People still want to know what’s keeping Stephen Poloz up at night. The ever-astute

Unsurprisingly, the book is a national bestseller, with many individuals seeking his word on what lies ahead—while others still want to know what’s keeping him awake at night.

So, what’s keeping him up at night?

This was a question Mr. Poloz was often asked during his tenure as the Governor of the Bank of Canada and was asked once more during FITT’s most recent fireside chat with him, hosted by FITT President, CEO and CITP Caroline Tompkins. As usual, his answer was in-depth and well thought-out, mainly focusing on political polarization and the concern that “politics somehow are going to get to a place where things really can’t get done.”  

But it isn’t just polarization that’s keeping him awake at night, it’s also the rising income inequality most countries are seeing, which, in his opinion, is fuelling the type of atmosphere where polarized political sides only seem to work together when crisis hits. This is a weakness that could lead to a trend of governments stumbling from one crisis to another to get things done, he thinks. If the past year’s events, from the global pandemic to the war in Ukraine, are any evidence of Mr. Poloz’s knack for nailing a prediction on the head, then he might have a second career as a clairvoyant (though he would disagree with this assessment). 

Despite the multiple looming risks discussed throughout the chat, Mr. Poloz also showed his famous sunny side, giving insightful solutions and strategies that businesses and everyday individuals can use to better prepare for uncertainty. These include things like empowering teams with values-based leadership and ensuring that companies have solid long-term forecasts. These forecasts should include strategies for managing tectonic changes like inflation, political polarization and an aging workforce. He also highlighted the openness of individuals in government to work together toward better solutions for the economy. 

Other interesting topics discussed during the chat include: 

• The exacerbation of inflation (which Mr. Poloz had predicted in his book over a year ago—but did not think would happen so quickly) 
• Canada’s slow trade growth and contributing factors such as low productivity hampered by logistical and regulatory inconsistencies that prevent businesses from growing 
• Canada’s strengths, which include a strong influx of immigrants who contribute to our workforce and productivity, our excellent education system and better handling of income inequality when compared to other countries. 

A rich and insightful 60 minutes, we’re grateful to have hosted Stephen Poloz for the second time and hope there will be many more opportunities in the future. 

Watch the event here:

[youtube https://www.youtube.com/watch?v=TO0PfS4OcWw]

The post Diving into the World’s Mounting Tectonic Economic and Trade Forces with Stephen Poloz appeared first on Trade Ready.

New technologies are altering the face of trade finance, bringing a host of opportunities and challenges for corporate treasurers. Joon Kim, Global Head of Trade Finance Product and Portfolio Management at BNY Mellon Treasury Services explores the changing trade finance landscape.

Having remained largely unchanged for decades, the trade finance industry is now experiencing a significant transformation. The combined force of technological innovation, shifting client demands and the unprecedented Covid-19 environment are propelling trade finance toward a digital future.  

New automated technologies available to banks

The implementation of new technologies – from machine learning and optical character recognition (OCR) to digital signatures and distributed ledgers – lies at the heart of these digital efforts, and is helping to transform the historically time-consuming, manual-intensive and paper-based business of trade finance into a streamlined and efficient machine.  

While these rapid changes are posing fresh challenges, they are also opening up a range of opportunities for banks to better support their clients. And as these solutions begin to deliver on their potential, we are now on the cusp of significant gains. With this in mind, what can banks do to ensure they can continue to drive this digital transformation?  

Obstacles in compatibility to overcome

Almost 80% of trade finance is now conducted in the open account space, where goods are shipped and delivered before the payment is due. While it has become by far the most prevalent means by which to conduct trade finance, several weaknesses remain – including the lack of a network to effectively and securely exchange information  

In lieu of such a network, treasurers working in the open account space typically have to structure their trade finance deals on a bilateral basis and onboard several different proprietary systems.

Not only is this a time-consuming process, but it also brings a number of complications. For instance, it creates a system that is more susceptible to financial crime.

With no standard network to exchange information, fraudsters can use a single invoice to obtain multiple lines of credit from different banks.

The turbulent landscape created by the COVID-19 pandemic, which put extreme pressure on global supply chains and liquidity, served to exacerbate these issues. As a result, it became clear that an effective and secure system was needed to support, facilitate and optimize open account transactions.     

Industry collaboration is key

In order to make open account trade more secure and efficient, several networks are being developed – and industry-wide collaboration is proving key to their success.  

One such example is the Marco Polo network, a  consortium of approximately 45 banks that leverages blockchain technology to provide an open software platform for trade, payments and working capital financing. The network is removing the need to integrate a host of external systems and replacing this with a single point of access on a cloud-based blockchain-powered network.  

The use of blockchain technology means that the moment both parties agree that the transaction terms are correct, the trade can be confirmed in real time.

This means the data in trade documents can be checked, matched and confirmed by both parties almost instantly. This is also reducing the risk that the same trade instruments could be used to secure working capital from multiple liquidity providers.  

By enabling the seamless, secure and fast exchange of trade information and transactions, partner banks are able to more efficiently insert liquidity into the international supply chain via a host of supply chain finance solutions, including both payables financing and receivables discounting.

Working towards a more efficient trade finance future

Trade finance is truly transforming, with the use of emerging technologies driving efficiencies and streamlining processes. But, while significant progress has been made – particularly with the COVID-19 pandemic pushing the industry away from the paper-based processes and towards digital alternatives – the era of digital trade finance is only just beginning.

Banks will need to keep up with the pace of change, participating in the industry initiatives, such as the Marco Polo Network, and investing in cutting-edge technologies – ensuring they can provide the support, tools and solutions their clients need to flourish in the new digital world. 

The post New technologies changing the trade finance industry appeared first on Trade Ready.

