With a strong emphasis on the country’s multiculturalism and linguistic diversity, the professionalism and high ethical standards of Canadian businesses, and the valuable contribution of the diaspora, this article explores the unique set of advantages that enable Canadian businesses to thrive in the global market.
The Canadian service industry has experienced significant growth over the years, making it a crucial component of the country’s economy. The industry accounts for approximately 70% of Canada’s GDP. The service industry also employs the majority of Canadians, making it a primary driver of economic growth.
Any service provided by a person or business from one country to a person or business in another country is a service export. Many services are produced in Canada before final sale to a global customer. They include product design, marketing, tourism, software development, logistics support, and financial services.
In fact, many exporters of goods are also service exporters if their products involve after-sale services such as installation, maintenance, training, and knowledge transfer. Because proximity to the customer is vital to the success of many of these services, an increasing number of service-producing companies are establishing a local presence in international markets. Global sales volumes of Canadian service enterprises have had a compound annual growth rate of 12%—double the sales volumes of goods (6%) from 2012-2020. In 2022, service exports of Canada totalled $161.2 billion.
The top 5 highest grossing industries
1. Travel and tourism. This high-earning sector generated $31.7 billion in revenue in 2022. It encompasses personal and business travel, which was the hardest-hit sector during the COVID-19 pandemic.
2. Technology services. This category is becoming increasingly important for Canada, having generated $26.5 billion in export sales in 2022. It includes data management and cloud computing services, software, research and development (R&D), information communications technology (ICT) and other information technology (IT) services.
3. Professional and management consulting. Taking advantage of Canada’s highly educated workforce, consulting service exports have been growing consistently, totalling $24.4 billion in sales in 2022
4. Transportation and logistics. Due to our country’s expansive size, Canada has several companies in the business of moving goods, whether by ship, rail, air, or truck. Export sales in transportation and logistics totalled $18.9 billion in 2022.
5. Financial services. These exports include banking, insurance, investment, and wealth management, garnering $15.6 billion in sales in 2022. Canada’s strong and well-regulated financial sector helps make us a leader in this space.
The United States remains the largest market for Canadian service exports, with the country accounting for approximately 80% of total service exports. Other significant markets include the United Kingdom, China, and Japan. As Canadian businesses continue to expand into new markets, there has been an increase in service exports to countries in Asia and the Middle East, creating opportunities for growth and diversification.
The volume of service exports is expected to grow with the implementation of various trade agreements, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Canada-United States-Mexico Agreement (CUSMA). These agreements are expected to increase market access and reduce trade barriers, making it easier for Canadian businesses to export their services.
Canada leverages its service-oriented economy by investing in research and development (R&D) and innovation. The government provides various tax incentives and funding opportunities to promote R&D in the service industry, leading to the creation of new and innovative services. This has enabled Canadian businesses to be at the forefront of technological advancements, positioning them as leaders in the global service industry.
In fact, each and every Canadian plays a significant role in ensuring that the country continues to excel in this area. To excel at exporting services, Canadian businesses require a unique set of qualities and skills. Multiculturalism is one such quality that is particularly valuable in this context. Canada is known for its diverse population, and this has created an environment where companies are accustomed to working with people from different cultures and backgrounds. This ability to work effectively with people from diverse backgrounds is a key advantage when it comes to exporting services to different countries.
Furthermore, the languages spoken in Canada are another tremendous asset. Being a bilingual nation, English and French are both official languages and are spoken fluently by a significant portion of the population. This linguistic advantage can open doors for Canadian businesses by being able to easily communicate with potential clients and partners in other countries.
Soft skills are also crucial for success in exporting services. Attention to detail, strong communication skills, and the ability to build and maintain relationships are all critical when engaging in international business. Canadian businesses are known for their professionalism and high ethical standards, which is another key factor in their success in the global market.
The contribution of the diaspora and immigrants cannot be overlooked when it comes to the export of services. Many Canadians leave the country to work or study overseas, and these expats often become valuable ambassadors for Canadian businesses. Landed immigrants on their turn often get involved in export development thanks to their close ties and knowledge of the country of their origin. These individuals can offer insights into local cultures and provide connections that can make it easier for Canadian companies to enter new markets.
In conclusion, there are many reasons why Canadians excel at exporting services. From the country’s linguistic and cultural diversity to the professionalism and strong ethical standards of its businesses, Canada has a unique set of advantages that make it a leader in the global service industry. With continued innovation and focus on the skills and qualities required to succeed in this realm, the future for Canadian businesses in the export of services looks bright.