125. EXPORTING TO CANADA

After all, isn't doing business in Canada the same as doing business in the U.S.? Not so fast . . . Before you load your products on a northbound freight train, there are a few things you need to know about exporting to Canada.

As you might expect, the Canadian market is considerably smaller than the U.S. market, primarily because Canada's population is about a tenth of the population in the U.S. But despite the difference in scale, there are many similarities between the American and Canadian economies, and the two countries have shared an historical affinity that doesn't exist in most other international markets.

Yet at the same time, it's important to remember that Canada is an international market with its own unique set of trade customs and regulations. To be successful in Canada, American entrepreneurs need to approach the exporting process with as much diligence as they would exporting to any other region of the world.

Canadian Pride

On the whole, Canadians value their close relationship with the U.S. However, Canadian consumers are acutely aware of the trade advantage enjoyed by U.S. companies and whenever possible, tend to choose Canadian-manufactured products over those imported from the States. American exporters can still compete in Canada, but to do so they need to offer an incentive for consumers to select their products over domestic alternatives.

Cost is the most direct advantage U.S. exporters can offer Canadian consumers. If your products or services can be offered less expensively than Canadian domestic products, then the majority of consumers will choose your products regardless of its point of origin. American businesses can also offer a technical advantage over Canadian companies, especially in cutting edge fields related to software, hardware, and other technologies. The bottom line is that the more effectively you are able to differentiate your products from Canadian alternatives, the more profitable your export business will become.

Geographic Hubs

Unlike the U.S., the population in Canada is largely concentrated around a few geographic hubs. Cities like Toronto and Montreal contain as much as 90% of the market for most goods and services. This means that most U.S. exporters need to concentrate their efforts in a few select areas, and find agents or other in-country representatives who are adept at connecting American companies with buyers in these locations.

Although you may ultimately decide to expand your market to the entire country, a few major cities offer the biggest payoff, so it's to your advantage to start by building relationships in select urban hubs.

Trade Barriers

Canada has fewer trade barriers to U.S. imports than many other countries, but they still exist. Trade agreements between the U.S. and Canada have eliminated virtually all tariffs on imported goods. However, Canada continues to have specific regulatory requirements on U.S. imports. Labeling is also an issue since most provinces require imported products to be labeled in both English and French. For more detailed information about trade barriers and other restrictions, visit the U.S. government's exporting website at www.export.gov.