The word ‘globalization’ evokes strong sentiments in our current times. For some, it represents a practice that has been occurring for centuries: trade between countries, while for others it means the loss of jobs, offshoring, protectionism, and geopolitical tensions. With the onslaught of the pandemic, these tensions have become more prominent, but they are also opening doors to meaningful and important conversations about the evolution of global business and trade.

Recently, FITT hosted an event with Stephen Poloz, CITP, Special Advisor at Osler, Hoskin & Harcourt LLP, and the former Governor of the Bank of Canada to discuss the future of globalization. He noted that it is not a black or white scenario and much of the backlash against it can be attributed to a variety of factors often overlooked by mainstream politics and media. Poloz’s upcoming book, “The Next Age of Uncertainty: How the World Can Adapt to a Riskier Future,” touches on a few of these topics, while for our event, he specifically dove into the foundations, risks, and solutions to post-pandemic globalization.

The event was hosted by Caroline Tompkins, CITP, President and CEO, FITT and moderated by  Alberto Quiroz, CITP, President, Intellimeter Canada Inc. and Chair, FITT Board of Directors, and garnered some excellent questions and insights into the topic.

Read some of the most fascinating excerpts and quotes by Stephen Poloz from the event transcript below:

Globalization, COVID-19, and the effects on the global economy

“There’s no doubt that the pandemic has shaken our foundations. It will have permanent effects on the global economy and on how we do business. But much of what I have to say today was in motion long before COVID-19 came along. The pandemic might have accelerated some of those things, but they were already there and they were destined to affect our future.”

Economic Resiliency

“Just to illustrate, here in Canada, the economy did shrink by about 20 percent last April to May (2020), which is a pretty big number—but it’s not maybe as big as I might have thought. You know, if you shut down the whole economy, would you expect that around 80 percent would just keep running? That surprised me a little. The declines in the economy here in Canada lasted only two months as the economy began to grow again in June, last year, and by the fall we were operating at 97 percent of pre-pandemic levels of economic activity—and right now we’re 98 to 99 percent of pre-pandemic levels. You wouldn’t know that probably by watching the news.”

Erroneous comparisons to The Great Depression

“We’re hearing mostly about the sectors that have been hit directly by the COVID-19 shutdown…but the key to this is that each time we have closed the economy, the unaffected sectors have continued to do well. There’s been no spread of the negative sentiment from the directly affected sectors to the rest of the economy, and this is exactly why those comparisons last year to The Great Depression were so inappropriate and actually totally misleading. A recession happens when your next-door neighbour loses their job and they cut their spending and, when you hear about it, you cut your spending too because you’re worried that you might be the next one to lose your job. Well, not in this case. We had very fast policy responses—monetary policy and especially fiscal policy—and not to mention the fact that our banks allowed people to take holidays from paying their mortgages. These were really big buffering actions and they enabled us to stop the clock in certain sectors and allow the rest of the economy to continue to run. This is exactly why economists have been pretty uniformly surprised at each stage of the global recovery.”

Sources of discontentment related to globalization

“The source of this discontent, I think, the most important one, is rising income inequality. Data from the UN shows very clearly that income inequality has risen for over 70 percent of the world’s population over the past 30 years. The reasons for this vary from country to country, but the common denominators are technological progress, rising corporate concentration, eroding labor bargaining power, and, of course, globalization—and all these things actually tend to go together. There’s a lot of research on this question and as an economist…it’s quite clear that the root cause is actually technological progress.

“Technological change has been a constant throughout human history, as we know, from the very beginning, but it’s been punctuated by three major waves of change and we call those industrial revolutions. These were the steam engine during the 1800s, the spread of electrification in the early 1900s, and the deployment of the computer chip beginning in the late 1970s. Each of these technological leaps has delivered untold benefits to society in terms of quality of life, productivity, and of course income, but, at the same time, companies have had to adapt to new technology or be forced out of business—that’s highly disruptive. These disruptions are particularly hard on people, on employees… many of them lost their jobs permanently, even though many new jobs were being created in the background.”

“A key feature of all three industrial revolutions is that the economic benefits of the new technology do not get spread around. You might imagine it being spread around like yeast, you know getting into every crack so everybody gets some. But instead, the benefits to technological progress tend to pop up more like mushrooms. So, not yeast— mushrooms and then the mushrooms get collected by a few large firms and firms get bigger as a result. So, historically technological change has also always been associated with rising income inequality and worker discontent and, of course, opportunistic politicians are tapping into this discontent.”

The third and fourth industrial revolutions

“Notice that the peak period of adjustment to the third industrial revolution also corresponds to the peak in the globalization wave that followed China’s entry into the WTO. So, during the past generation, we’ve got these two major forces that are helping to contribute to rising income inequality. Now, politicians, it seems, prefer to point to globalization as the main reason for rising income inequality. Maybe it’s easier to identify—displaced workers can certainly identify—that there’s foreign competition perhaps that has caused their displacement. And, of course, it’s deceptively easy to fix. You just impose tariffs to protect people from the disruptions.”

“But let’s just take a moment to walk through the full impact of a technological leap. Firms deploy the new technology and, of course, as we know, people lose their jobs because of that new technology—and the companies make a bigger profit. New jobs in the new technology, they make good money too. Income inequality rises—absolutely it does—because many people are disrupted and don’t have work at all. But now two things happen: prices fall—prices of all the things that use the new technology fall—because the companies are more efficient. So, purchasing power of people with incomes rises significantly and the people who are making big money from the innovation spend their purchasing power too. So, those two channels of spending create jobs across the entire economy: that’s people who don’t just make, let’s say, cars, but people who build houses, people who are plumbers or electricians or furnace repair people. All these kinds of jobs are created because the level of income throughout the economy goes up that creates new jobs in the economy that no one, and I mean no one, points to as a benefit of technological progress.”

“You could ask exactly the same question about the full and complete effects of globalization and the story is exactly the same as it is for technological progress. Firms make money, prices fall, purchasing power rises, jobs are created that, again, no one points to as a benefit from globalization. So this basic confusion is what I think is driving political polarization around the world and causing politicians more often to intervene in trade.”

