What do you do when a competitor springs up and offers your clients a similar product at a much lower price? The question has never been more urgent for Canadian exporters since China usurped Canada as the world’s top seller to the U.S.
With July exports to the U.S. of US$21.3 billion, China outsold Canada in our bread-and-butter market by a margin of US$700 million. And life for Canadians stateside will only get worse: although Canada’s exports to the U.S. have grown by a decent 18.5% over the past three years, China’s have grown by 92%. China is showing particular strength in textiles, clothing, furniture and appliances.
How can Canadians stay competitive south of the border? Robeez Inc., a manufacturer of leather baby shoes with Chinese competitors, emphasizes its proximity to its U.S. customers. “We’re able to deliver when the market needs the product,” says Sandra Wilson, president of the Burnaby, B.C.-based firm. “It comes down to speed of delivery, and the ability to deliver what the customer orders because we’re actually manufacturing here in Vancouver and not waiting for shipments to come over on sea freight.”
A strong brand also helps Robeez compete. “We’ve really built a brand and a reputation in the marketplace for providing a high-quality product,” says Wilson. “Once you have a relationship with your customer and they know your brand, and customers are coming into their stores looking for it, it’s difficult for [Chinese firms] to have a lot of impact.”
In the long term, consider investing in new equipment and machinery. “It’s what we call a defensive type of investment, designed to keep costs down, become more efficient and boost productivity in response to growing offshore competition,” says Todd Evans, director of economic analysis and forecasting at Export Development Canada in Ottawa. He also recommends specializing in market niches, and possibly sourcing components from China to keep your own products competitively priced.
Finally, Canadian companies have a multitude of opportunities to leverage their cultural diversity and insert themselves into the Chinese-U.S. supply chain. After all, if you can’t beat ’em, join ’em.
© 2005 Sue Bowness
