Canada’s Hidden Export Gems

Oil, wheat, canola, aircraft, and autos come to mind as typical Canadian exports. But Canadian companies have been globally successful in other, lesser-known sectors, according to a recent Conference Board of Canada report, Competing Globally: Canada’s Hidden Success Stories. These “success sectors” include:

• cosmetics;
• pet food;
• photonic devices (e.g., imaging and machine vision systems, 3-D scanners);
• butyl rubber (a synthetic rubber used in the making of tires);
• sodium chlorate (a chemical essential to producing the necessary bleaching agent to make chemical pulp).

For each of those products, Canada is among the world’s top ten exporters. And our exports are competitive not only in the United States, but in numerous other markets as well, including many fast-growing ones.

While those five sectors are very different from each other, similar factors explain their global successes. For example, having close access to key suppliers or customers—often made possible by our proximity to the U.S. market—is an important source of competitiveness for our exports of private labels of cosmetics and pet food, butyl rubber, and sodium chlorate. And being part of an industry cluster supports our exports of butyl rubber and photonic devices, as it facilitates collaboration between academic institutions and the private sector.

However, neither being close to key suppliers and customers nor the presence of an industry cluster is enough to compete in markets beyond the United States. This is where Canadian companies’ ability to commercialize unique and innovative products for niche markets comes into play. In particular, without the commitment of a few companies to find untapped niches and offer innovative products, our worldwide exports of brand-name cosmetics, premium pet food, and specialized photonic devices would never have taken off.

Canadian manufacturers of cosmetics and pet food now export their higher-end products to dozens of countries, many of which are fast-growth markets. For example, Canada is Brazil’s fourth-largest source of cosmetic imports and Malaysia’s fifth-largest source of pet food imports. This is a remarkable achievement, given the dominance of multinational companies, such as Procter & Gamble and Nestlé, in the global cosmetic and pet food markets.

Similarly, while the United States, Germany and Japan are the world’s powerhouses for manufacturing photonic devices, Canadian companies also have what it takes to be globally competitive in this segment through constantly innovating and staying at the forefront of their field. As a result, Canadian photonic devices, are used in manufacturing plants around the world and, increasingly, in fast-growth markets. Between 2006 and 2012, Canada’s combined exports to China, Mexico, South Korea, Russia, and Brazil more than doubled, and these markets now account for 25 percent all our foreign sales. (See chart below)

In short, while natural resources and autos make the headlines, business leaders in lesser-known or less-visible sectors are busy growing their global market share beyond the United States by finding niche markets for their innovative products. We should celebrate and build on these successes.

To know more about Canada’s hidden success stories, join The Conference Board of Canada on July 16 for a special 60-minute live webinar with Kristelle Audet. This piece also appeared on The Conference Board of Canada’s website on July 3, 2014.