Forbes Magazine’s latest annual ranking of global economies placed Canada as the world’s best place to do business, knocking Denmark out of the top spot. Welcome to Canada!
There are plenty of reasons for why Danish companies should do business in the Canadian market. English is spoken all over the country making communication very easy and corruption is almost non-existing. Culture and the way of doing business are very comparable to Scandinavia; in fact Canada is referred to as “The Americas Scandinavia”. The financial and political system are both extremely stable, eliminating almost all thinkable political and trade risks. Most important is the fact that the Canadian business mind-set is known for being very open to new impulses and ideas.
With $1.6 trillion the total Canadian economy, it is the ninth biggest in the world. GDP is expected to grow 2.6% in 2012 and 2013.
Canada has been relatively unaffected by the global financial crisis compared to those of other industrialised countries such as the United States and Great Britain. The World Economic Forum ranked Canada’s banking system as the soundest in the world for four consecutive years (2008, 2009, 2010 & 2011) and Canada is said to have the strongest economy among the G7 countries. Another endorsement from Moody’s also claims Canada has the soundest bank sector in the world and is a safe haven for investors.
Since the beginning of the recession, the Canadian GDP fell approx. 3.2 % and the unemployment rate rose from 6 % to 8.3 % in 2008 to 2010 respectively. Compared to other countries, the recession was mild partly because of a fast and efficient economic stimulus plan and a very sound and strong banking system. . The unemployment rate has since then dropped to 7.5% and is expected to further decrease to 7% by 2013.
In 2012 and 2013 retail sales are expected to grow 4.3% and 4.6% respectively. As retail sales is considered a coincident indicator in that activity reflects the current state of the economy this overall growth should have a positive effect on Canada’s economy as a whole.
The Canadian economy is relatively open and the inter province trade is significant. USA is Canada’s most important trading partner and in 2009 the U.S. received 75 % of the Canadian export. Canada is a member of NAFTA, which provides lucrative access to both the American and the Mexican market. This close connection also means that the Canadian economy gets affected by the conjunctures in America. Next to the USA the EU is Canada’s most important trading partner, and there is an increasing focus on European and Asian markets.
For the past 5 years Canada and the EU have been negotiating a comprehensive economic and trade agreement. The agreement will eliminate 99% of all tariff lines and open for significant increase in trade of goods, services and cultural exchange. Export to Canada will increase more than EUR 14 billion (20%) on an annual basis as a result of the agreement. It is expected to be signed at the end of 2012.
Canada’s most significant source of revenue is from oil and natural gas production, and today Canada is the world’s 3rd largest producer of natural gas and the 8th largest oil producer. Moreover, Canada possesses the 2nd largest oil reserves in the world.
Mining is another important industry in Canada. More than 980 mines exist around the country and more than 40% of the world´s mining exploration involves Canadian companies. Mining, oil and gas contribute with 5.4% of the country´s total economy and have created more than 300.000 direct jobs.
In addition to oil and natural gas Canada is very dependent on the primary sectors such as agriculture, fishery and forestry.
The industrial sector plus chemical processing are also of particular importance to the economy. Moreover it is expected that the Canadian high tech, ICT and aeronautic companies will receive large sums of foreign investments. Furthermore Canada is a popular tourist destination. In general, Canada is an easily accessible market and the occupational structure is well regulated. However there may be some differences in regards to policies and procedures between the different provinces and territories. Similar to Denmark, SME also dominates in Canada as a result the politicians often prioritise improving the conditions for these SME’s. In addition to sharing the same occupational structure, Denmark and Canada also have similar business economy values. Both countries are open, export oriented and interested in attracting investments. The foundation for future growth in both economies lies most certainly within innovation and research.
Denmark already has a relatively large market share in Canada, but there is indeed a huge unexploited potential. Lately medical and pharmaceutical products have experienced a remarkable growth and are now among the largest Danish export category to Canada. Also the Canadian CleanTech sector’s outlook is very bright as an increasing green awareness is rising among Canadians. It goes without saying that this provides Danish companies within the CleanTech sector a promising opportunity to export sustainable solutions to the Canadian market. According to a recent analysis by KPMG, Canada is one of the most profitable western countries to establish a company in. The workforce is well educated, the wage level is below the Danish level and the start-up expenses are cheaper than in the U.S. This makes Canada an interesting country for those Danish companies wishing to establish themselves on the NAFTA-market as well as the soon to be finalized Canadian-EU trade agreement. Canada makes an excellent entrance to the US market and the Danish companies can benefit by testing their products and strategy on the Canadian market before they set out to the American market.
TC Canada looks forward to assist the Danish companies in this process!