The idea of supporting local businesses is inherently appealing.  It resonates with our sense of nationalism and supports a notion of “doing good” for our economy and our country – preserving jobs, supporting national development and keeping money in our country. But is it that simple?

No, it’s not.

In fact, I’m going to argue that “buy local” campaigns may even hurt the very same businesses these campaigns are designed to support.

Full Disclosure: While this piece has been written from the perspective of a Canadian-Barbadian about Barbados and considers the unique peculiarities of a small island economy, many of the supporting arguments used are relevant to other markets as well.

Here are three reasons not to buy local.

1. It impedes competitiveness

Whereas once there were many products protected by high import duty rates, the force of globalization has caused this to change.

High duty rates now exist only on a handful of protected products, such as jewelry, furniture, t-shirts, printed products and clothing – vibrant industries that the government hoped to preserve and develop.

The premise was that high duty rates would push Barbadians to buy locally manufactured products and give companies in these areas a chance to grow unperturbed by competition.

This didn’t happen.

Instead, these sectors, in the absence of the helpful push of competition, became less and less internationally competitive, while the tastes and needs of consumers kept up with global trends.

Eventually, the disparity between what was being offered locally and what was wanted by consumers, in tandem with increased online access to products from around the world, pushed Barbadians to buy these products from overseas, despite the high rates of duties.

For example, the number of wood furniture manufacturing enterprises has fallen in the past 10 years from 46 to approximately 20. Exports of wood furniture and wood products in 2013 and 2014 totalled USD $135,198 and USD $302,141 respectively, down from over USD $2 million in 2009.

Furthermore, protection offered to businesses in one area invariably impedes the development of businesses in other areas. For example, in the U.S., original t-shirt design is a US $262 million industry and the annual growth rate of this industry is over 20%.

There are also several small, young businesses seeking to enter this area in Barbados. However, these businesses are faced with the challenge of low quality, locally made t-shirts and duties of 115%, in addition to the requirement of an import license on imported t-shirts.

A top Barbadian designer voiced his frustrations in a newspaper article in August 2014.

“These guys [local garment manufacturers], I swear they are committed to mediocrity. I am not seeing the evidence of them trying to upgrade their product.”

Are they just trying to stop other people from getting their thing in, so that they could maintain a monopoly? So that they can maintain a hold in the local market? I don’t think that is acceptable.

In a December 2013 newspaper article, the Executive Director of the Barbados Manufacturing Association expressed concern with the influx and preferential treatment of imports by supermarkets.

In the same article, however, the ED also observed that there had been a “noticeable increase in the production of unique products ranging from footwear, food and toys.” There is certainly a correlation between globalization and the development of new ideas.

2. It’s hypocritical

We speak out of both corners of our mouth when we discourage imports and encourage exports.

Given the small size of our national market, we depend on exporting for business growth.

We would not be OK with strong buy local campaigns in key export markets, or with these markets imposing high import duties on the products which we manufacture. In fact, there are international trade rules discouraging these practices.

Let us also consider just who is doing the buying. In 2014, Barbados had nearly 520,000 stayover visitors (note: the population of Barbados is 285,000). Is it not disingenuous to push buying local, when many of those actually doing the buying are not in fact local?

Lastly, on the point of hypocrisy, we in the region are members of the CARICOM Single Market and Economy, a union that seeks to establish a single economic space along with 11 other Caribbean countries. Buy local campaigns fly in the face of our region’s efforts to encourage economic integration.

In 2008, the WTO raised an eyebrow at Barbados’ buy local campaign (100% Bajan), claiming that it was anti-competitive and in contravention of the General Agreement on Tariffs and Trade (GATT), which speaks to national treatment.

In response, the buy local campaign was revamped – funded by manufacturers, rather than the government.

3. What Does ‘Local’ Even Mean?

The fact is, not much produced in Barbados is really “100% Bajan”. Even a product as inherently Bajan as Bajan pepper sauce (a mustard-based hot sauce) is made up of imported products.

Would you have guessed that the pepper mash used in this product is imported (as is the mustard, vinegar and, of course, the packaging)?

This holds true for almost every locally made good produced or service offered; they would not exist without imported inputs.

Let’s expand on this point – what qualifies as ‘local’?

If a foreigner moves to Barbados and opens a restaurant, is it local? What about buying a meal from a big franchise (i.e. Chefette with 15 locations on this 430 square kilometer rock) versus your neighbourhood rum shop; do both qualify as ‘local’?

