Generating economic or business prosperity increasingly means aggressively looking for trade opportunities in new markets. One of those markets is Chile, ranked “numero uno” in Latin America for ease of doing business. Here’s how a concerted pull by many hands brings in new Chilean trade deals for Canadian companies.
In the midst of a painfully slow global recovery, many Canadian businesses are still struggling to grow globally. At the same time, others have overcome recent challenges by developing a presence in non-traditional markets, which are growing much faster than the more industrialized countries.
For small and mid-sized company (SME) owners, who wear many hats, the intention to expand abroad may be top of mind, but the action may be scuttled by other priorities. This is where helping hands can make it easier for these companies to follow through on their growth plan, by offering them the chance to showcase their skills and expertise to the right people at major foreign corporations.
In this vein, EDC works closely with Foreign Affairs and International Trade Canada (DFAIT) to actively seek trade opportunities and arrange meetings for Canadian firms, with serious foreign buyers. EDC adds clout to the process by lending to targeted foreign companies with global supply chains. EDC can then use its relationships and influence as a lender to introduce appropriate Canadian suppliers to senior procurement decision makers. These are people whom it might be impossible for SMEs to meet on their own.
These loan facilities, called “pulls,” led to more than $3 billion in new contracts last year for some 870 Canadian exporters, largely small businesses. Since 2004, EDC’s pull loans facilitated export sales of almost $16 billion.
EDC has 12 active loans to major buyers in Chile in sectors that match Canadian expertise – helping influence procurement from Canada.
Chile as launching pad
One of the first such loans was with Chile’s state-owned copper giant Codelco, in June 2004. Today, EDC has 12 pulls in Chile, in the mining, resources, oil and gas and ICT sectors. CMPC, for example, is one of the largest integrated forestry companies in the world, making pulp, tissue and paper products. Its sales are in the range of $4.5 billion. After EDC put the first pull in place with CMPC in 2005, 110 Canadian suppliers have signed some 145 contracts with the company, worth more than $53 million – surpassing the $48 million of our original loan.
“This is a unique business model we have with EDC, which supports our financing (on behalf of) Canadian suppliers, and then has the suppliers meet with us. It’s easier to build the relationship, to buy, to make a contract, because EDC provides the financing,” says Oscar Carrasco Larrazabal, CMPC vice-president, Procurement.
Companies like Ontario’s ERCO Worldwide, which produces environmentally preferred chlorine dioxide technology for the pulp and paper industry, signed a $25-million deal in 2010
with CMPC. Others, such as B.C.’s Optimil Machinery, and Andritz and Autolog Sawmill Automation, both of Quebec, secured contracts worth close to $1 million each in 2011. These firms were among 19 Canadian companies for whom EDC and DFAIT arranged meetings with Chile’s top forestry players during the Expocorma tradeshow in Santiago and Concepcion last fall.
More recently, EDC, DFAIT and other key industry partners arranged for some 20 Canadian companies to meet individually with Chile’s top mining companies at Expomin 2012 in Santiago. Revisiting its long-standing relationship with Codelco, EDC calculates that from 2004 to 2011, more than 140 Canadian suppliers have done some $1.3 billion in business with the copper powerhouse.
Chile: Hot Facts
- Economy is expected to grow 5% this year
- Bilateral trade with Canada grew 11% in 2011 vs. 2010
- 90% of Canadian exports enter Chile duty-free, thanks to our 1997 free trade agreement
- Canada’s investment stock in Chile was >$13 billion in 2010
- Canada is ranked 3rd in overall investment in Chile, after the U.S. and Spain; 1st in mining (2010)
- World Bank’s Ease of Doing Business Index 2012 ranks Chile 1st in Latin America, based on the regulatory environment for starting and operating a local firm doingbusiness.org/rankings