Prepared for
Foreign Affairs and International Trade Canada (DFAIT)
Communication Bureau
125 Sussex Drive
Ottawa (Ontario)K1A 0G2
613 944-0697
Kevin.Chappell@international.gc.ca
January 2008
POR Number: 231-07
Contract Number: 08170-070400/001/CY
Award Date: 2007-10-26
Fieldwork Completion Date: 2007-12-12
Phoenix SPI was commissioned by the Department of Foreign Affairs and International Trade (DFAIT) to undertake a survey of Canadian businesses on issues related to foreign government procurement access. The purpose of the research was to identify the market interests of Canadian businesses selling to foreign governments, including the importance to Canadian businesses of government procurement in the following eight foreign markets: Brazil, Russia, India, China, UK, France, Germany and Japan. In addition, the study identified potential barriers that impede their ability to take advantage of government procurement opportunities in these foreign markets, as well as the willingness of businesses to accept increased competition from foreign suppliers for government procurement opportunities in Canada as a trade-off for greater access to such opportunities in these foreign markets.
A telephone survey was conducted with executives of Canadian companies that sell (or would like to sell) goods and services to foreign governments in these target markets. In total, 253 interviews were completed with eligible businesses1 between November 16 and December 12, 2007. The sample was generated from a list provided by DFAIT consisting of businesses that are doing business, or would like to do business, in the target countries.
In total, 67% of surveyed companies had exports of less than $ 5 million in their most recently completed fiscal year. Close to half (47%) attributed at least some of their export revenue from that year to sales to foreign governments. Technological products and services (19%) headed the list of sales to foreign governments by surveyed companies, followed by sales of heavy equipment and industrial services, agricultural, food, and beverage products/services, and consulting services (cited by 10 -12%).
Turning to the client governments for these products and services, relatively few businesses currently export to the foreign governments that are the focus of this survey. That said, governments in the European Union (26%) and China (22%) were the most likely to be current clients, followed by India, Japan, Brazil, and Russia (10-13%).
Companies that do not currently sell to these countries tended to express interest in many of them. For instance, 53% of surveyed business expressed interest in five or more of the countries that were not current clients. Moreover, majorities were interested in each country that was not currently their client, with interest in European Union governments being most widespread (76%).
Given that the DFAIT list did not constitute the full universe or population of interest for this study, the survey results are directional and indicative of public opinion, but do not constitute a probability sample. Therefore, a margin of error and confidence level cannot be applied.
Executives provided mixed views on the importance of specific countries to their firms. They were more likely to perceive as important the UK (49%) and China (46%), followed by Brazil (41%), and Germany (39%).
The top products and services that are being sold (or that companies would like to sell) to each specific country were essentially the same for all of the countries. Heading the list were technological products/services, heavy equipment and industrial services, and agricultural food and beverage products/services, followed by manufacturing equipment, components and raw materials, and consulting services. Differences between the countries on these and most other products and services tended to be small. In fact, 78% of companies identified the exact same products or services for each country of interest.
Executives identified a range of similar obstacles or barriers that they think limit their companies' success when selling to foreign governments in the target countries. When the focus was on individual countries, the barrier identified most often in each country was the same - a lack of communications channels and contacts, identified by 13-18% depending on the specific country. This was cited most often for China and India, and least often for Germany and the UK. This was in response to an open-ended question.
Looking at the eight countries as a whole, executives were asked directly to rate the significance of potential barriers to their company. The top perceived barriers were a lack of timely information about procurement opportunities (49%) and governments favoring local companies (45%). Other barriers were seen to be significant by smaller numbers (13-30%), including difficulty getting export financing, cultural barriers, high tariffs, strong foreign market competition, and difficulty meeting product standards and regulatory/ licensing requirements.
Business executives pointed to a range of barriers their company has encountered when trying to obtain information on government procurement opportunities in other countries. However, none dominated. Leading the way was poor access to information in general (15%). Fully 29% did not encounter any barriers to obtaining information.
Fully 72% of surveyed executives are not opposed to making Canadian procurement opportunities at all levels of government (federal, provincial and municipal) more accessible to foreign companies in exchange for equivalent access to foreign government markets (including 49% that indicated clear support). Those not opposed to open access pointed most often, in support of their perspective, to the belief that global competition will result in better products and services (42%). Meanwhile, those opposed were most likely to hold this view because they think the resulting competition will be bad for their business (40%).
Overall, surveyed companies have significant involvement in government procurement. In their most recently completed fiscal year, 64% of firms sold products/services to governments in Canada or abroad. More specifically, they were more likely to have sold products or services to foreign governments (47%) than to Canadian governments (40%).
Executives expressed interest in the eight foreign government procurement markets that are the focus of this study. Although no more than 22% currently do business with any one of these governments, two-thirds are interested in doing business with the majority of them, with over half interested in virtually all of them (7 or 8 of the 8 countries examined). Not only does this suggest general interest in foreign government procurement markets, it also points to a lack of differentiation between the different markets among many surveyed executives, at least with respect to the foreign governments that were part of this study.
The products and services identified for each country also did not vary very much across the different countries. In fact, over three-quarters of companies currently sell or would like to sell the exact same types of products and services to each of the countries they are interested in.
This lack of variance was also apparent in terms of perceived obstacles or barriers to export success with foreign governments in these eight countries. It was clear that information and communication was a key obstacle - the number one barrier in each country was a lack of communication channels and contacts. In addition, focusing on these countries as a whole, lack of timely information about procurement opportunities was viewed as the top obstacle.
There was a willingness among surveyed executives to open up Canadian government procurement markets to foreign companies in exchange for similar access abroad. In total, 72% were not opposed to this arrangement. Conversely, less than one-quarter were opposed to reciprocal access. Not only is there considerable support for reciprocal access agreements, most executives (62%) expect a net increase in their company's revenues under these conditions.
For more nformation:
Supplier Name: Phoenix Strategic Perspectives Inc.
PWGSC Contract Number:08170-070400/001/CY
Award Date:2007-10-26
To obtain more information on this study, please email
por-rop@international.gc.ca.