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China and India: The New Markets

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With the United States seemingly focused on becoming a protectionist state, Canadian businesses need to look elsewhere in order to continue to expand their export and import markets. While this idea of diversifying your market, customer and product base is not a new concept to business, it has certainly become a topic to be kept at the top of your list of actions items.

While Prince George businesses have been aware of the need to diversify their markets since this last round of softwood sanctions, the need to diversify hasn’t gone unnoticed by the rest of Canada and its political leaders. Diversifying helps to ensure no single customer, market, product or supplier is able to hold all the aces if a game of business poker should begin. By ensuring that your business holds most of the aces, you ensure that no one, except for maybe your banker, can force your hand.

As the softwood crisis has shown, diversifying to other countries or trading areas is also a prudent move. Thankfully for Canadian businesses, both China and India have begun the journey to becoming significant players in the global economy we now operate in. This awaking is both good and bad news for most businesses located in British Columbia. Being the closest province to China we will be the first to experience the changes in this new global leader.

The good news is that the Canadian government has also recognized the potential of the developing markets in China and India. Thus we are seeing the federal government shift their focus and attention towards these two countries. This means that businesses looking to take advantage of these new opportunities will find that they can access advice, financing, export knowledge from the federal government. However a word of caution needs to be noted. You are going to see a mass movement on behalf of business to enter these two growing markets and becoming lost in the stampede is a concern. The biggest advantage will go to businesses which are looking towards these markets in a timely fashion. As the quote goes, “if you wait until the bandwagon comes along, it’s already too late.”

With our countries shift to these new markets, transportation infrastructure is certainly near the top of the list for all levels of government. Governments are aware of the economic importance, value, and potential taxes, which will be realized with this increasing trade. Thankfully, our governments have accepted the fact that they will be a key catalyst in this international trade opportunity. Expect to see more our federal government shift its focus away from the United States towards China and India.

However, one of the main concerns with the growing Chinese market is regarding their ability to access a seemingly unlimited supply of inexpensive labor. This means that businesses in Canada will likely not be able to compete on this basis, and will likely find that they will lose labor intensive business to the Chinese and Indian market. As an example, it is cheaper to ship raw fish to China from Newfoundland, have it processed and then shipped back, then it is to process the fish in the Newfoundland.

This does however open the door to businesses which have access to natural resources, such as wood fiber, minerals, metals, etc. These businesses will be able to ship the raw goods to China and import the finished or manufactured products back into Canada for distribution to North America.

Finally, any business looking to tap into the Chinese or Indian markets will need to do so with technology or natural resources. This means that strategic partnerships and joint ventures will become the key competitive tool available to Canadian businesses.

Myron Gordon owns TMSG Management Services Group, which provides management and financial services to growing businesses.


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