Canada’s a quiet export giant

Canada’s overall trade growth has been low in sectors other than primary products, but a new Conference Board of Canada report reveals some hidden success stories and the factors behind them.

“The common perception is that Canada only does well at exporting natural resources. Very few people think of Canada as being a global player in the cosmetics industry or being competitive at manufacturing and exporting high-tech equipment or chemicals,” says Kristelle Audet, a Conference Board economist. “However, they are among some of Canada’s hidden export success stories—it comes down to creating innovative products for niche markets.”

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Highlights

• Beyond primary products, Canada’s export success in markets other than the United States rests on a small number of companies.
• A key factor in achieving global success is the ability to develop and sell innovative products for niche markets.
• Canada is already a world-class exporter of cosmetics, pet food, photonic devices, synthetic rubber and inorganic chemicals.

Conference Board researchers looked at more than 1,000 export items and found five little-known products from non-primary sectors for which Canada is globally competitive. In their report they assess the factors behind their success.

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Successful products

• Cosmetics. Canada is the world’s tenth-largest exporter of cosmetics, for 3% of the global cosmetics trade. Competiveness rests on proximity to the U.S. and on companies’ ability to establish themselves at an early stage in fast-growth markets.
• Pet food. Exports are 3.5% of global pet food trade, making Canada the world’s ninth-largest exporter. As in cosmetics, our competitiveness in pet food stems from our proximity to the U.S. market, and manufacturers’ success at exporting premium brands to emerging markets. Further, manufacturers have a “Made in Canada” advantage. Canada is globally recognized for producing high-quality food products in clean facilities.
• Photonic devices. Canada is the world’s tenth-largest exporter of photonic devices. Photonic devices include imaging and machine vision systems, 3-D scanners, and mapping systems. Global competitiveness flows from a large concentration of interconnected organizations in Central Canada.
• Inorganic chemicals. Canada is the world’s largest exporter of sodium chlorate, a chemical used as a bleaching agent in the pulp industry. It accounts for 98% of inorganic chemical exports and 75% of global trade. Competitiveness is due to low electricity costs, ready access to fresh water supplies, and proximity to some of the world’s largest pulp manufacturing plants.
• Synthetic rubber. Butyl rubber, a key ingredient in making tires, makes up 80% of exports of synthetic rubber. Canada is the world’s fifth-largest exporter of butyl rubber, accounting for almost 15% of global trade. Exports come from a single plant in Sarnia, Ontario and are supported by the petro-chemical industrial cluster located in the area and proximity to the U.S. market. However, its competiveness is currently being challenged by other countries, in North American and Asian markets.

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Although these five globally competitive products are diverse, they share some important similarities. For each of the five categories examined, successful sales to countries other than United States was due to a small number of companies. These companies generally built their success on one or more of the following factors:

• Proximity to key suppliers or customers;
• Benefiting from the presence of an industry cluster;
• Ability to develop and market innovative products and establish an early presence in fast-growth markets.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.