The third and fourth industrial revolutions and the “K”-shaped economy

“We’re now just entering the fourth industrial revolution and that’s the digitization of all parts of the economy. AI, bioengineering, and amazing leaps in technology…. COVID-19 is for sure accelerating the adoption of new technology in all kinds of dimensions. This points to what I call, ‘K’-shaped economy…in other words, people who are being disrupted go to the bottom part of the “K,” the rest of the economy grows well into the top part of the ‘K.’ We look at the economy as a whole—it may look more or less normal, but beneath the surface, there’s a lot of pain in some areas.

“This is going to become highly political and therefore increase political polarization and the inability, given that polarization, for governments to really forge a consensus around the policies that would actually address inequality—that would be major tax reforms, as I’m sure you’re aware. It’s going to lead to more intervention in the global trading system, as a sort of second-best, and, I think, generally counterproductive way to manage political risks from those discounted, discontented individuals. And, it’s going to lead to haphazard trade policies that will fuel geopolitical tensions because every trade policy that you put in place in one country affects another country. That makes the global trading system inherently unpredictable and riskier overall—with the root cause being is rising income inequality that’s coming from that technological wave now.”

How trade-dependent companies can adapt to a riskier trade environment

“Higher risk in general means devoting more resources to active risk management. It means more frequent use of scenario planning and updating those scenarios frequently—not just once a year to prove to the board that you’re on top of your risk, but rather to develop them every time the starting point is changing… to do a whole new set of scenarios, have it all automated so you can keep them up to date. It means the company needs dedicated resources to risk management. A firm that does a good job with risk management will create more shareholder value than one that does not.”

To me, risk management is like a new form of intangible investment— like the way companies invest in their brands or the way they invest in their employees. It’s a cost item. It doesn’t look like equipment or real investment but, believe me, it is because it pays off year after year.

Why de-globalization and automation aren’t favourable risk management strategies

“What will companies do in practical terms? Well, it’s a few options and I always want to run through them even though maybe one or two of them are just strawmen:”

Reshoring and de-globalizing

“The first option is to avoid it all. You can reshore everything, you can de-globalize the company. Now, this is seen by many as the ultimate form of de-risking, and the governments who are advocating for disruptions of international trade love it because it seems that it would create local jobs, for example. Creating a lot more local jobs—building, for example, household appliances—well the tariffs that the U.S. put in place to try and encourage reshoring of household appliance manufacturing added pretty close to a thousand dollars per year onto the costs of every American household. Now, this is money that was no longer available [for citizens] to spend on other things, including things like, let’s say, upgrading their kitchen. Now there are lots of lost jobs in the construction sector because people no longer have the resources they would like to have to do put a deck on their house, so those jobs that are lost in the construction sector will not be identified as a side effect of a policy designed to reassure the manufacturing of appliances into the United States.”

Automation

“The second option that companies might consider is full automation. So, given higher domestic wages, partial automation is always part of reshoring. Okay, so you reoptimize. You bring stuff onshore, wage costs are higher, so you figure out what’s the appropriate capital-labor ratio and, of course, you buy a few robots to compliment the people who are on the line. The point is that you may not create as many jobs as the politicians were hoping you would—but the full risk management strategy may be able to make a plant full of robots and a handful of technology exports. So, you could just have all robots and just a few folks running the system with a mouse. This is the ultimate backfire for the politician, so there is always a risk that something else will change after that optimization happens. So, the full automation option…I don’t think it’s the way to go, but I do think that to the extent that reshoring is forced by government policies, one of the downsides for the strategy is that there will be lots of automation that happens in the process and so fewer jobs will be created domestically than originally imagined.”

Why we should keep supply chains as they are but manage the risk differently

“The third option which is starting to sound more appropriate is to keep the supply chains as they are but manage the risk differently. So, you preserve the value that’s being created in the global value chain but perhaps give some of it back in order to manage the risk.”

Globalization has always been portrayed as just black or white. You know, either you’re globalized, or you’re not globalized—either you’re doing trade you’re not doing trade. Well, a supply chain was always going to be fluid and a living thing and re-optimized often. An optimal global supply chain requires full product fragmentation and each fragment of the process matched with exactly the right skill set and the wage cost in some other country. So, when relative wages change, the optimal suppliers of some fragments will change and therefore the supply chain needs to be continuously revised as we go through time.

Ways to manage trade and geopolitical risk

“So, what we need to think of is trade risk or geopolitical risk. Call it what you want, it’s just one more cost or cheap thing that can change that forces a company to re-optimize that global supply chain. So, re-optimizing the supply chain more often or more continuously—that’s, of course, going to cost money but it’s a form of insurance against the risk that we’re talking about. Re-optimizing the supply chain can be thought of as right-shoring or best-shoring if you like. So, practical examples would be create redundancies to reduce risk so if you have to you have one fragment of the process reliant on one supplier, well, find a second supplier and run the system with two suppliers in two different countries for exactly that same fragment. That’s just a risk mitigation strategy. It might cost a little bit but that’s a small cut price to pay in exchange for having a place you can go when something goes wrong because of geopolitical tensions at the top.

“Secondly, build flexibility into contracts with suppliers from the beginning, so that you’re not committed for a long time so the continuous scenario analysis or business continuity planning allows the movement from one supplier to another.”

“The third sort of thing that we hear about is nearshoring that’s exploiting nearby trade agreements that offer legal protections for the firm. So, for Canadians, for example, you know using Mexico as a supplier instead of a producer out in Asia maybe gives you more protection just because CUSMA is going beyond all this.”

Want to get more insights from the event? Watch it here:

The post Post-pandemic globalization: Practical strategies for managing a risky trade environment—event recap appeared first on Trade Ready.

