Global Trade Complexity: More opportunities than ever

At an iPolitics Live event on Wednesday afternoon that was broadcast from the Forum for International Trade Training conference, a panel of trade experts spoke about the opportunities for trade for small and medium-sized enterprises (SMEs), but also about what kinds of things they need in order to succeed in a global trade environment.

“With the advent of online communications and platforms like eBay, small businesses have become much more engaged in trade and it’s important that governments are starting to recognize that,” said Corinne Pohlmann, senior vice-president of national affairs and partnerships with the Canadian Federation of Independent Business.

Pohlmann said that while government statistics show that 90 percent of those who are involved in trade are small-business owners, only ten percent of small businesses are engaged in trade. She added that her members were thrilled with news that there was talk about a chapter on SMEs as part of the NAFTA renegotiation talks currently ongoing, given that many of the barriers for SMEs are regulator and at sub-national levels.

“There’s no doubt that small businesses have a real challenge when it comes to dealing with borders, and continuing to finding ways to ease those border processes is going to be very important,” said Pohlmann. “That’s often where the biggest barriers come – figuring out which government entity you have to work with, which forms you have to fill out, making sure you’re doing it on time.”

Platforms like eBay have had a big part in enabling trade for SMEs, which has paid off for those businesses in return.

“We’ve seen the power of trade to stabilize a small business, insulate it from local market shocks, allow it to grow and diversify its customer base,” said Andrea Stairs, managing director of eBay Canada. “When we look at our commercial traders on our platform, those thousands of companies export at a rate of 99 percent. When they export, in contrast to a traditional SME exporter who normally reaches two-and-a-half markets a year, eBay sellers will reach 18 to 19 markers on average a year, creating great diversification.”

Stairs said that the changing landscape of e-commerce means that the Internet has decoupled entrepreneurial success from a business’ location.

“It used to be that you had to be in a population centre in order to run a successful business, but we increasingly see that that’s not the case, particularly if most of your business is outside of the country,” said Stairs.

The government has also been trying to do their part to facilitate trade through Crown corporations like Export Development Canada (EDC), which last year supported $100 billion in trade by 7100 Canadian companies in 150 markets.

“Today, we’re in a period where trade is changing faster, and maybe in different ways than we might have thought four or five years ago,” said Carl Burlock, senior vice-president and global head, financing and investments at EDC. “Certainly trade itself has changed. It’s no longer about shipping goods from one country to another. Even traditional exporters now are being asked by their buyers to hold inventory in market or to provide service after sale directly in-market, so that creates opportunities and also challenges, especially for small companies.”

Burlock echoed Stairs’ sentiment about the benefits of trade for businesses, citing that companies that export are more resilient, have higher revenues, hire more workers, and spend more on research and development. With that in mind, EDC has been working to tailor programs for SMEs when it comes to market knowledge and introduction to opportunities in other markets.

Education and training are areas where Canada excels, but the knowledge gap can be where a lot of SMEs face challenges.

“For a lot of small to medium-sized businesses that are getting into exporting, and they don’t have the revenue stream to justify a new hire or the new export manager, they’re looking to students and to graduates to provide some of those skills,” said Leroy Lowe, a certified international trade professional.

Companies hire students hoping that they not only bring the necessary skills about trade and markets, but in the hopes that they also have the skills to deal with websites, social media, and web presence on the simple assumption that it’s because they’re young that they will have those skillsets, even though they are generally not offered in universities, and where most colleges are still catching up.

Asked what advice they would offer SMEs looking to get in on the export market, panelists were quick to recommend eBay as a good platform for companies to test the markets because they do most of the heavy lifting in a way that didn’t used to exist.

“For small and medium-sized business considering it – do it,” said Lowe. “The costs have never been lower. It’s a lot of new skills. You just have to make that investment and know that it’s going to pay off so be incremental about it.”

The advice did come with a word of warning that not knowing about legal requirements, taxes, and intellectual property can be pitfalls that can come back to bite those trying to get into export markets.

“If you’re low-volume or low-scale, you might not be at too much risk, but if you’re building a business and it’s a growing concern and you have employees, you need to invest in the training of those aspects of trade and finance,” said Lowe.

Watch the entire session here.