Canada, being the world’s second-largest country in terms of land size, boasts an abundance of natural resources. This rich landscape offers a wealth of water, underground treasures, and harvests vital for global momentum. Yet, when we look at the economy, Canada appears smaller. Its economy is ten times smaller than that of our neighbor to the south. As a G7 member, Canada possesses the smallest real GDP among its peers. There are about 1.3 million Canadian businesses; however, fewer than 5% are export-ready.

According to Innovation, Science, and Economic Development Canada’s annual report, exports drive Canada’s economic growth and correlate with real GDP growth. Moreover, exports allow businesses to expand beyond Canada’s modest domestic market.

But there’s a catch: few Canadian businesses export, and of those, over 85% heavily rely on the US market.

This over-reliance becomes uncomfortable considering external factors like the Buy American Act and severe competition, which diminishes the appeal of exporting.

The aim of this article isn’t to deter but to spotlight the value of an export strategy, urging Canadian businesses to look EAST – namely, the Indo-Pacific Region.

Why Indo-Pacific?

The Indo-Pacific region, with its 40 economies and over four billion people, amounts to CAD in economic activity, making it the world’s fastest-growing region. By 2040, the region will account for over half of the world’s GDP and more than 65% of its population.

Recognizing this, the Canadian government unveiled its Indo-Pacific strategy in late 2022, signaling a shift in export direction and resource allocation. For Canadian businesses, seizing this opportunity not only ensures sustainable growth but also bolsters the national economy for future generations.

However, every opportunity presents challenges. Penetrating a new market, especially an exotic one, isn’t simple. But Canada has an edge – strong ties to the region. Thanks to our immigration policy, 20% of Canadians have sort of connections there. Additionally, Canadian products have historically been well-received. An effective approach for Canadian businesses is to capitalize on e-commerce as a market-entry strategy.

The Indo-Pacific e-Market

The expansive realms of the Indo-Pacific market are responsible for an overwhelming 90% of the global e-commerce growth. Adopting cross-border e-commerce as a market-entry strategy therefore stands out as not just practical but crucially essential. The evidence is compelling:

The e-commerce market of Greater China alone dwarfs many, equal to three times Canada’s entire GDP.

Powerhouse brands such as Alibaba and JD.com are not merely platforms but are reshaping the very fabric of consumer behavior. As we gaze towards Japan, the transformation becomes even clearer. The island nation has seen its e-commerce landscape grow by nearly 30% in the share of retail distribution. Platforms like Rakuten and Amazon Japan have stepped up as the new-age shopping titans, gradually overshadowing traditional retail outlets.

South Korea’s digital footprint is equally noteworthy. In a span of five years, from 2017 to 2022, the nation’s cross-border e-commerce market made a remarkable leap, soaring from US$ 2 billion to a staggering US$ 4.5 billion. The success stories of platforms like Coupang and Gmarket illuminate this trajectory, with an average annual growth rate of 23%.

And then there’s Singapore, a beacon for the Southeast Asian e-commerce domain, dubbed  the “e-commerce gateway” to its larger region. Projections suggest that eCommerce sales in this region will skyrocket, possibly quadrupling from US$ 38 billion in 2019 to an expected US$ 172 billion by 2025. This, combined with the fact that 70% of the region’s population is now online, paints a vivid picture of the digital revolution in play.

With the inherent characteristics of e-commerce, from the invaluable real-life data tracking to the immediacy of end consumer interaction, it is rapidly establishing itself as the preferred channel for market exploration.

Given the sheer purchasing power and wide acceptance among consumers, e-commerce isn’t just another platform; it can be the core of your omnichannel strategy. Such a strategy can seamlessly dovetail with traditional channels like physical stores, offering an enhanced customer experience. This synergistic approach, when infused with the allure of authentic Canadian products, promises not just sustainability but a pronounced edge in the competitive marketplace.

3 Steps to Develop Your E-Commerce Strategy for the Indo-Pacific

So far, we have delved deep into the macro-level benefits of leveraging e-commerce to enter the Indo-Pacific region. Moving forward, I want to introduce a tailored framework that can guide your e-commerce strategy development.

Think of it as a three-step process designed to provide a clear pathway: from integrating your business into the region’s e-commerce ecosystem to managing e-commerce operations and marketing activities once you’re established.

1. Strategizing

This initial phase is all about exploration. Dive deep into understanding your export readiness, assessing the feasibility of potential markets, studying the competitive landscape across both traditional and digital channels, identifying risks, formulating the most effective pricing strategy, and forecasting your financial performance.