1. Create value for customers

To attract and keep customers, you need to be sure that your business creates value for your customers. When your product or service provides a value that makes your customers’ life better or easier, it gives them a reason to keep doing business with you. As you create, adapt and grow your products and services, try to see them from your customers’ points of view. Focus on growing your business in a way that will better serve and create value for your customers. That value will help bring more customers your way.

2. Pick a market that’s ripe for growth

Often, it’s the market that determines that determines whether a business succeeds or not. That means you need to carefully select the markets you enter. Your market needs to have a need for your product and services, as well as a population that will support your business. As you evaluate a market, be sure that the market is ripe for your new business, and that the market will enable your business to grow over time.

3. Manage cash flow

Your business needs a steady flow of cash. That cash allows you to pay your employees, your business’s overhead and buy the supplies and inventory you need to serve your customers. If you aren’t successfully managing your business’s cash flow, you are jeopardizing your business’s ability to succeed. As you prepare to launch your business, make sure you secure the capital you need to fund your business the way it needs to be funded. As your business gets up and running, make sure you’re keeping careful financials so you know how much money is coming in and how much is going out, so you can make adjustments when needed to keep your cash flow healthy.

4. Hire for your weaknesses

As you add employees and grow your business, take on employees whose skills and strengths complement yours. When a new position opens up, evaluate what skills and experiences are needed to successfully fill the slot. Then, take some time to evaluate yourself and your existing team. Look for new employees whose skills, personalities and backgrounds differ from yours and from the rest of your team. Hiring a diverse group of employees will make your business stronger because you will have a team ready to handle a range of responsibilities and tasks.

5. Focus on the big picture

There is a lot that goes into starting up a business. It can be hard to take yourself beyond the day-to-day tasks that keep your business running. To grow and succeed, however, you need to focus on the big picture for your business. Set goals and have a vision for how you want your business to grow. Have a roadmap of daily, weekly and monthly tasks that will help you achieve your goals. Evaluate your goals and your milestones regularly so you can adjust to stay on track to reach those goals.

Successful startups are the exception, not the rule. When you take the risk of starting your own business, you want to do what you can to ensure that your business succeeds. Modeling what successful startups do differently can help your startup become a successful business, as well.

The post 5 things successful startup founders do differently appeared first on Trade Ready.

Although governments in Canada were freezing hiring and limiting budgets, I managed to get a 3-month contract with Consumer and Commercial Relations (the name of the Ministry at the time) as a Policy Analyst. For the next 3 years I went from 3 to 6-month contracts and finally to one-year contracts, and eventually after proving myself and building my reputation, to full-time status.

I took additional courses in French, mathematics and accounting to broaden my skill base and wrote articles on doing business in foreign markets, based upon research and interviews I conducted with experienced traders. I used whatever tools I had to acquire to strengthen my resume and orient it toward what I really wanted to do.

All of this effort put me in a position to apply for an “internship” in the Ministry of Industry and Trade and do what I really wanted to do – work in the growing field of international business. Taking the job required a pay cut – not exactly great timing with our first child on the way and a new house with a high-interest mortgage. However, the rest is history you might say, as I progressed rapidly and after progressive responsibilities retired in 2016 as a Professor of International Business. Now I operate a small import-export business, just for fun.

Charmed life you might say? The road to achieving what I had set my sights on to do as a career was far from easy. And, I will admit no different than the path anyone may take to obtain the same results. So what advice can I offer to young people just starting out in their careers, perhaps not long out of school, and who intend to work and thrive in a career involving some form of “international business”?

1. Recognize that you may not be able to start your “dream job” right away

It may happen that you must start working in a field totally different than what your goals project. The key is that you do two very important things:

1) Once you obtain that first job, do whatever job you are in to the very best of your ability and build your reputation as a reliable, adaptable and relentless learner such that your performance – and your reputation – is well regarded.

2) Keep your eye on your goal and continually look for opportunities to apply for positions that are related to your core interest in international business.

It could well happen that the endeavour in which you are currently involved has an international component somewhere in its organizational structure and opportunities may arise that allow you to move, now with experience, to that position.

I once met one of my students on the floor of a Canadian Tire, stocking shelves, a year out of school. He told me that he was disappointed in his current occupation and still wanted to work in international business. I told him to first be the best employee that Canadian Tire had ever seen – and if that meant being a “stellar shelf stocker” so be it.

I noted that since Canadian Tire bought products internationally, watch company job postings for opportunities in the purchasing office or a logistics function that moved products from foreign markets to Canadian Tire distribution centres.

After all, he had an education related to that work – including all of the FITT courses . This suggestion got him thinking and although he did not end up with Canadian Tire, three years on from graduation he is now working for a leading customs brokerage firm. A recent thank you email for that passing advice reaffirmed that I had steered him in the right direction.

The moral of the story is that sometimes it may take what I call a “flanking move” on the job you seek. Just get a job in the building, which may involve taking a job at or near the bottom of the organization. If you are in the right organization and develop the right work ethic you can move your way up the chain. This applies to any position in any field.

2. Practice continuous learning and continuous improvement

Continue to take courses to add to your tool kit. Now, education is very tailored to specific skill sets and designations that may take one or two years to complete. In the grand scheme of things this is a short period of time. If you already have a good general education in international business, such as that obtained from the skill set derived from a full FITT program offered at many leading educational institutions leading to the CITP designation, build on that knowledge base.

Consider for example, the many designations that can be obtained in logistics, supply chain management, freight forwarding. Consider as well learning or improving your knowledge of another language, a fundamental skill in the conduct of global business.

I like to say, in the world in which we now live, you cannot say “business” without saying “international”.

Many businesses have these needs and functions embedded within their operations. Consequently, many businesses will have international requirements and working in these areas are financially rewarding and will satisfy your appetite for an international career.

But keep in mind, your learning will never stop here. If you pay attention to the two important things I mentioned in my first piece of advice – you will continually move in a positive direction and further develop your career. Every employer rewards people who never stop trying to perform better and achieve the organization’s goals – in alignment with their personal goals.

