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SMEs warming to emerging markets

Although most of Canada's SMEs prefer to operate close to home, some are looking at emerging markets for export opportunities to supplement trade with the US, according to UPS Canada study.


January 10, 2012
by PLANT STAFF

MISSISSAUGA, Ont.: Although most of Canada’s small and medium businesses prefer to operate close to home, some are looking at emerging markets for export opportunities to supplement trade with the US, according to a UPS Canada study.

The Angus Reid survey shows 21% of SMEs say they will consider conducting business in emerging markets such as China, India or Mexico with some looking to broaden their export practices to other overseas markets.

UPS Canada attributes this interest to greater optimism about emerging markets. Fifty-nine per cent of the SMEs polled believe burgeoning middle classes in these markets have a growing appetite for Canadian goods.

Respondents see demand highest for natural resources (86%) and professional services. Forty-four per cent cite demand for green goods such as energy equipment while 31% identify consumer goods.

Just 4% of those who export to the US see Buy American provisions affecting their activities. Thirty per cent of them say they won’t be affected.

The ranks of exporters will grow this year by 4% who will join the 14% that expect to sustain current levels of exports. Of those expecting to export eventually, 8% intend to do so next year, 5% in 2014 and 4% in 2015.

“There’s definitely been a positive shift in small businesses’ perception of global trade,” said Nicolas Dorget, vice-president of UPS Canada in a release. “Hopefully the trend will continue, because the Canadian economy needs more businesses — regardless of size – to be engaged in building the country’s international trade presence beyond North America.”

However, the survey also revealed SMEs like to source close to home with 62% of them saying they make the effort to support Canadian partners and suppliers, even if they are more expensive than those from overseas.

And 50% of the SMEs intend to limit their business activity to their provinces over the next 10 years.

“We’re seeing an emerging disparity among SMEs in Canada,” said Dorget. “There are those who are beginning to realize that taking advantage of emerging markets is extremely lucrative and not nearly as complex as they had previously thought, and then there are those who are withdrawing or who feel there’s no demand for their product or service beyond Canada’s borders.”

The survey sample was comprised of 552 small and medium business owners who are Angus Reid Forum panel members. Margin of error is +/- 4.1%.