HSBC’s Navigator Survey of more than 9,000 corporations from around the globe shows that Canada is on the radar of international business leaders seeking to diversify their trade partnerships. We are the second most popular country for businesses considering global expansion in the next three to five years, with over one in 10 (11%) organizations surveyed identifying Canada as a potential destination for their upcoming expansion plans.
The top countries identifying Canada for expansion are Mexico, the US, France, India, Brazil, the UK and Sweden.
The top three reasons that make Canada attractive to international businesses are favourable partnership opportunities (44%), proven customer demand (43%) and access to new suppliers (41%).
Three in 10 of those businesses (29%) planning to expand to Canada see the country as a gateway to the North American market, reflecting the increasing popularity of North America as a region for expansion (25% of businesses have North America in their sights, compared to 22% in 2018).
While the world looks to Canada as a valuable trading partner, Canadians continue to predominantly look to the US as their trading partner of choice. Just over two-thirds (67%) of surveyed Canadian businesses say the US is one of their top three trading partners. Canadian companies view mainland China as an attractive market, ranking the country as the second-most important partner by 17% of companies. The UK (13%) and Mexico (12%) take third and fourth place.
Looking ahead, Canadian businesses identify the US, Mexico and mainland China as the top three markets for trade expansion over the next three to five years.
What makes these markets valuable choices as trading partners? Proven customer demand tops the list (USA: 34% and Mexico 44%), followed by favourable partnership opportunities in the US (41%) and the advantages that come from new trade agreements (27%). Mexico is an attractive destination for Canadian companies seeking supply chain efficiencies, providing access to new suppliers (36%) and a skilled workforce (32%).
Eighty-four percent of Canadian businesses expect their sales to grow, slightly higher than global average (79%) and the US (80%). However, Canadian businesses are not anticipating high growth, with only one in five businesses (21%) expecting to grow their business by more than 15%, which is below the levels projected for the United States (34%) and globally (22%). Only 7% of businesses are anticipating that their businesses will shrink.
Although more than two-thirds of Canadian businesses (68%) think that protectionism is on the rise, almost nine in 10 (86%) have a positive outlook for cross-border commerce, about the same as last year.
Their strategies for addressing protectionism? Reducing costs (25%), changing their offerings of goods and services in affected markets (25%), and entering into joint ventures with local companies (24%).
Takeaways for your business
Canada’s ranking as the second-most popular destination market for international businesses wanting to expand reflects the confidence that global business leaders have in our economy, favourable partnership opportunities and proven customer demand.
This is good news for Canada – but it also underlines the need for our leading businesses to look outwards for opportunities.
Just like their global counterparts, Canadian businesses can reduce risk and benefit from domestic and international opportunities by staying nimble, committing to innovation and investing in products and customer experience.
About the Navigator survey
HSBC Navigator is an ongoing survey of leaders in international trade sponsored by HSBC. The latest report is based on a comprehensive HSBC market research study conducted between August and September 2019. More than 9,000 global business leaders from 35 markets shared their perspective for the next one to five years on business outlook, international trade, protectionism and geopolitics, sustainability, well-being and technology in business. Global results within the report are deemed representative of the universe of international trade volume, taking into account the contribution of services and goods businesses according to World Trade Organization data for 2016-2017. Two hundred business in Canada participated in the survey.
To learn more about what businesses have to say about other important issues, including investing in well-being and the growing role of technology in business, read the entire Canadian Navigator report (PDF, 2.87MB).Read the global HSBC Navigator report
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