3. Recognize that many “opportunities” exist in places you may never have considered

Another one of my international business students was feeling a little despondent for not obtaining employment in his chosen field of study. He bemoaned the fact that he had an upcoming interview with a Canadian bank and felt that he would be destined for “tellerdom”.

I encouraged him to study hard for the interview and since he was a very smart and industrious fellow, and with his keen sense for and skill with “numbers”, win the job and take it from there. I suggested that banks were excellent training grounds and would offer a plethora of varied, future opportunities beyond whatever position he may take initially.

Banks, I suggested, also have several international departments and international operations, and with an eye to his goals he could apply for these positions from within the organization. One day I entered my branch to do some banking – and there he was, a financial advisor, which when we spoke suited him for the time being as he positioned himself for those very opportunities of which we had discussed two years before.

One can consider many diverse businesses and then think about how there might be an “international component”. Take the investment industry for example. It is not just a business of buying stocks and bonds or selling mutual funds. All investment companies evaluate international opportunities for investment, assess international political and economic (as well as business) risks and positions in these areas are filled with international exposure.

4. Do not ignore governments or international organizations because they seem “too lofty”

Do not ignore governments or international organizations just because they seem “too lofty” a reach or may be undergoing cuts and change. At present, these organizations are actively seeking new, young recruits to help them renew their operations. I follow the UN on Twitter (@UN) and I see many appeals for young people to apply for positions in a variety of fascinating international positions. I recommend you visit the UN Career site and see for yourself.

You can build a resume online and set up notifications for positions that may be in your areas of interest. NGOs are also areas where one can start and develop and international career. And of course, you can also get weekly updates on the career section of FITT’s TradeReady blog.

The Federal and Provincial governments are in the same position and despite the current turmoil of the times – just like I experienced way back in 1979 – they will be seeking new, young recruits for a variety of internationally related functions and responsibilities. Visit their web sites and job postings and you may be surprised at what you find.

The time-tested methods of identifying where to start and then building your skill set and reputation still hold true today for those interested in working in a variety of careers with an international component.

If I may borrow a very powerful marketing message from an investment firm – “tomorrow begins today” to reinforce the notion that we all have the power to make our future, with thoughtful planning, positioning and a continuous improvement mindset in whatever we choose to do. This includes ultimately achieving one’s goal to follow a global career path.

The post 4 lessons learned on starting and growing a career in international business appeared first on Trade Ready.

This article was updated on April 16, 2019

For Canadian exporters in the know, many would agree that the Canadian Trade Commissioner Service (TCS) is one of Canada’s best-kept secrets.

It’s baffling that a trade network with such a proud 120+ year history doesn’t have higher brand recognition within the Canadian business community.  I am regularly reminded of this when meeting with SMEs throughout the Prairies.

However, once they fully understand the diverse ways the TCS can help them into foreign markets and the impact it can have on their businesses, these companies often become long-standing TCS clients.

Simply stated, the TCS helps connect Canadian companies with international business opportunities.  Here are five easy ways your business can get the TCS Advantage:

1. Connect with your TCS regional office first

There are five TCS regional offices across Canada, each with a team of trade commissioners covering specific sectors to best support companies in their region.  If your business has the capacity and commitment to do business abroad, the TCS wants to meet with you.

Consider the regional trade commissioner as your key account manager; they can serve as your first point-of-contact for all government-related programs and services.

Their biggest value-add, however, is helping you connect with our TCS network in over 160 international locations.  Regional offices regularly receive business leads from TCS colleagues abroad, and occasionally host incoming foreign buyer delegations.

We can’t connect you with these opportunities if we don’t know about you!

2. Have the TCS vet potential business contacts/leads

You have just received an unsolicited inquiry from an interested foreign supplier or sales agent.  You’re interested in the market potential, but how can you be sure if it’s a reputable business?  Ask the TCS, of course!

Think of the TCS as an extension of your sales/marketing team.  Your TCS regional office will refer you to the right trade commissioner abroad to help vet potential business contacts and leads.

Our trade commissioners abroad also provide local market context to help you decide if it’s the right market for your business.  They might also recommend alternative market entry strategies that you haven’t yet considered.

3. Reach out to your in-market trade commissioner when traveling for business

I’m always surprised to learn how frequently Canadian SMEs travel abroad for trade events or fact-finding missions.

Business travel budgets are tight, so why not maximize your investment and meet with a local trade commissioner during your trip?

Here’s a tip: wherever we have a Canadian Embassy/Consulate/High Commission, we likely have a trade section as well.

Those trade commissioners are working on your behalf to help you succeed in that market.  If you make the effort to visit a country, it shows you are serious about the market.

Usually, a trade commissioner will gladly make the time to meet with you, learn about your business, and understand why you’re there.

Such introductions help keep your company top-of-mind when business opportunities are uncovered by the same trade commissioner later on.  Again, your TCS regional office will gladly make these introductions for you.

With sufficient lead time, the TCS can even arrange additional meetings with local contacts you wouldn’t have thought of on your own!

4. Consider trade shows where the TCS is already involved

Industry trade shows are an obvious way to assess new market potential and develop local contacts.  However, attending events that have active TCS participation will increase your chances for success.

How so?  The TCS is already involved in numerous trade events worldwide and often organizes side-events.

Your business can take advantage of pre-planned networking receptions, export cafés, and B2B matchmaking activities.

As one example, the Prairies TCS regional office welcomes over 20 trade commissioners from abroad every year to the Global Petroleum Show in Calgary.

Many trade commissioners bring potential buyers, for which the regional office – together with government partner, Export Development Canada – arranges B2Bs for TCS clients.

In addition, our visiting trade commissioners are happy to meet with Canadian companies to explain the opportunities in their overseas markets.

