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The Canadian marketplace can be an untapped “gold mine” for a U.S. business looking to expand operations to Canada. However, whether you are a small company or a gigantic one, if you do not do proper research, misfortune is sure to follow. Stories of popular small U.S. based businesses failing in Canada and even ones as large as Target, all have made the news lately for their failures to succeed in Canada. This article is not meant to detour a U.S. business from expanding into Canada, it is meant to encourage them to expand in Canada. But, by learning from the past and not making the top 4 mistakes U.S. businesses keep making.
- Failure to take advantage of programs – There are “trusted trader” programs that are designed to help U.S. and other foreign businesses looking to break in and dominate the Canadian market by learning more about the border clearance process. The primary trusted trader programs for U.S. companies is the Customs-Trade Partnership Against Terrorism (C-TPAT). When a program such as this is completed, a U.S. company will enjoy a reduced amount of border inspections, among many other entitlements.
- Failure to become a Canadian Non-Resident Importer – Current Canadian law, restricts non-Canadian businesses to collect taxes or even carry a status of “importer of record” when trying to export goods into Canada. This is the equivalent of two boxers fighting, but one of them, the U.S. fighter, would have one arm tied behind their back and losing the fight. Basically, this is a huge disadvantage for a U.S. business as it tries to compete against Canadian companies. The way around this is to apply for the “Non-Resident Importer NRI” program. This will allow a U.S. business to be an “Importer of record.” This is how a U.S. business can legally get their other arm “un-tied.”
- Not using the benefit of Duty Relief Opportunites – There is no escaping duties, they are as much a part of the importing and exporting business just as much as anything else. However, this does not mean that one company should be paying far more in duties than the next business. Paying more duties will not earn a U.S. business a reduced amount of border inspections. The problem is most U.S. businesses who did not do their research, often end up paying a lot in duties. It does not have to be this way if duty relief opportunities are thoroughly examined and understood.
- Failure to Understand the Canadian Market – You would think a business would have this rule down before they ever plunked down millions of dollars to expand into Canada. Unfortunately, this is not always the cases. The biggest, most recent and most interesting case of this is the Target failure and all the aftermath. When Target opened 133 stores in Canada, they had to close them all shortly after. Researchers said they did not truly know their market, which caused the collapse. Also, Americans have a misconception that Canadians are JUST like Americans. This is a misconception that can leave a U.S. business having to close its doors in Canada.
Other worth notes about Canadians
Canada is a bilingual country, they follow the metric system, they prefer all their transactions in their own money (the loonie). They care more about loyalty and everyday low prices than they do about coupons and mail-in-rebates. Also, 80 % of Canadians live within 100 miles of the U.S. border.
If you are a U.S. business wanting to expand operations into Canada as there are millions of people who are waiting to buy U.S. products, it can successfully be achieved. You just need to read this article, and do more of your own research in addition. Furthermore, one critical factor is to hire a well-respected Canadian (who actually lives there) who has an extensive body of work dealing specifically with U.S. businesses wanting to expand their operation to Canada.