• Readiness and Feasibility Analysis: Begin by evaluating your business’s readiness to venture into the Indo-Pacific e-markets. This entails an assessment of internal capabilities, gauging the product-market fit, and pinpointing potential barriers.
• Pricing Strategy Development: Weigh various pricing models, from cost-plus to competitive pricing. Consider aspects like local purchasing power, competitive landscape, import duties, and taxes.
• Financial Performance Analysis: Project potential revenue streams, costs, and profit margins. Account for initial investments, sustained operational costs, and expected returns.
• Market-Entry Strategy Compilation: Decide on your entry strategy. Are you targeting a couple of countries first or aiming for a more expansive reach? Your resources, willingness to take risks, and market insights will guide this decision.

2. Integrating

The foreign e-commerce markets you’re targeting operate on platforms that might be unfamiliar to western businesses and occasionally aren’t even accessible via common channels like Google. There’s also the challenge of navigating diverse cultures and languages. Not to mention ensuring the protection of your product ideas and brand. This stage emphasizes ensuring you’re on the right platforms, effectively reaching your target audience, communicating appropriately, and operating within legal confines.

• Platform Application Management: Determine the e-commerce platforms that dominate in your target Indo-Pacific areas. Think Alibaba and Lazada, but also keep an eye out for niche platforms tailored to specific locales or products.
• Ecosystem Onboarding & Integration: Grasp the entire e-commerce ecosystem of the region, which encompasses payment methods, delivery mechanisms, and review systems.
• Brand & Marketing Material Adaptation: Localize your branding. It’s more than just translation; it’s about resonating with local traditions, sentiments, and values.
• IP Protection Measures: Intellectual property norms can differ significantly across markets. Ensure you’re compliant by familiarizing yourself with local regulations.
• Platform Configuration & Optimization: Customize your online store to align with local preferences. This might mean adjusting your site’s design, improving its mobile-friendly features, or incorporating region-specific functionalities.

3. Managing Day-to-Day Operations

E-commerce operations in overseas markets, akin to the one in Canada, demand regular oversight and consistent nurturing. Navigating multiple, especially as vast as several Asian e-markets, can be tricky. Challenges range from language barriers and time zone differences to intercultural communication nuances.

As business owners, agility and adaptability are key. You might often find the need to collaborate with local experts to bridge cultural and linguistic divides, synchronize business processes effectively, and expedite your international business’s growth. Regardless of whether you’re handling tasks in-house or outsourcing, there are crucial areas of focus:

• Marketing Management: Craft and roll out localized marketing strategies, leveraging tools like SEO, PPC advertising, social media, and collaborations with local influencers.
• Operation Management: Ensure the smooth functioning of daily operations, from inventory management and prompt order processing to effective customer service.
• Supply Chain Management: Familiarize yourself with the logistics landscape. Establish relationships with dependable local suppliers, manage warehousing facilities efficiently, and prioritize timely deliveries to enhance customer experiences.
• Quality Control & Reporting: Consistently assess the caliber of products or services you’re offering. Set up comprehensive reporting systems to review sales data, gather customer feedback, and monitor other critical performance metrics, ensuring continuous improvement.

Why not seize the opportunity in this untapped market?

The Indo-Pacific is an untapped market with tremendous growth potential. As countries like the UK, US, Germany, Italy, and France increase their footprint, Canada is well-positioned to capitalize on this opportunity. E-commerce offers an efficient and economical route for Canadian businesses to make inroads. With the framework provided, businesses have a head start. And remember, the governmental agencies like Export Development Canada and Trade Commission Services are available to assist throughout the exporting journey.

By meticulously crafting your strategy, smoothly integrating into the Indo-Pacific e-commerce ecosystem, and managing daily operations efficiently, Canadian businesses stand to capture the immense potential this burgeoning market presents.

As more craft brewers come online in Canada, and Canadians continue to reduce their beer consumption, many local beer markets are becoming increasingly saturated. Interprovincial and US markets likewise have very competitive environments for high-quality craft beer.

For Canadian brewers to continue to grow, they will need to look to other markets. And there is one, bigger than any other, that is largely untapped by Canadian brewers: Chinese e-commerce.  

China beer market growing fast

Valued at nearly $18 trillion, the Chinese market is the second largest in the world. With 842 million Chinese people shopping online, China also has the largest e-commerce market globally, generating over 52% of the world’s transactions, more than North America’s and Europe’s combined. And this growth shows no signs of slowing down any time soon.  

“China’s e-commerce sales are expected to be 52% of the country’s more than $6 trillion in retail sales, making it the first country in the world ever to have more online sales than traditional retail sales”, says Calvin Xiao, founder of Catalystx, a Canadian international marketing management firm specializing in Canadian to Chinese e-commerce trade.  

So far in 2022, Chinese people have spent over $120 billion US on beer consumption and represent 12% of the world’s beer market.