5. Don’t underestimate the value of province-/industry-led trade missions

Some companies have told me that they regularly receive invitations to join trade missions organized by the province or sector association but decline because they don’t see their company as the right “fit.”

They should reconsider.

What most don’t realize is that the in-market TCS team usually coordinates most of the mission logistics and B2B programs for these Canadian businesses.  Wherever possible, meetings with local contacts are tailored to match the interests of each participant.

It makes sense to leverage Canada-branded trade promotion activities for your own business. For each trade mission, the TCS works behind-the-scenes planning exhibition space, identifying foreign buyers, scheduling B2B’s and so on.

Collaboration between Canadian provinces/industry associations and the TCS network abroad helps deliver trade missions to different markets and industry sectors.

Now the “secret” is out about how your Canadian business can take advantage of the TCS to succeed in global markets.

Reach out to your nearest regional office to learn more about how the Canadian Trade Commissioner Service (and its new funding program, CanExport) can support your expansion plans into new markets and business lines.

The post 5 easy ways Canadian exporters can get the TCS advantage appeared first on Trade Ready.

Your next move should be to visit the market with which you plan to invest and/or trade!

Below are four perspectives on how in-market visits can help with the opportunity-identification and market validation processes.

1. Witness firsthand the opportunities and potential of your target market

Visiting your target market will give you the ability to witness and validate the foreign market opportunities you plan to pursue firsthand, beyond what you are able to learn through market reports, market studies and presentations.

The Philippines has built a thriving Business Process Outsourcing (BPO) sector from the ground up. The country has overtaken India as the call-center capital of the world because of its highly educated workforce that can speak fluent English, and their strong grasp of Western culture.

In early 2011, I had the opportunity to work on a lead and investment generation project, which entailed finding North American companies that could potentially outsource their contact centre and other back-end functions to the Philippines.

The process took me to the Philippines and enabled me to see  government initiatives, private sector investments, and public-private partnerships that were designed to make the country a BPO hub in Asia and globally.

Some of these developments included the creation of industrial parks, business parks and specialized economic zones (SEZ) to anchor in investments; the building up of BPO sectors in the cities of Manila, Cebu, Davao, and Cagayan; and even the establishment of schools that teaches call center agents how to speak in various accents of the English language.

By conducting an in-market visit to the Philippines, I was able to connect with foreign companies including Expedia, Lexmark, Toshiba, Convergys and Telus, that all successfully invested and leveraged the country’s BPO sector.

I was able to learn first-hand about the business environment, market entry challenges, and what it takes to be successful in the marketplace, and it helped me to identify opportunities in the BPO sector.

2. Uncover nuances of your target market

In-market visits will help you uncover market nuances that could potentially act as market entry barriers or  delay your expansion process if left ignored.

As an example, I worked on a market assessment and sourcing project for used mobile devices in the ASEAN market. A market nuance not uncovered by the team visiting Hong Kong, the Philippines, Singapore and Vietnam through secondary research was the preference to use dual SIM phones in certain parts of Southeast Asia that have limited network coverage.

Having a dual SIM phone allows users to access multiple carrier signals.

By identifying this market nuance, we were able to adapt our business plan accordingly.

3. Connect with parties that can assist in the internationalization process

In-market visits will enable you to connect with parties that can assist in the internationalization process, including:

• Government commercial representatives and sector specialists from the Canadian Trade Commissioner Services (TCS), investment promotion agencies (IPAs), and/or trade promotion organizations (TPOs) that can support your business interests and facilitate a soft landing should you decide to move forward.
• Potential customers, potential suppliers and potential partners that can test the feasibility and fitness of the products and/or services you wish to introduce to your target markets.
• Business associations that can provide you with market insights, guidance on how to navigate the market entry process and key contacts, including potential partners, distributors and end-users
• C-level executives and business owners who can validate the market opportunities you plan to pursue and can share nuances, challenges and constraints in the marketplace.

4. Monitor your external environment, which can affect the market opportunities you plan to pursue

The task of monitoring the external environment is an ongoing process.

By conducting in-market visits, you are able to track any changes in the external environment, which may impact the trade and investment opportunities you plan to pursue.

This will enable you to take corrective action if need be and minimize risks prior to the execution of your trade activities and/or the establishment of your business operations.

In today’s globalized world, Canada’s economic well-being is tied directly to its economic linkages with other countries. Although Canada’s supply chain is deeply integrated with the North American Free Trade Agreement (NAFTA) markets, I believe Canada needs to diversify its economic relationships.

By 2030, Asia is estimated to account for 64% of the global middle-class and over 40% of global middle-class consumption.

Given the tremendous foreign market opportunities Asia offers today and in the future, Canada needs to intensify its economic engagement in the region. If we don’t, then Canada risks losing out to other nations that are actively pursuing opportunities in Asia.

The post Four ways that in-market visits enable you to maximize foreign market opportunities appeared first on Trade Ready.

Such firms are not necessarily large businesses—many small to medium-sized Canadian enterprises (SMEs) are discovering that investing abroad can have many benefits, including:

• Getting better access to foreign markets
• Increasing sales and market share
• Serving customers better
• Joining new global and regional supply chains
• Gaining access to new technologies and resources
• Reducing vulnerability to downturns both in Canada and internationally

Investing abroad: the basics

There’s no one-size-fits-all approach to CDIA, but in general it includes some or all of the following steps.

A word of caution first, though: foreign investing is complicated, so you should always obtain assistance from reputable experts throughout the process.

Consulting professionals in your target market is especially important, since they will be familiar with local investment, legal and tax requirements and can help you avoid expensive mistakes.

1. Decide whether CDIA is for you:

CDIA may or may not be a good bet for your business even if you’re already exporting. Ask yourself questions such as: Does it fit my international business strategy? Do I have the resources to set it up and sustain it? Does its potential outweigh the risks involved? If the investment isn’t a good idea, now is the time to find out.

