Kevin Carmichael: Exporters have suffered over uncertainty from the U.S. and China; if they don’t spread out geographically now, they never will
I’ve spent years looking for a Canadian exporter that defied economic gravity, and Jean-François Bernier, chief executive of Attitude, a Montreal-based maker of natural body creams and household cleaners, earned his way into the paper with these two words: South Korea.
He was being ironic, a darkly humorous allusion to China’s jailing of Canadians Michael Kovrig and Michael Spavor after Canada apprehended Huawei Technologies Co. Ltd. executive Meng Wanzhou on behalf of U.S. authorities. China also retaliated with its pocketbook, blocking Canadian canola and, until recently, shipments of pork and beef. Chinese propaganda has stirred resentment against Canada, making a notoriously cutthroat market even tougher for anyone hawking goods branded with a Maple Leaf.
“Most companies don’t want to go through the hustle,” he said, pointing out that Attitude didn’t just choose the Korean market. “We went everywhere.” At the same time, China went from being a plausible bilateral trade agreement partner to a commercial bully. Navigating the regulatory labyrinth in Brussels or finding a partner in Vietnam must look more attractive when companies run their cost-benefit analyses now that shovelling goods into the maws of the U.S. and China can no longer be considered a sure thing.
In some ways, the extreme concentration is natural: Canada shares a border with a single country that has the gravitational pull of Jupiter. But the lack of diversity leaves Canada at the mercy of U.S. business and political cycles. It also represents an opportunity cost, since most companies have essentially missed out on the hyper growth that occurred in China and other emerging markets over the past couple of decades.
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