China is also one of the few places in the world where the beer market is growing fairly rapidly at 5% annually, and the most likely place the Chinese consumer will make that purchase is online.  

“Chinese consumers are very tech-savvy, and 55% of Chinese alcohol consumers are ordering online,” says Xiao.  

Canadian craft beer a good match for evolving market

With the development of the Chinese economy and improving living standards, Chinese consumers’ purchasing habits are dramatically changing as younger generations search for products with a unique taste, high quality, and freshness. Canadian craft beer fits this profile perfectly.  

This younger generation is quickly becoming a primary purchasing group and represents more than 65% of beer purchases in China. And these young people are willing to pay for quality, uniqueness, and freshness – things Canadian craft beer has in droves.  

“A recent poll showed that more than 74% of Chinese consumers are willing to pay for craft beer at a higher price,” says Xiao.

More than 57% say they are willing to pay 25% more than the regular price and nearly 17% are willing to pay 50% more. That’s a phenomenal opportunity for Canadian craft brewers.

Canadian craft beer market is saturated, and beer exports to the US are decreasing

But no Canadian brewers are handing people in China a beer. Most recent Canadian beer exports went to the US market. But US demand in Canadian beer is decreasing and between 2015 and 2021, Canadian beer exports dropped 14.2%. 

The Canadian domestic beer market is also becoming more saturated. More than 85% of Canadian beers were sold and consumed locally. In the last five years, the number of local brewers increased by 115%. The business density (brewing facilities per 100,000) soared by 100%. But domestic beer consumption is decreasing. Beer sales fell 6.6%, and per capita consumption dropped 12.6% from 2015 to 2021.

So, the Chinese market is a growth opportunity for Canadian brewers, representing a significant source of market expansion and sustainability for the industry. 

Early adopters will gain a significant share of the Chinese market 

So, now is the time to consider exporting to China’s e-commerce market. Canada is known for some of the best barley in the world and has a growing reputation for great beer.

With Chinese beer drinkers turning away from cheap local brews toward premium products and imported beers, Canadian brewers can leverage this reputation and market their products for significant margin gains. Plus, cross-border e-commerce channels now provide Canadian brewers unprecedented access to markets across China. Brewers who gain entry early will take substantial portions of the market and make gains that late adopters will not. 

Time for Canadian craft brewers to become “export ready”

Unfortunately, most Canadian beer manufacturers – having focused largely on local markets – are a long way away from being export-ready.  

“Canadian beer exports aren’t well-developed and remain exclusively US-dependent,” says Xiao. In 2021, Canada had 1,876 beverage and tobacco product manufacturing, less than 15% of those manufacturers were export-ready establishments.

But, with the right support, Canadian brewers can dip their toes into international trade through Chinese e-commerce relatively easily.  

As the craft brewing industry in Canada has grown, so has the global recognition of Canadian beer. Canada has a reputation for some of the best barley in the world, clean air and fresh water, a friendly business environment and political stability. Plus, China is Canada’s second-largest export partner and the process for e-commerce trade in China has become highly effective and accessible.  

“The time for Canadian brewers to become export-ready and enter the Chinese e-commerce market is now,” says Xiao. Cross-border e-commerce transactions in China reached $261 billion in 2020. So, the process has become effective and efficient for international trade.

Canadian breweries that enter the Chinese e-commerce market today benefit from streamlined Chinese customs procedures, improvements in delivery methods, policies that allow direct-to-consumer cross-border transactions and exemptions of certain goods from registration, Chinese labelling, and testing requirements.  In short, cross-border e-commerce channels now provide unprecedented access to markets across China. 

Last year, the value of Canada’s beer exports was CA$129 million dollars, which counted for less than 9.8% of the beverage and tobacco manufacturing exports. Canadian craft brewers could grow these exports significantly. 

On one side, with the development of the Chinese economy and better living standards, Chinese beer drinkers are turning away from cheap local brews and seeking out foreign craft beers.

These beer drinkers are also willing to pay top dollar for quality, uniqueness, and freshness.

On the other side, the Canadian beer market is becoming increasingly saturated at home, and US exports are decreasing, so Canadian brewers should consider diversifying markets for profitable and sustainable growth.  

As the craft brewing industry in Canada has grown, so has the global recognition of Canadian craft beer. There has never been a better time for Canadian craft brewers to export their beer. A Chinese e-commerce market is a solid option for Canadian brewers. Not only is its e-commerce becoming the future  of mainstream commerce, but it is also the most effective, efficient, and economic foreign market-entry strategy for an SME.

To put it another way, Canadian brewers can sell products from abroad without establishing a presence in Greater China and the six Southeast Asian countries (the SEA region). That’s an innovative and accessible way to enter a new market. And these are not small markets! China’s E-Commerce alone is incredibly lucrative.