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Mississagua, April 27, 2011
Believe Canada must diversify export base to remain competitive
Canada's small and medium-sized enterprises (SMEs) are more global in their outlook compared to one year ago*, believing Canada must diversify its export base and do away with trade barriers in order to ensure the country's economy can compete with emerging markets.
The most recent results of UPS Canada's quarterly barometer of SMEs shows a high level of optimism about Canada's international competitiveness and the fate of its manufacturing sector.
According to the survey, conducted by Angus Reid, SMEs overwhelmingly state that the Canadian economy must become more globally competitive, with 73 per cent of SMEs opining that Canadian businesses should disregard the current strength of the loonie and put more resources into international trade.
In addition, almost two thirds are concerned that Canada continues to maintain an international trade deficit and an equal number believe the government should either abolish all tariffs between Canada and other nations or provide tax incentives to export-based businesses to stimulate global trade. This is a strong departure from the previous quarter when 40 per cent of SMEs believed businesses should confine their commerce within Canada in order to sustain the country's competitiveness, and 51 per cent who stated Canada should establish tariffs to discourage overseas exporters from accessing the Canadian market.
"More than half of Canada's SMEs have told us that unless Canada significantly improves value-add innovations and diversifies its export base beyond its traditional focus on natural resources, the country could be in serious trouble in the long-term," said UPS Canada President Mike Tierney.
Most SMEs have high hopes for Canada's manufacturing sector. While 36 per cent describe it as high cost, 43 per cent say it's also high quality. Meanwhile, 57 per cent see the recent rebound of the sector as a sign of better things to come.
However, evidence of paradoxical views also emerged from the study. Just less than 60 per cent of SMEs believe the trade agreement currently being negotiated between Canada and the EU is still valuable because there is demand for Canadian goods on the other side of the pond despite the high loonie, and because European economies are likely to bounce back soon.
Yet, many still associate the fate of Canada's export sector with its traditional U.S. trading partner, including 45 per cent who believe a rebound in Canadian exports will hinge on U.S. consumer confidence and 56 per cent citing the value of the loonie as a key driver.
In addition, while SMEs' global outlook has improved significantly many are still somewhat insecure about going global themselves. In fact, 27 per cent said that they have never considered exporting because they don't think there's much of a market outside of Canada for what they offer. In addition, one in five SMEs doesn't believe it can compete with counterparts in emerging markets such as China, India and Brazil.
"With SMEs representing more than 90 per cent of Canadian commerce, it is critical that they become more engaged in the global marketplace," said Tierney. "There is international interest in and demand for Canadian goods that goes far beyond the traditional natural resources sector that has dominated Canadian exports. SMEs should invest in these opportunities as they can provide a competitive advantage."
The Vision Critical / Angus Reid Public Opinion survey was conducted from March 9 to March 21, 2011 among 546 randomly selected Canadian adults who own a small to medium-sized enterprise (SME) and are Angus Reid Forum panelists. The margin of error—which measures sampling variability—is +/- 4.19%. Discrepancies in or between totals are due to rounding.
* Relative to UPS-commissioned research conducted by Leger marketing in Q2 2010
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