Three Tips for Doing Business in Canada
Canada offers a unique opportunity for American businesses looking to sell products into new and profitable markets. Canada shares a border with the U.S. that spans 5,525 miles, and entered the North American Free Trade Agreement with the U.S. and Mexico on January 1, 1994. Since then, Canada has purchased a significant number of American exports, which has grown significantly.
Canada’s 35 million citizens have a strong desire for American products, and they have the purchasing power to satisfy those needs. In order to take advantage of this marketing opportunity, it is important for business owners to understand the logistics involved with entering the Canadian marketplace. Here are three key tips for American companies that are considering doing in business in Canada:
- Know the market. Before a company decides to market in Canada, it’s important to conduct research. Industries currently growing in Canada include health, beauty, automotive, manufacturing, environmental, and technology. Canadians are also particularly open to products that benefit the environment.
A large percentage of the Canadian population lives close to the United States border, so consumers have a strong awareness of American brands and marketing campaigns. However, while Canadians have a strong inclination towards American products, the markets are not identical so their needs will be different. E-commerce is also growing in Canada. If a company provides a high quality product that is appealing to both Canadian and American consumers—and it can be purchased online—there is a greater chance that the product will be successful in Canada.
Fundamental differences. Canada is different in a number of ways from the United States, and it is important to be aware of these differences before entering the marketplace. The population in Canada is also spread out, so when dealing with Canadians in remote regions, who may have a tendency to buy in bulk, incentives such as a free shipping can encourage this behavior. Since portions of the country like speak French, many companies must offer customer service and product packaging that appears both in English and French.
- Regulations. There are a number of complications that might arise when it comes to shipping products in Canada, and if a company is not informed regarding the nation’s shipping regulations and taxes, their overall might falter. For example, average product delivery times can often exceed two weeks and some companies don’t offer tracking codes. It is important to consider the size of the country, and its thinly spread population. There are significant costs for expedited services, and Canadian customers have to pay additional sales taxes and extra duties on products shipped from the U.S.
There are also a number of strict regulations that have been enacted. For example, the U.S. government prohibits the export of particular products outside of the nation (such as GPS devices). Health Canada also has specific regulations when it comes to allowing cross-border shipping. For instance, health and beauty companies are not permitted to ship more than 90 days’ worth of inventory across the border unless the products they are moving are specifically approved by Health Canada.
American companies looking to stay on top of trends, Canadian regulations, and unique business differences, can ease the transition by partnering with Canadian firms that specialize in cross-border delivery logistics. By doing so, businesses can tap into existing Canadian distribution systems, and have a better grasp of Canadian culture, business methods, and an overall understanding of the Canadian marketplace.