The resurgence of COVID-19 is seen as the primary threat to growth and recovery by all businesses followed by reduced consumer demand and supply chain disruptions, according to a new HSBC survey. While almost half of Canadian businesses are considering cost-cutting strategies, survey respondents indicated that the future lies in workplace upskilling and expansion into new markets.
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The HSBC Navigator report, which surveyed businesses in 39 markets, including 501 in Canada between September 11 and October 7 revealed that:
- Two thirds (67%) of Canadian companies expect international trade over the next 1-2 years to have a positive impact with companies based in Quebec and the Atlantic provinces leading this trend (both 77%)
- Over the next 3 to 5 years, respondents expect intra-regional trade to decrease (44% from 53% in 2019), while the share of trade with Europe is expected to increase to 32% compared to 22% in 2019.
- More than one-third of businesses in Atlantic provinces, Quebec and British Columbia see Europe in their top three markets for expansion, with the United Kingdom seen as the most attractive.
“Clearly the pandemic is not dampening enthusiasm for exploring further trade opportunities outside of Canada,” said Pete Molenaar, Senior Vice President and Head of Commercial Banking, Western Canada at HSBC Bank Canada. “As Canadian businesses continue to respond to shifting needs, they recognize the benefits of international trade for their business and broader society.”
Along with the anticipated increase in business with European markets, Canadian companies are eyeing opportunities with markets in Asia and Latin America. HSBC’s Navigator: Growing with China from early November reveals close to three quarters (73%) of Canadian companies expect their sales in China to grow over the next two years: it continues to be a target destination market and key player in Canadian supply chains. While fears over broken supply chains have Canadians looking closer to home, 77% (consistent with three-quarters of all companies globally) also noted an expected increase in proportion of their supply chains based in China over the next two years.
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Amid the pandemic, the majority of Canadian businesses are remaining agile, savvy and innovative with an eye on the future. Six-in-10 Canadian businesses intend to increase their overall financial investment in their business in the next year, with a greater focus on environmental and ethical sustainability. Furthermore, companies in Quebec and Ontario are keen on increasing investment in technology.
“Promoting employee well-being and enabling new ways of working, with a sharp focus on the customer experience, will be key to a sustainable and healthy recovery” added Molenaar. “There’s no question the economy will be scarred by higher unemployment in the short term, however as businesses shift focus on long-term growth and expansion in local and international markets, they have a chance to come out even stronger.”
Looking ahead, in line with global sentiment, seven in ten Canadian businesses expect to return to pre-COVID levels of profitability by the end of 2022, and just over one in ten (11%) are already ahead of their own pre-COVID levels.
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