Afraid to Make the Right Move?

The Canadian corporate landscape is notorious for either hollowing out or for fearing to venture out of its comfort zone — the country’s own borders. Why the latter? After quite a number of failed ventures into China, Canadian businesses are convinced that risks in emerging markets far outweigh any potential rewards. Yet, there are so many other companies, both in the U.S. and EU, which are proving them wrong on any given day.

I’ll agree that China is a tough playground. The country is a strange mix of communism and capitalism, hyper-regulation and deregulation, secrecy and transparency. But China is not the only emerging market worth venturing into. How about India, the world’s most populous democracy?

Apparently, there is an abundance of business opportunities in that corner of the world: real estate, information technology, the financial and retail industries, etc. Those who have ventured and prospered there, such as Google, Microsoft and IBM, all say the same thing: India is like an orchard ripe for the picking; don’t miss out on it! So, why is Canada not jumping on this particular bandwagon?

According to the Canadian Chamber of Commerce, in 2007 Canada exported only about one percent of its total exports to India. Moreover, the same one-percent inflow of imports from India came to Canada. To make matters worse, we’re missing the gravy train completely at the time when our largest trade partner, the U.S., is experiencing serious economic slowdown that is teetering on the brink of a full-blown recession, too.

While there are very few exceptions to the rule, the bottom line is that most Canadian corporations are extremely hesitant to commit in any shape or form to investing in India. Aside from bruises sustained in China, there is another reason why Canadian businesses shrug off India — the recurring image that India is only good for outsourcing and mushrooming call centers.

Among the usual excuses why there are no significant capital commitments by Canadians in India are the distance, not knowing the business environment there, and not having money set aside for such capital-intensive projects. Sure, you cannot fly out to India in the morning, have a few meetings, a business lunch, seal the deal, celebrate in the evening, and catch an early flight back the next morning. But who said that conducting business in India would be the same as conducting business in North America?

To succeed in this emerging and promising economy, more than capital investments are needed. Canadian corporations should be prepared to devote time, effort and money to learn how to do business there and develop profitable relationships. After all, isn’t this what investing is all about — locking in on potentially profitable opportunities and going for it?