Close to 22% of the Canadian population was born outside of Canada. According to a 2016 Statistics Canada report, immigrants who have been in Canada between 10 and 30 years have a private incorporated business ownership rate of 5.8% – higher that the 4.8% rate of those born in Canada. The failure rate, in comparison, is 7% higher for newcomer entrepreneurs.
A recent research by the Conference Board of Canada, found that the common challenges contributing to the failure of immigrant entrepreneurs include weak social and business networks, business and regulatory knowledge, language skills, and cultural understanding. In addition, there are few settlement support programs in Canada dedicated to helping immigrant business owners.
Canada’s mandate is to look beyond the traditional trading partners it has: United States, Japan and the European Union. Given their changing economic realities, Canada has recognized that exploring other trading partners are imperative for the country’s growth.
“Canada’s top source countries of immigrants could end up being top trading partners that support Canada’s economic growth moving forward,” said Kareem El-Asaal, Senior Research Associate and Senior Network Manager, Immigration for the Conference Board of Canada. “The majority of Canada’s immigrants arrive from fast-growing markets such as the Philippines, India, and China and these newcomers are well-positioned to help Canadian businesses access these and other fast growing markets.”
Studies have found a positive relationship between immigration and international trade. Some studies suggest that a 10% increase in Canada’s immigrant population corresponds with a 1% increase in exports.
The positive relationship between immigration and exports can be explained by immigrants possessing a number of key attributes such as know-how – language, political knowledge, political, business and other knowledge that facilitates doing business in their countries of origin; know what – knowledge of global markets, such as emerging trends and consumer preferences; and finally, know who – business and government connections and trusted relationships to help to facilitate international trade. Without these skills, the transaction costs of international trade would likely be higher for Canadian-born entrepreneurs, which would reduce the likelihood of them engaging in global markets.
Pernille Fischer-Boulter, a Danish immigrant to Canada and founder of Kisserup International Trade Roots Canada, an international consulting and export development company, agrees. Fischer-Boulter employs staff from seven different nationalities and attributes the success of reaching businesses in over 90 diverse global markets to them. “We would have taken more than double the time to conquer this had we not had the cultural experience, diversity and knowledge of immigrants.
Given that immigrants are inherent risk- takers, they may be more comfortable launching a business and exporting to countries that Canadian-born entrepreneurs are unfamiliar or uncomfortable with.
However, despite this risk-taking ability, statistically their businesses tend to be smaller, employ fewer people and underperform compared to those of Canadian-born owners.
“They key is to equip newcomers with the tools that they need to thrive and benefit Canada’s economy in the process,” said El-Asaal.
According to the Canadian Conference Board’s report, while recent immigrant entrepreneurs are over twice as likely to export beyond the U.S., they are more inclined to have business models based on price competition than on delivering innovative products and services. This makes it difficult for immigrant entrepreneurs to build the long-lasting competitive advantages and make it challenging for them to contribute significantly to Canada’s international trade agenda.
Entrepreneur face many challenges, however, there are unique challenges specific to immigrant entrepreneurs: language and cultural barriers; weak Canadian social and business networks; lack of Canadian business and regulatory knowledge; lack of awareness of domestic and international business supports; overconfidence in their export-enabling attributes; financial difficulties; and logistical challenges.
The report suggests that to enhance immigrant entrepreneurs’ success and role in advancing Canada’s international trade agenda, it is important to help build their domestic networks, enhance their awareness of domestic and international business supports, offer more settlement support programs dedicated to their needs and improve their access to financing.
For example, there are few support programs available in Ontario that are dedicated to newcomer entrepreneurs, Canada’s leading destination for immigrants. Dedicated supports addressing these unique challenges would help improve the success rate of immigrant entrepreneur-owned businesses.
“Services provided to entrepreneurs must find better ways to address the needs of diverse groups including immigrants as well as women and others,” said Dr. Wendy Cukier, Founder of the Diversity Institute.
Canada is a global leader in integrating immigrants due to the great lengths it takes to support newcomers. Similarly, devoting additional efforts to supporting immigrant entrepreneurs, in tandem with key stakeholders such as business and immigrant-serving organizations, could yield even greater benefits to the country’s international trade objectives and overall prosperity.