In the face of Canada’s first trade deficit in 32 years and murmurs of protectionism policies in the U.S., some Canadian tech companies are concerned about future prospects of doing business south of the border.
In December, Canada imported about $458 million more than it exported. That’s the first time since 1976 the country has faced a trade deficit. Add to that the spectre of a ‘Buy American’ policy in President Barack Obama’s stimulus packages currently before congress, and it’s understandable some companies are antsy.
Representatives from everal small tech firms attending a seminar on tapping into export markets at the Innovation Synergy Centre in Markham, Ont. expressed their concerns yesterday. For some, relying on the larger U.S. market for sales was a crucial part of doing business.
“If you’re talking about American protectionist policies, yes they will [affect] us,” says Thomas Cheung, vice-president of finance and operations at Pulse Microsystems Ltd. “The worst case scenario is 50 per cent of our business.”
The Mississauga, Ont.-based company develops software and systems specializing in embroidery for the garment industry. It works through several distributors in the U.S. to reach its customers there, Cheung explains.
But Canadians looking to do business below the 49th parallel aren’t alone. There are a good selection of government programs that can help open up doors and ease costs. Such programs are available both at the provincial and federal levels, says Debbie Walker, director of community export development at the International Trade Branch of the Ontario Ministry of International Trade and Investment.
The thickening border is an issue, and business may not flow as easily, she acknowledges. But she says the ministry is here to help. “The U.S. is still definitely the number one market you want to start with, then you can diversify beyond that to grow your business.”
One program designed to help Ontario exporters is New Exporters to the Border States. This crash course equips companies with all the information they need to know to conduct business in the U.S. The program also organizes for delegations to various U.S. locations and explores export opportunities.
One such group will be going to Buffalo next week.
Despite its name, the program isn’t just for new companies. It’s open to established exporters, who want the latest information on regulations.
That’s a program that Rafael Moshe might consider taking if the protectionist concerns turn into reality. President and CEO of a Toronto-based company that makes GPS-based mileage tracking systems for vehicles, Moshe relies on the U.S. for most of his sales.
If he found a ‘Buy American’ policy was suddenly hurting those sales, he’d need to adapt.
“We might have to look at alternatives,” Moshe says. “Such as sourcing some of our components in the U.S. and doing some manufacturing there.”
But there are still opportunities to sell Canadian-made tech products and services across the border. Mary Mokka is the trade commissioner for the Canadian consulate based in Buffalo. She says she wants to help small Canadian companies do business in her region, and reminds businesses that consulate services are free of charge.
If companies need to use the consulate to have a meeting with prospective clients, the space can be provided – and lunch too. The consulate won’t set up the meeting, but it can provide a list of contacts relevant to a particular industry.
Mokka is confident the U.S. won’t back away too much from doing business with Canada, if at all. An estimated 37,000 trucks and 300,000 people cross the border each day and Canada-U.S. trade supports more than 7 million American jobs.
“I don’t think President Obama is going to cut back on that trade, because it’s resulting in jobs for a lot of people down there,” she says.
One software company agrees with that position. R.J. Juneau is the chief technology officer at Maxxian – the Richmond Hill, Ont.-based company that provides security software and services for cable companies in the U.S.
“The U.S. is painfully aware of the harm this could do to the worldwide economy and is fighting to keep (protectionism) out of the legislation,” he says. “At this point, we’re not really concerned about it.”
For Canadian tech companies either looking to tap into the U.S. market or perhaps broaden their horizons to other trade partners, here is a list of government Web sites that will prove useful:
Virtual Trade Commissioner
Connected with 900 Canadian trade commissioners around the world, this free service allows you to track their activities and make requests. Businesses can look at a list of relevant trends and events according to their industry.
This is a service you can use in conjunction with the trade commissioner’s Web site. RepHunter provides online sourcing for U.S. representatives and distributors seeking Canadian suppliers of goods and services. Normally a paid site, only the reps names can be viewed for free. But take that name and send it to the trade commissioner service, and they’ll provide you with the entire profile without charge.
Canadian Trade Commissioner Service
This site contains thousands of marketing reports that you can download for free.
Export Market Access
Designed to help small companies develop an export business, this outfit offers an opportunity to win grants to do just that. It also covers a portion of start-up costs — up to 50 per cent. You can and also avail of airfare and per diem costs to visit prospective export markets. Translation services are also available.