2. Find the best market:

If you’re already doing business in a particular market, investing there may be the logical next step. If you’re looking to invest in a new market, research it very carefully and, as mentioned earlier, consult local experts about its foreign investment climate. Some countries encourage incoming investment but others can be less hospitable.

 3. Choose your investment approach:

Three of the most common approaches to CDIA are as follows:

• You set up a foreign affiliate by establishing a new business in your target market. Depending on your company, this could be as modest as a small sales office or as ambitious as a full-scale manufacturing plant. Regardless of size, the affiliate is wholly owned by your Canadian firm but operates as a local company with respect to regulations, laws and taxes.
• You acquire a foreign business. To do this, your company invests in the foreign firm by purchasing its shares and/or assets. To qualify as CDIA, however, the investment has to be large enough to give you significant influence over the foreign company’s activities. If you acquire 100 percent of the foreign company, of course, you have complete control over its operations, and have effectively acquired a wholly owned affiliate without building it from the ground up.
• In a merger, you establish or already have an affiliate in the target market. You then combine that business and a local company into a new firm that owns the resources of both companies. Both the original businesses disappear and your new firm continues as their successor. As with an acquisition, the new business functions as a wholly owned affiliate of your Canadian parent company.

4. Choose your investment and carry out due diligence:

At this point, you decide where to put your money—into an affiliate, for example, or into merging with or acquiring a local company. Before going ahead, though, you absolutely carry out due diligence. This can range from financial and credit checks to looking at local foreign-investment rules. Again, professional help will be indispensable.

5. Make your investment:

This is where you sign contracts and pay out money. The importance of getting the contract right can’t be over-emphasized, since it will help you avoid difficulties that can range from language issues to tax problems.

You should also be aware that the way contracts are negotiated in North America or Western Europe can be very different from the way it’s done in other cultures.

For both these reasons, you’ll need trusted local counsel to help you manage the process successfully.

6. Protect your investment:

Whenever you have assets in another country, you’re implicitly accepting some level of risk. You can reduce this by careful planning and scrupulous due diligence, but there may still be residual hazards that are out of your control. You can protect yourself against them by using various types of insurance, which can cover risks ranging from expropriation to breach of contract.

Want to learn more about investing abroad? Watch a video with me and Dominique Bergevin, and then visit EDC’s Invest in Foreign Markets pages.

Have you ever invested abroad? In which markets did you invest, and what was your experience? Share below!

The post Six steps to investing abroad appeared first on Trade Ready.

Built into a career in international trade is the need to travel to visit suppliers or establish relationships with clients. Those who have been in international business for some time have often racked up more than a few frequent flyer miles. Here, we’ve gathered the most useful travel tips straight from those who have been all over the world and have learned a thing or two about jet-setting with style and wisdom.

1. Prepare for the high altitude

You know you need to prepare for different climates: cold, hot, humid, and changeable. Now, have you also factored in altitude?

Don’t just check the weather forecast when traveling to Latin America, also check the altitude you’ll be working at.

The higher up you go (think Bogotá, La Paz, Quito and other cities), the more time you need for adjusting. Don’t schedule meetings for soon after you’ve arrived. Believe me, unless you’re very used to it in your home country, you’ll struggle.

You will very likely feel very tired, at the very least – imagine an appalling jetlag or some mighty hangover! Some people feel nauseous, too, dizzy, or very exhausted. Running up the stairs is a total no-no, it will totally deplete you of energy.

I don’t suffer too heavily from these symptoms but have traveled with people that do, some of whom are young and otherwise very healthy and fit. Keep hydrated. Take it easy and give your body time to adapt. As I said, do check the height. 1,000 meters above sea level might not do you any harm, but at 2,000 meters some people struggle and above 3,000 meters we’re all in for some experience…

By the way, remember that if you open a tube of cream/gel/toothpaste at high altitude, the whole thing will come out very quickly (as it happens on a plane), so watch out! I lost half a tube of newly-bought foundation due to this mistake!” – Gabriela Castro-Fontoura

2. Being a gratuitous host has a big impact on the bottom line

“I was very happy when I convinced a West African delegation of business-people to come to visit a company I was working at in a suburb of Montreal. My plan was for this delegation to meet the management team and some key employees, and show them the large inventory of products ready to export.

I decided to rent a minibus and drive them through the city to the meeting, taking on the role of travel guide at the same time. I was thrilled that they were impressed and had a great time. It turns out that I had created demand for my impromptu tours. The day after the visit, some of the visitors wanted to return to the company, and the new people were also interested. Happily, I played the travel guide once again. Afterwards, they purchased containers of our products!

By adding some extra fun to their travel experience and accommodating their request, I was able to ensure their trip was a great success for all parties involved.

After the success of this visit, we decided to pay them a reciprocal visit to their country in Africa, to continue developing the relationships and the business. These experiences have all taught me valuable lessons, so I hope you found them useful. And I hope you’ll pass on your own stories as well.” – Sylvain Charbonneau, CITP|FIBP

3. Know the culture your heading into

“I was presenting some new diagnostic test to the OBGYN in one of the Universities in Seoul, and was attempting to set up a “trial to buy” at this facility. After we had gone through a long presentation and Q&A session, I came to my close.

After asking “Can we set up a trial later this week, as I am in Seoul until then?”, the assistant professor got up and simply said excuse me and left the office!

We stayed for an hour expecting him back but Ricky, my distributor colleague, advised me than perhaps the customer could not say “no” to performing a trail without losing face, since I would be embarrassed, and he would have been the cause of it. So we left, no trial no sale!

Nowadays in Korea and sometimes Japan, I have to be a bit more subtle with my closing technique, for example I ask if the customer can consider our request for a trial.

Moral: Don’t be a wise ass. Understand cultural etiquette before making closing statements.” – Samir Patel 

4. There are lots of ways to stay connected

“If you’ve done a lot of business traveling, odds are you have paid for roaming on your phone before. Paying your phone company for the ability to access another network and continue your regular phone, text, and data plan internationally can be very useful, but also expensive, depending on where you live and which phone carrier you use.