How about buying a meal at a Burger King, a locally owned franchise (owned by the well-known Barbadian, Ralph “Bizzy” Williams)? Or supporting a restaurant owned by a Barbadian who lives abroad?

The definitions for ‘local’ are inconsistent and unclear.

Lastly, let us be cognizant that importing products actually supports local services such as shipping, transportation and distribution.

But, what about jobs?

In closing, let’s consider the most used argument in support of the buy local campaign – that buying locally made products preserves jobs.

In 1996 (the first year in which this data is readily available), the GDP composition by sector in Barbados looked like this:

• Agriculture – 7%;
• Industry – 17%;
• Services – 76%.

The unemployment rate stood at 16.2% that year.

In 2015, almost 20 years later, the GDP composition by sector looks like this:

• Agriculture – 3.1%;
• Industry – 11.8%;
• Services – 85.1%.

Despite the decline in the manufacturing sector, the unemployment rate is in fact lower (11.5%) than it was when manufacturing played a larger role.

In addition, the GDP per capita is higher now, even when inflation over this period is accounted for. Any jobs lost in the manufacturing and agricultural sector transformed into new, typically higher paying jobs in the services sector.

Conversely, over the last 30 years, with the rise of manufacturing in China, the number of Chinese families living in extreme poverty has dropped from 84% to under 10% – that’s 680 million Chinese people no longer facing possible imminent death (i.e. the entire population of Barbados almost 2400 times over).

There is nothing I enjoy more than to see a local business thrive in the face of competition. For many commodities, buying local is almost always a good choice, particularly when it comes to agricultural products like bananas, coconuts, mangoes, etc.

But businesses in this global marketplace don’t need protection in order to grow – not in the long term; they need to innovate, diversify and improve their international competitiveness.

Instead of focusing on whether a product is produced locally or not, consider the factors that are important to you, such as: Is it best priced? Is it well-made and well-designed? Is it conveniently available? Is it made/produced in an environmentally sustainable manner?

And then make the most sensible purchasing decision – whether that be local or imported.

This is a perspective from a 440 sq. km² island country of 280,000. I am interested in the perspectives from larger economies. Share your comments below!

The post 3 reasons why you shouldn’t buy local appeared first on Trade Ready.

Julie Nowe, CITP®|FIBP®, CGA, is the Finance and Business Development Manager for Big 8 Beverages, a subsidiary of Sobeys.

She has risen through the organization over the past several years by combining her financial expertise with the international trade skills she gained by taking FITT courses.

Julie has big future plans to develop relationships for the company in new foreign markets.

Julie started the ascent to her current role with Sobeys Atlantic Finance in 2005. After three years in her role there, she was able to use her experience to transfer to Big 8 Beverages—producer of Sobeys Atlantic’s private-label spring water and soft drinks—and earn the position of Finance Manager.

In 2013, however, Big 8 Beverages started producing its own 500ml bottles, which reduced its costs significantly.

With the nearby Halifax port offering an excellent method to distribute its products internationally, and the new competitive pricing, the company saw an opportunity  to make inroads internationally.

While looking into what she could do to help the company learn to export globally, Julie came across FITT’s International Trade Research course and decided to take it. After completing the course and finding it both helpful and beneficial to her work, she decided to take the rest of the courses as well.

Julie was able to apply what she learned along the way and use those skills to export to several countries, including China, Barbados and Aruba.

Her new skills and international trade expertise have also helped her to earn her current title, which reflects her professional growth and expanding responsibilities.

“Becoming export ready has been a journey, as it takes time to understand the target market, logistics, financial, legal and overall knowledge of international trade,” she says.

The FITT courses have given me the skills and confidence to take Big 8 Beverages to the international market.

Julie is continuing to eye global expansion opportunities, and is hoping to develop the company’s relationships further in China and the Caribbean, as well as make inroads in the Middle East.

For Julie, earning her CITP®|FIBP® is an important next step in her career and a source of pride.

Applying for the CITP was a natural progression after completing the courses and getting the international experience.  Having both the CGA and CITP designations is a tremendous professional and personal accomplishment as I am a single mom of two daughters.

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While they were referring to the fine, white, sandy beaches and calm aqua waters, the MerryMen were on to something bigger.

Barbados is indeed a gem, but its wealth is not restricted to tourists alone. Barbados is a great place to work and invest.

The international trade environment and Barbados

In a snapshot, Barbados’ international rankings look like this:

• Ranked forty-seventh in the Global Competitiveness Report and third in Latin America and the Caribbean;
• Ranked forty-eighth worldwide on the United National Human Development Index and first in Latin America and the Caribbean;
• Ranked fourth worldwide in UNDP’s literacy assessment;
• Ranked fifteenth worldwide with respect to transparency according to the Transparency International’s Corruption Perceptions Index.

