Canadian Manufacturing

New report urges SMEs to seek success in emerging markets

Firms often yield higher returns than they would operating with Canada's traditional trade partners



OTTAWA—Small and medium-sized Canadian firms doing business in emerging markets often yield higher returns than they would operating with many of Canada’s traditional trade partners, a new report suggests.

According to the Conference Board of Canada report, Success in Fast-Growth Markets: Strategies for Small and Medium-Sized Businesses, SMEs that succeed in fast-growing international markets are technologically-advanced trail blazers.

But they often do more than offer world-leading products; they develop a worldwide reputation, choose fast-growing markets to enter selectively and make “bridging” arrangements with local partners to reduce barriers associated with working in new markets.

“Why should owners and managers of small and medium companies want to do business in challenging fast-growth markets? The reason is that these markets often yield a higher return than doing business with many of Canada’s traditional trade partners, especially the United States,” report co-author Rebecca Reuber said in a statement.

The think-tank’s report assesses how Canadian SMEs should enter these “next top markets”, including Brazil, India, and China—but also those in Latin America, Eastern Europe, the Middle East, Africa and Southeast Asia, and outlines challenges faced by firms in two groups.

  • Politico-economic, such as cumbersome regulations that add to the cost of doing business, weak intellectual property protections, political interference or corruption, and limited access to financing for expansion to fast-growth markets; and
  • Socio-cultural, such as differences in language and culture, and differences in business practices with new markets.

According to the Conference Board, it’s important to note that not all SMEs are suited to expand into fast-growth markets.

But for those that are, owners and managers should make sure to maximize their ability to learn about new markets, spend time building personal relationships and innovate and develop a worldwide reputation to protect against intellectual property risks.

Policy-makers also have a role to play in fostering successful SMEs in fast-growth markets, including focusing government services and support on innovative companies that have a technological advantage, evaluating the effectiveness of ‘twinning’ Canadian communities with those in other countries and facilitating bridging or “experience-building” arrangements.

The research is part of the Tool Kit for Growth Markets series, published by the Conference Board’s Global Commerce Centre.

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