Paving the Road to Global Markets for Canada
Small and medium-sized enterprises (SMEs) are the backbone of Canada’s economy, representing 99% of its businesses. Yet, they are a relatively untapped source of exporters, with less than 4% of SMEs exporting goods in 2020. According to a new research report by the Standards Council of Canada, standardization may be one of the keys to increasing Canadian SME export.
SMEs face many challenges when breaking into the global market. To sell abroad, companies must meet applicable requirements in technical regulations, product standards, and certification within the desired countries. This can be costly and may be particularly difficult depending on whether the technology aligns to the standards and regulations.
“We’ve been working with SMEs for many years at SCC, and we have long been aware of the challenges they face,” said Diane Liao, SCC Program Manager, Research and co-author of the report. “They come to us for strategies to help them commercialize and scale up, and we have gotten to see how standardization benefits them firsthand. However, we really wanted to analyze how participating in standards development can advance exportation since this is what will move the needle most for Canada’s growth economically.”
International standards have been recognized as an effective way to reduce some of these business challenges. Standards are the written guidelines used to achieve certification and to demonstrate adherence to requirements in regulation. Participating in the development of international standards allows a country to gain economic and political influence by aligning standards development with the country’s interests.
This is a crucial first step that can enable more SMEs to access global markets down the road,” said Liao. “By taking a strategic and planned approach to international standards development, Canada can reduce technical barriers to trade that could ultimately bring more SMEs into global value chains.”
Drawing on national SME survey results, SCC’s analysis showed that Canada's participation in international standards development has a positive impact on Canada's exports and is associated with engaging more SMEs in international trade. Specifically, participating in an additional technical committee where international standards (such as ISO and IEC) are developed could potentially link to over 200 more SMEs exporting, with an estimated value of 516 million CAD in goods.
This is an important piece of knowledge, both for SMEs and for the organizations that support their growth, such as the Government of Canada. Encouraging and investing in Canadian SME participation in standards may mean a boost in Canadian exports.
To learn more, check out the paper, published by the International Journal of Standardization Research.