What else?

• Barbados has entered into Double Taxation Agreements with a long list of countries;
• Barbados has entered into treaties for the promotion and protection of investment with numerous countries;
• The corporate tax rate is as low as 1.75 percent for international businesses;
• Barbados is an OECD approved domicile, and the only independent Caribbean nation which has ‘substantially implemented’ the internationally agreed tax standard.

Perks of doing business in Barbados

So, what does this mean in layman’s terms? It means that not only is Barbados ready and able to support your business on its shores, but also by doing so, you’ll likely be reducing your tax rate while enjoying a high quality of life alongside a large Canadian expatriate community to keep you company!

Canadians have charted this path many times before.

In fact, Barbados is one of the largest recipients of Canadian Foreign Direct Investment; Canadians represent 75 percent of the international financial community in Barbados.

Ok, maybe you’re not ready to relocate your business… Did you know that Barbados has also liberalized 75 percent of all services sub-sectors in the context of the CARIFORUM-EC Economic Partnership Agreement (EPA)? This gives European service providers the opportunity to work in Barbados (as well as the rest of CARIFORUM) for periods of up to six months! Have you started your market entry strategy yet?

Import and export opportunities between CARICOM and Canada

Trade negotiations between CARICOM and Canada remain unfinished despite several extensions of the deadline for completion, including the ‘drop dead’ date of June 30. If the agreement can be successfully concluded, a similar arrangement as the EPA will likely exist for service providers from Canada.

If the agreement fails, while this would be unfortunate for both sides, Canada has committed to providing CDN$600 million to the region over the next 12 years (from 2007). This would provide significant opportunities for Canadian consultants to work in the region.

Barbadian culture and business norms to help you get started

Let’s say you’re ready to relocate your business or take on a long-term consultancy—what now?

How do you navigate the Barbadian business world?

While there are many similarities between doing business in Canada or the U.S. and business in Barbados, there are equally as many differences. Here are five tips based on my own observations, as a fellow Canadian living and working in Barbados:

1. Let go of your firm grasp on time.

The stereotype is true: the Caribbean is not known for its punctuality. The concept of time is treated differently here than  in North America. ‘Soon’ for example, can mean anything. As a Canadian, I typically used to show up 15 minutes early for business meetings, which in Canada equates to ‘on time’. In Barbados this equates to ‘early’ and can make your host feel rushed or uncomfortable.Show up a couple of minutes before your meeting is scheduled; you’ll likely wait for the meeting to start regardless.

2. Build your network.

I cannot emphasize this point enough. Barbados is 431 square kilometers and 280,000 people ‘big’. Who you know can make a difference. Lucky for you, given the size of the island, it’s not hard to quickly establish a strong network.Join a local business support organization or two. Attend their networking events. Check out organizations like the Barbados Chamber of Commerce and Industry, the Barbados International Business Association, the Barbados Coalition of Service Industries, the Barbados Manufacturers Association, or the Small Business Association of Barbados. Reach out to your fellow expatriates on the ground. Organization’s targeted towards women include the Canadian Women’s Association of Barbados, the American Women’s Club of Barbados, and the British Women’s Club of Barbados. Attend their events (even if you’re not a woman).

3. Get help.

Whether you’re considering relocating your business to Barbados or hoping to take on a short-term consultancy there is lots of support on the ground. The Canadian High Commission has had a presence in Barbados for over one hundred years. They can help you get started with your market entry strategy. Barbados also boasts the largest number of business support organization’s per capita in the world (while I have no proof of this fact, I’ll personally bet on it). Speak to representatives at Invest Barbados for starters.

4. Don’t be deterred.

Sometimes doing business in Barbados takes a level of persistence that is not required in North America. If you can’t get the answer or support you were hoping for, try again, or tap into your network and encourage them to pass on the push you need.

5. Avoid ‘loud’ political affiliations.

This holds true in many small countries, and Barbados is no exception.

Get connected

A first step in accessing opportunities in Barbados is to expand your networks and keep your eyes open. Are the Caribbean Development Bank, the Inter-American Development Bank, the Delegation of the European Union in Barbados and the Eastern Caribbean, Caribbean Export and the CARICOM Secretariat a part of your Facebook and LinkedIn networks? Are you monitoring their websites regularly? Start there.

And play this MerryMen song!  It’ll give you the final push you might need. “Come back to my island, Barbados. Come back to my island and me.”

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