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Global view

By Chris Atchison | December 20, 2013
Global view
Rajesh Sharma

Export Development Canada (EDC) is a financially self-sustaining Crown corporation based in Ottawa, with roughly 1,200 employees in 33 offices and 12 countries worldwide. What EDC does best is help Canadian companies to compete and grow in more than 200 markets worldwide each year, all while providing innovative ways to mitigate the kind of risk – everything from corruption and corporate social responsibility challenges, to the threat of local political unrest in some markets – that so often stifles their ability to seek out new offshore opportunities.

The Senior Vice-President of Business Development with EDC, Rajesh Sharma, says: “Our model is about partnership and mobilizing capital to get deals done for Canadian companies. We tap into financial institutions at home and abroad to provide the financial capacity for companies to do what they need to do.” Sharma adds that collaborating with public-sector partners, like Foreign Affairs, Trade and Development Canada and, in the small and medium-sized enterprise (SME) market, Business Development Bank of Canada, is key to EDC’s success.

With a mandate to help Canadian exporters and investors going international with everything from risk- and supply-chain management to providing financing, credit insurance and working capital, EDC has a key role to play in a Canadian company’s development internationally and a corresponding impact on our economy.

Consider the months following the financial crash of 2008, when banks were retrenching and credit began drying up worldwide. “We stepped up and were able to use our lending capacity for the benefit of Canadian companies to help them get into more supply chains,” Sharma recalls, adding that EDC worked hard to leverage its partnerships with financial and other key institutions to help local companies seize the many global opportunities that emerged during that period. Many international banks began to vacate their traditional finance businesses, resulting in a shortfall in capital to fund new projects. In stepped EDC. “We were always in that space, but we took on a greater role,” recalls Sharma. “It required us to put more capital in, but … we deploy capital to create opportunities. That strategy has been good for Canadian companies and for Canada.”

So, too, is one of EDC’s other main activities: promoting Canadian businesses abroad and bringing opportunities to the attention of the country’s leading business owners and executives. “In addition to being a financial services provider, we’re the face of Canada in the international finance market: sometimes we’re following our companies, other times we try to lead them to where we think the business is going to be,” he notes.

While other countries such as Germany and the U.S. have the advantage of being able to position their large multinationals as an anchor in new markets, thus creating vast opportunities for smaller firms to follow in their wake, Canada’s market is far more SME-driven and lacks much of the multinational firepower of larger economies. “Our ability to get international companies to do business with their Canadian counterparts requires us to play more of a marketing or matchmaker role, and that’s what we’ve been doing over the past several years,” Sharma explains. “With our international presence, we look at areas of demand – like healthcare infrastructure or agricultural resources in Southeast Asia, Africa and South America – and we then try to match supply with the demand to open doors for Canadian companies.” The organization also offers access to products on both the trade and export finance side, such as its political risk insurance coverage for companies opening offices or facilities in emerging markets, receivables insurance or direct lines of credit providing access to expansion capital.

Of course, another of EDC’s strengths is its ability to shed light on emerging trends and markets around the world, thanks to its web of regional offices and roving team of economists and researchers. The question that Sharma is asked so often by Canadian entrepreneurs is always the trickiest to answer: Where will the most lucrative export opportunities emerge in the next year and beyond?

According to the EDC’s spring 2013 Global Export Forecast, the United States will remain our strongest export market, as it has been for decades. Case in point: North-South trade grew by 18 per cent in the past year alone, a trend that’s expected to continue. While Japan and the European Union will face ongoing economic pressures, the report predicts that China will experience growth in the neighbourhood of 8.2 per cent this year and 8.5 per cent next, while emerging markets are expected to post a collective growth rate of 5.9 per cent next year. At the same time, markets such as India are showing signs of renewed life and presenting tantalizing business opportunities, thanks to that country’s trillion-dollar core infrastructure gap.

Given those trends, Sharma feels Canadian companies should brace for increased demand for primary goods such as lumber and oil, as well as for high-value-added exports such as machinery, aerospace components, wood products, processed foods and consumer goods. That’s not to mention the growing demand that EDC is predicting in specialized clusters such as green technology, healthcare, oceans- monitoring technology and natural resources infrastructure – all areas where Canadian companies can bring their unique expertise to bear on the global stage.

Although the recent recession years have jeopardized the success of many Canadian businesses and threatened their financial sustainability in the short term, Sharma sees an export-related silver lining to the crisis. While trade with the U.S. still accounts for nearly 75 per cent of this country’s $427-billion in annual exports, EDC has witnessed a major diversification of trade among Canadian firms, particularly directed toward regions such as Asia and Latin America.

“In the last five years our companies have started to realize there are opportunities to be had in emerging markets,” Sharma states. “We’re seeing a diversification of trade away from our traditional G7 partners and into the emerging markets. And as the U.S. comes back, we predict that Canadian companies will not stop selling to these new markets: the trend is clearly for our companies to look globally and into the international and emerging market space.”

Export Development Canada (EDC) is this country’s export credit agency, supporting Canadian firms and investors as they do business internationally in more than 200 markets worldwide. Founded in 1944, the self-financing Crown corporation helps Canadian businesses find new opportunities abroad, while providing support on a number of fronts, including insurance and financial services, bonding products and direct overseas investment – as well as into Canada – and customized support for small- to medium-sized business owners who hope to do business on the international stage, but may lack the financing or brand awareness to compete. EDC is also committed to building and maintaining partnerships with other organizations such as financial institutions to help Canadian firms seize key export opportunities.

Last year alone, EDC helped more than 7,400 companies drive export sales and investments totalling $87.4-billion. The organization estimates its investments helped generate $52.7-billion of Canada’s nearly $1.8-trillion GDP in 2012, while helping to sustain nearly 574,000 jobs. “We’re involved in anything to do with international trade activity where Canadian companies are trying to manage risk, break into global supply chains or connect and do business with big multinationals around the world,” explains Rajesh Sharma, Senior Vice-President of Business Development with Export Development Canada. “As they tap into those, we can go to the borrowers and potential buyers and provide them with debt capital if they are buying, or will buy, from Canada.”

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