February 21st, 2017

The importance of being there


By Lethbridge Herald Opinon on December 30, 2016.

Personal connections are crucial in the global marketplace

Carlo Dade

CANADA WEST FOUNDATION

If you export for a living, travel is a necessity – at least if you want to keep exporting for a living.

In a world where other exporters are actively forging personal connections with customers to win and keep market share, people who visit their customers do better than those who do not.

This is the simple truth behind the upcoming trade mission to Asia by the City of Lethbridge and Lethbridge County. It is the same simple truth that lies behind the recent provincial trade missions and the trade mission and state visit by the prime minister to Asia.

It is also the simple truth that drives our competitors, such as the states of South Australia and Queensland, to undertake a half dozen official visits to Asia each year.

When we are not present, our competitors are.

They are there because exporting commodities is no longer simply about dumping goods into hopper cars and trusting that the best price from the best markets will follow.

The booming markets of Asia are no longer overwhelmingly poor. Consumers no longer buy commodities based solely on price. Today, China has roughly 200 million people earning between US$10 and US$100 per day. By 2030, that number will reach one billion. These new, middle-class consumers in China and elsewhere in Asia want in their products what they cannot always get at home – quality, safety, reliability. Being middle class means that one can afford these types of choices.

And they are now willing and able to pay a premium for these things from producers they trust and whom they know – personally.

Growing global demand means that places like Lethbridge will be able to find markets for its products. The question is what end of the market it gets; the higher-value, higher end of the global middle-class markets that want to be wooed, or the lower-value markets that can’t afford to care about being wooed.

A visit by a prime minister or premier gives gravitas to a relationship; a visit by specific places like Lethbridge means that the people producing your food really care.

On the other hand, the only thing worse than not visiting these markets is to do what Lethbridge has done to date and that is to not return visits that delegations from Asia have been making to Lethbridge. The sub-text that Lethbridge is sending is clear and unequivocal – you do not want their business.

Though, to be fair, the failure of Lethbridge to return visits has been helpful to places such as Queensland and South Australia who are happy when we stay at home.

But Asia is only part of the story.

The types of visits and outreach by Lethbridge and other cities and counties is the cost of doing business in Asia, and is now also the cost of doing business in the U.S.

The past decade has seen a troubling rise of protectionism and trade irritants with the U.S., the destination for more than 90 per cent of Alberta’s exports. At the same time, there has been a cut in Canada’s diplomatic presence in U.S. states.

In fighting, let alone preventing, issues like country-of-origin labelling, agricultural inspection fee raises and Buy America, Lethbridge’s best defence is not in Washington, D.C., a place crowded with 160 embassies all fighting for attention on similar issues, nor is it in hoping that Ottawa will place western interests on a par, let alone ahead of, those in Ontario.

The best defence is at the state and municipal level where these issues start, where we are the only foreign jurisdiction visiting and working on joint projects, and where the Americans see us as different than the rest of the world.

Reinforcing and building on that unique Canadian advantage at the local level means that officials in places like Lethbridge will have to do even more visiting of key U.S. states and sister cities like Culver City, California and more hosting visits by state and local government officials, all to turn neighbours into friends and allies.

U.S. congressmen do not listen to ambassadors; they listen to folks back home who vote for them. They also listen to high-priced D.C. lobbyists. Canada is unique and fortunate in having a more effective – and cheaper – alternative to high-priced lobbyists; our connections with local government officials in our key market, the U.S.

In Asia and in the U.S., this is now the cost of doing business. We can invest what is necessary or we can stay at home and watch others take market share away from us. The choice is ours.

Carlo Dade is the director of the Centre for Trade & Investment Policy at the Canada West Foundation.


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