generally pay higher wages, are more resilient and learn lessons that can make them more competitive at home.

There is no doubt that selling to a new market in a different region of the world can be a challenge. But Canada is already our second largest trading partner with more than half of all their imports coming from the U.S. Clearly there are customers for U.S. goods in Canada, and the proximity and established trade channels offer many advantages.

Leveraging Canada’s Ease of Access

When entering a new international market, top challenges exporters face include overcoming language and cultural barriers, logistics and a general lack of knowledge about doing business in the country. Minimizing those barriers is important to early success when companies are first starting to export. The American Express Grow Global Survey reports that U.S. exporters recently identified North America (Canada and Mexico) as the region with the most potential for exporting sales over the next five years (34 percent), showing a preference for more familiar and nearby markets.

Communication with Canadian customers is simplified because English is the common language for much of the market (some areas prefer other languages but often speak English as well) and time zones generally match those in the U.S. (with a few exceptions). Travel and face-to-face meetings are also relatively convenient since 75 percent of Canada’s population lives within 100 miles of the U.S. border, according to K12 Study Canada. The closeness also means Canadians share many business and cultural practices.

Shipments to Canada by U.S. exporters are often easier than shipping overseas due to the high volume of U.S.-Canadian trade that already exists. This frequency of trade between the two countries has led to infrastructure and familiarity that facilitates transactions. Specialized freight forwarders and customs brokers are more accustomed to the Canadian regulatory considerations and can help ease the logistical barriers of entry for U.S. companies.

Reaching Canadian Buyers Digitally

A website offers U.S. companies global reach, and a strong digital presence can help attract global buyers. Business can tap into a new set of buyers in neighboring Canada who are interested in many U.S. products and services. Since there are cultural and language similarities, American businesses can efficiently market to Canadians online without duplicating efforts.

A digital marketing program built for a domestic audience will often also work to penetrate the Canadian market. In fact, it’s becoming more common for companies to get an accidental exporting start when Canadian buyers inquire online about purchasing products.

Canada is Still an International Market

While business with Canada has many similarities to doing business domestically, it’s important not to overlook international best practices. Company leaders need to ask questions and conduct research like they would for expansion to any new market.

For example, Canadian product regulatory and labeling requirements differ from the U.S. and even between provinces, so be aware and plan accordingly. As another example, export shipments to Canada still require denied party screening — the process of checking buyers against the U.S. government’s lists of companies, entities and individuals to whom sales of U.S. products are restricted — and export documentation. Therefore, U.S. manufacturers need to inquire about shipment logistics with professionals who have experience moving goods into the Canadian market.

Once you get up and running with sales to Canada and start to plan for further sales and servicing in the market, there are other important considerations. Be sure to follow travel and visa guidelines; to check into contractual obligations with resellers; to understand company and tax registrations; and to study up on other regulations that differ in Canada.

Selling across our northern border is still different from domestic business despite the ease of entry to the Canadian market.

The Canadian Exporting Opportunity

In the U.S., five percent of mid-sized companies and less than one percent of small businesses export, meaning many business owners may not realize they could diversify their business and gain new revenue streams by exporting. While not every company is a candidate, if a business is able to get management buy-in and are able to scale to meet demand, Canada can be an exporting entry point. Businesses can easily find success

Getting started is often the biggest hurdle to exporting. Canada’s proximity and similarity simplify that first international sale and provide a learning opportunity on the journey to global growth.

Ed Marsh is the exporting advisor to American Express Grow Global.

More in Supply Chain