Before traveling, make sure you research to discover what your roaming charges would be and think about how you want and need to stay in communication, to decide whether paying for roaming charges is the best option for your situation.” – Bennett O’Brien

5. Learn to enjoy the moment when things don’t go as planned

“The art of travel links closely to personal approach and style: politeness goes a very long way and can help resolve what might seem at first like an insurmountable logistical challenge; fits of anger, impatience or arrogance will inevitably exacerbate any issue you might be facing ‘en route’, and you have a great deal of influence on the way you react to a situation.

Delayed train in London as you are heading to Heathrow for a flight across the pond? Don’t worry, sip a nicely chilled Bollinger at the champagne bar at Paddington Station (what else would one order, but a favorite of James Bond when in the UK?)

Delayed connection to Singapore from Tokyo on a first (quick) stop in Japan? No worries, the sushi at Narita is far better than what can be found in some reputable restaurants in Canada, and you may even have an opportunity to learn to appreciate the delicate flavours of cold sake: Kampai! It can get even better when the unexpected small pleasure is topped off with a courtesy upgrade for the next leg of the trip.” – Alexander R. Malaket, CITP|FIBP

There you have the top five tips for traveling, straight from the experts, but it’s really just the tip of the iceberg.

Was this advice helpful? What tips do you have for when you’re traveling? Let us know in the comments down below.

The post Top 5 travel tips straight from the experts appeared first on Trade Ready.

The exciting part of international business and trade, some will suggest, is in the development and entry into new markets, in the enrichment that comes from experiencing different cultures and navigating the challenges of doing business in new environments. Certainly not in the area of finance!

The reality is however, that you can get everything absolutely right, but if you miss the target or lose the plot in terms of the financial aspects of the deal, it could have disastrous effects on your business overall. Have I got your attention?

The pursuit of international business and trade should be enriching and enjoyable, but it must be commercially viable—let me just say it—PROFITABLE!

I happen to think (perhaps you’ll feel a tear of sadness well up as you read this) that finance can be VERY interesting, and almost anything with an international flavour or angle is intrinsically fascinating, including finance that crosses borders. So much so that I make a decent living at it, and just for fun—because everybody needs a hobby—I wrote a short book on the topic. I can hear some of you saying “GET A LIFE!”

What IS trade finance?

Trade finance—the esoteric, poorly understood branch of finance that deals with the financing of international trade—is in fact relatively straightforward at its core. It has proven effective in facilitating trade across every market on the globe for hundreds of years if not longer. Did you feel that? The sudden rush of adrenaline and flash of goose-bumps as you contemplated the mind-blowing implications of this statement? Work with me on this!

Industry estimates suggest that 80 to 90 percent of global merchandise-trade-flows (now in the range of $18 trillion annually) are enabled through some form of trade finance. Put another way, only 10 to 20 percent of trade could take place today without some form of trade finance, including the risk mitigation aspect of trade finance. Still think trade finance is a snoozer topic? Really? Then STOP READING NOW!

For the rest of us, I wrote my book, “Financing Trade and International Supply Chains” as a means of introducing this vital business—a critical element of any company’s international business toolkit—in a way that (hopefully) distills some key concepts, and presents the topic in a very practical, commercially useful manner.

The four fundamentals of trade finance

Trade finance, including the financing of global supply chains, is fundamentally about four things:

• The facilitation of secure and timely payment across borders: “SHOW ME THE MONEY”
• The effective mitigation of a wide variety of risk in markets across the globe: “PLEASE DON’T LET ME LOSE MY SHIRT ON THIS DEAL”
• The provision of liquidity and financing: “BANKER, CAN YOU SPARE A DIME?”
• The facilitation of information flow about a shipment and/or about the related movement of money: “I COULD TELL YOU, BUT THEN…”

No matter how complex a deal or trading relationship, or how challenging the markets may be from a political risk perspective, a trade financing solution will involve some or all of the above. It can also simultaneously benefit an importer, an exporter and potentially a collection of commercial relationships that are part of a common global supply chain. Trade finance has proven effective and valuable in transactions involving stable and secure economies with established and trusted trading relationships. It’s also effective (even essential) in markets that may be war-torn or challenged by lack of basic infrastructure.

Trade finance can play an important role in enabling trade linked directly to international development and poverty reduction in the most difficult markets on the planet.

It can also play a critical role in enabling access—through trade—to agri-food, commodities and other goods or services that shape the standard of living of entire nations and regions. Perhaps at a more granular level, trade finance can help small businesses, even start-ups, explore opportunities to source in or sell to international markets much earlier in their life cycle than might otherwise be feasible.

Setting up a trade finance solution

While banks provide the majority of certain types of trade finance, other providers, such as Canada’s Northstar Trade Finance, provide critical support to SMEs. Other institutions like Export Development Canada (EDC) play a critical role in this domain as well, both on the side of financing and risk mitigation. Specialists in this field are very well-equipped to provide indispensable advice on trade and supply chain finance options.

As an exporter, the ability to package an attractive financing solution with your product or service can be an important competitive-advantage, especially in this post-crisis environment where liquidity remains constrained (i.e., there’s no cash around).  A large importer, likewise, can use supply chain finance structures to allow small suppliers (especially “strategic suppliers”) to gain access to financing on attractive terms.  Everybody wins!

If you’ve read this far, you’re hopefully convinced of the relatively straightforward nature of trade finance at its core, and of the versatility of this discipline in enabling trade flows involving businesses of all sizes. In the fine tradition of presentations and blog entries, this should ‘leave you wanting to know more’ about the financing of international trade, and if so, I happen to know of a pretty good book on the topic…

The post The impact of trade finance on your international business and supply chain appeared first on Trade Ready.