With COVID-19 vaccination rollouts at full throttle in many regions of Canada (and worldwide), the pandemic thankfully seems to be on its last legs. By fall 2021 Canadian businesses should be returning to something resembling normalcy after more than a year of being battered by the crisis.
Many Canadian businesses are looking at the end of the pandemic as an opportunity to come back stronger. They’ve survived the worst-case scenario, and are looking ahead at a “new normal” filled with possibility. They’ve proven how resilient they can be, and are shifting their focus to both recovering from the challenges of the past year and thriving in the years ahead.
“Canadian companies are feeling bullish about the next two years,” says Dan Leslie, Senior Vice President and Head of Client Coverage, HSBC Bank Canada. “They’re feeling optimistic about the future, with many expecting to return to pre-pandemic levels of profitability by the end of 2022. They’re also fully mindful that workplace upskilling, innovation and expanding into new markets will help them ride the wave to post-pandemic success.”
As the post-pandemic era nears, Canadian companies have also learned from the crisis that success requires more than just profit; it’s also about culture, sustainability and innovation.
Business and Entrepreneurship
Most Canadian companies are prepared to spend money in order to expand — even businesses with declining sales. Many indicated throughout the pandemic that they’re intent on investing in technology.
“Smart companies are also focusing on two fundamental areas this year as the pandemic draws to a close – customer experience and employee well-being,” Leslie says. “That involves investing in tech that not only improves the customer experience but also helps companies find customers and build brand loyalty.”
In short, savvy companies are now investing to deliver value over the long term, prioritizing investment over immediate shareholder returns.
Trade and Internationalism
Although there was a massive drop in international trade throughout 2020, many Canadian companies still conducted more than half their business internationally — and that’s ramping up in 2021, as the pandemic slowly begins to recede in the rear-view mirror. Today about 75% of that international trade takes place in North America , but trade with Europe is expected to increase over the next three to five years. China, meantime, is Canada’s No. 2 trading partner, making up 4.7% of our international trade.
Recent HSBC research2 has revealed close to three quarters of Canadian companies expect their sales in China to grow over the next two years as the country continues to be a target destination market and a key player in Canadian supply chains.
“Canadian companies recognize the many benefits of international trade for their business, for the communities where they operate and for consumers,” says Leslie.
A greater focus on international markets makes sense in the post-pandemic economy. Many companies believe reducing international trade would impact their business in three major, negative ways — a drop in customer demand, a loss of employee mobility and limited supply of raw materials.
Most Canadian companies have set targets for a wide range of ESG (environmental, social and governance) initiatives post-pandemic. Many have annual ESG targets in place, or are setting targets for 2025.
“Given the impact COVID-19 had on front-line workers, the pandemic has also caused Canadian companies to regard workplace-focused initiatives as among the most important opportunities to improve their ESG performance,” says Leslie. “That’s meant promoting employee well-being and enabling new ways of working.”
Many are seeing the benefits to their bottom lines in becoming more sustainable, and expect sales to grow due to their greater focus on sustainability.
The COVID-19 pandemic highlighted the fragility, vulnerability and unreliability of global supply chains, particularly when the crisis first hit. Consequently, many Canadian businesses are concerned about their supply chains — especially around increasing costs, suppliers that don’t meet sustainability requirements and supply chain partners who haven’t been sufficiently agile.
In response, businesses began choosing suppliers based on their country/government’s control of COVID-19 and increasing usage of digital/technology. The key benefits were cost reduction, increasing speed to market and enhanced security.
Now well into the pandemic’s second year, many Canadian businesses are focusing on suppliers closer to their customers or closer to home, and choosing suppliers based on their operational resilience and ability to deliver quickly.
“It’s all made very clear the utmost importance of enhancing supply chain security in the event of another black swan event,” says Leslie. “Even though we’re almost out of the woods in terms of this pandemic, smart businesses must do the hard work of ensuring the resilience and agility of their supply chain partners in the event another major crisis looms in the future.”
That advance planning and forethought — in all areas, including supply chains, ESG efforts, sustainability and international trade — are integral to ensuring businesses thrive during any kind of future disruption.
The post-pandemic period is on the horizon, and more companies are moving their day-to-day focus from resiliency to recovery. Those that plan ahead can ensure continued profitability and a smoother road to recovery.
Contact HSBC to discuss how your business can navigate the short term to thrive in the years ahead.