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Majority of Canadian Businesses Set to Expand Abroad

TORONTO, ONTARIO--(Marketwire - May 7, 2011) - The majority of Canadian businesses are looking to expand outside of Canada over the next five years, according to a new report from BMO Bank of Montreal. Moreover, more than three-quarters of business owners are interested in doing business in emerging countries.

According to the survey conducted by Leger Marketing, the United States, China, India and Europe top the list of markets where Canadian business are looking to expand in the next five years:

  • United States – 57 per cent
  • China – 57 per cent
  • India – 47 per cent
  • Europe – 38 per cent

More than three-quarters of those surveyed also indicated they are interested in expanding to countries in South America, Central America and the Caribbean, Asia (other than India and China), and Australia.

"When it comes to growth and expansion plans, the good news is that there is an encouraging level of optimism within the small business community," said Gail Cocker, Senior Vice-President, Commercial Banking, BMO Bank of Montreal. "At BMO, we are working closely with small business owners to help them make strategic spending and investment decisions to boost innovation and expand into new markets, both at home and abroad."

Ms. Cocker noted exporting can be a powerful way for businesses to mitigate risk. "In the same way that diversifying an investment portfolio can guard against market volatility, a company that diversifies its sales geographically can achieve the same benefit. With a number of emerging markets where Canadian firms can do business, the opportunities to make exports part of a comprehensive and diversified business strategy are growing."

"In the wake of the global credit crisis, business has learned the dangers of too much reliance on a single customer, sector or market," said Doug Porter, Deputy Chief Economist, BMO Financial Group. "With significant and growing export opportunities to emerging nations and the unprecedented ability to invest through imports, Canadian companies remain well-positioned to take on the world."

Emerging markets

Emerging markets are currently growing almost four percentage points faster than the industrialized (or developed) world. GDP in emerging markets is expected to grow roughly 6.5 per cent this year and next, versus about 2.5 per cent in the industrialized world. According to BMO Economics, while exports to emerging markets currently account for just over 11 per cent of Canada's export share (double the share from 10 years ago), there is significant potential for growth for Canadian businesses in the years ahead.

Additional Findings

The Leger report also provided sectoral and regional preferences among business owners looking to expand. The results included the following:

Business Sectors

  • 67 per cent of small businesses in the construction/manufacturing/mining and oil and gas sectors plan to do business in China
  • 90 per cent of businesses in tourism/travel, arts & culture sectors plan to do business in the United States

Regional

  • 30 per cent of businesses in Alberta plan to invest in the United States, while 67 per cent of Atlantic provinces want to do business there
  • 43 per cent in BC and 40 per cent in Ontario want to do business in China
  • Half of businesses in Ontario want to do business in India, while only 29 per cent in British Columbia have a similar interest

The online survey was conducted by Leger Marketing between February 1 – 25, 2011, using a sample of 507 Canadian small business owners. A probability sample of the same size would yield a margin of error of ±4.4 per cent, 19 times out of 20.

 
For further information:
For media inquires please contact:
Paul Cunliffe, Toronto
416-867-3996
paul.cunliffe@bmo.com

Sarah Bensadoun, Montreal
514-877-8224
sarah.bensadoun@bmo.com

Laurie Grant, Vancouver
604-665-7596
laurie.grant@bmo.com
www.bmo.com