Companies Engaged in Global Trade Are More Optimistic About Economy

(Logistics Today)

Although concerned about the economy, small- and medium-sized business exporters are confident about their companies' futures, especially when it comes to international sales, according to a recent survey commissioned by UPS.

Of the small- and medium-sized business exporters interviewed, 85% say the economy is their top concern, far exceeding their worries about any other issue. However, most respondents indicate they remained positive about their businesses and their international sales opportunities. More than three-quarters (78%) say they are confident international sales leads will materialize.

“Entrepreneurs who export are self-assured, adaptable and resilient so it doesn't surprise me that the survey shows exporters are confident about meeting their business goals,” says Laurel Delaney, owner of small-business consulting firm Global Trade Source.

The survey found that most small- and medium-sized businesses (61%) that had expanded into foreign markets did so with a sound plan. And, exporters are quick to learn about the in's and out's of exporting; more than half (53%) say they do not find the process of exporting frustrating. However, those who were newer to exporting say documentation and customs requirements are the biggest barriers to expansion. Read more here.

Small Businesses Are Big International Traders

(Northern Ontario Business)

A new report by the Canadian Federation of Independent Business states small business owners make up a significant chunk of Canada’s exports. The report entitled: Trade Without Borders: A small business report card on the Canada/US border, involved a membership survey that produced 6,000 answers.

Corinne Pohlmann, CFIB’s vice-president of national affairs, said companies with less than 50 employees represent 73% of all businesses that export and account for nearly one third of the total value of Canadian exports.

Pohlmann added “despite the large contribution of small exporters, the SME sector is usually an afterthought when discussing trade and border issues. Given the important role that SMEs play in the economy, lawmakers on both sides of the border should take careful note of these findings.”

CFIB presented their findings at the Canadian Association of Importers and Exporters in Toronto, April 20. Canada Border Services Agency was also to present on Business Simplification and Service Improvements at the Canadian border.

The complete report is on the CFIB website here.

CFIB August 2009 SME Business Outlook Survey

(CSCB)

Small business confidence has taken a clear upward turn in August, according to the latest CFIB survey findings. After mediocre results in June and July, the Business Barometer® index climbed to 65.4, its highest level in two years. The improvement is broad based across industries and regions, suggesting that the economy is finally making its first tentative steps toward recovery.

Measured on a scale between 0 and 100, an index level above 50 means owners expecting their business’ performance to be stronger in the next year outnumber those expecting weaker performance. According to past results, index levels normally range between 65 and 75 when the economy is growing.

The full report is available on the CFIB website here (PDF).

New on Industry Canada Website: Canadian SME Exporters Study

(Small Business Quarterly, Industry Canada)

This report represents the first comprehensive cross-sectoral analysis of Canadian SME exporters and international new ventures (INVs), i.e., firms with significant export revenues within three years of start-up. This work draws on data from large-scale survey data to challenge several widely held beliefs about the internationalization process of Canadian SMEs, particularly within the services sectors.

The following are selected highlights from among the empirical findings from this work:

• In 2004, 8% of Canadian SMEs exported goods or services.

• There are substantially more firms in the professional and “other” services sectors that export than there are exporter firms in the manufacturing sector.

• Both established exporters (enterprises that export and that began trading before 2001) and international new ventures (enterprises that export and that began trading in 2001 or later) derive an average of 33% of sales revenues from exports.

• A high proportion of exporters earn a relatively small proportion of revenues from exports: 44% of exporter firms report export sales of less than ten percent of total revenue; for 52.3% of Canadian SME exporter businesses export sales accounts for less than 25% of total revenue; 15% of exporters report export revenues of between 25% and 49% of total revenues.
Owners of exporter and non-exporter firms differ significantly on three important attributes: growth intentions, gender and Canadian residency status.

• Owners of exporter firms are much more likely to profess the intention to seek growth of their firms than are owners on non-exporter businesses. After controlling for firm size and sector, firms whose owners had expressed growth intentions were more than twice as likely to be among exporter firms as firms whose owners did not seek growth.

• Owner gender was significantly associated with the propensity to export. Having controlled for potential systemic explanatory factors, majority female-owned firms were still less likely to export compared to majority male-owned firms.

• Among established exporters, immigrants who have resided in Canada for less than 5 years were disproportionately more likely to be the primary owners of exporter firms.

With respect to firm-level attributes, firms that report investment in R&D are more than twice as likely to be exporter firms as firms that did not invest in R&D. Exporter firms were also significantly more likely to apply for external financing and business loans.

Among the (approximately) 287,100 SMEs that began trading in 2001 or later, approximately 21,300 reported exporting. Hence, more than seven percent of new Canadian firms are “international new ventures” (INVs). INVs operate across all industry sectors, an observation that suggests there may have been sampling biases in previous studies that have focused almost exclusively on manufacturing, technology and knowledge-based industries.

• While international new ventures are significantly smaller than established exporters their size, as measured by the number of employees, does not preclude export trade. This study finds that international new ventures achieve comparable levels of export intensity to established exporters with a smaller work force, younger and less experienced owners, and fewer assets.

• Owner profiles of international and domestic new ventures did not differ significantly in terms of age.

• Owners of international new ventures were disproportionately more likely to be new Canadian residents (or immigrants): approximately 10 percent of INV owners were new Canadians compared with less than five percent of owners of new firms that did not export.

The research team sought to consider these findings in the context of current export stimulation programs…. A key recommendation of this study is the need to re-evaluate international trade initiatives in light of these findings. To encourage such research and stimulate discussion among researchers, senior policy makers and trade commissioners, a series of questions about policy and programs is presented.

The complete report is available here.

Reviewing Gov’t Policies May Spur International Trade by SMEs, CBOC Report Says

(Canadian Economic Press – Sean McKibbon)

Canadian small and medium size enterprises (SMEs) are not very active in international trade but policy makers can help to change this, says the author of a new report commissioned by the Conference Board of Canada.

“Obviously it’s beyond capability of a lot of SMEs to be engaged in international markets,” says Kathleen Macmillan, the author of the report entitled ‘Canadian SMEs and Globalization: Success Factors and Challenges.’

“But if there are small companies with good ideas and the potential to make it we should look at what kind of obstacles there are holding them back and are they policy accessible? Is there some kind of low hanging fruit there that we can address that would help SMEs?”

Macmillan cites a 2004 survey by the Canadian Federation of Independent business showing that of the 9,577 small business owners surveyed, 51% engaged in some form of trade. Thirty-six percent of those did so through importing or exporting, and 15% by participating in a global supply chain.

Macmillan said that, in her review of research relating to small firms engaged in international trade, she noticed a few emerging trends. She said companies that are “innovation intensive,” tend to become more internationally focused. She also said that newer firms, those younger than three years, were just as likely to find success in foreign markets as more established firms. She added that small firms tend to have less capacity to push back against regulations and trade barriers that hurt their competitiveness.

As a result, Macmillan said governments should try to reduce trade barriers, review their own policies that tend to favor more established firms and attempt to foster innovation through industrial clusters, facilitating networking and information sharing.

“The most surprising thing I found was that small firms that have just begun to exist show similar levels of internationalization as more established firm. So that old notion that you have to establish yourself first in your home country is wrong. You don’t have to graduate to international markets. There are many firms that are ‘born global,’“ she said. The report can be downloaded from the Conference Board of Canada website.