How to Do Business in Canada
November 17, 2017
Doing business internationally may seem like a daunting task for any small business. Stepping into another country inevitably means facing a different set of regulations, unfamiliar negotiation rules and business culture, not to mention the hassle of handling payments across borders. But you’ll be surprised to learn that the advantages of finding international suppliers and partners clearly outweigh the trouble it causes.
Canada is one of the most accessible countries for US importers and exporters. Its closeness, the strong and stable legal structure, as well as similar business practices, language and culture make it a great opportunity for any US small business.
The size of the market is significant and most consumers regularly use the internet for making a purchase, which provides many opportunities for US-based small businesses active in ecommerce. Competition is high in several sectors, including cosmetics, vitamins, and furniture, but Canada’s ethnic diversity and relatively high income levels ensure a high demand for all kinds of specialty foods, clothing, and other end-user products.
Lately, more and more Canadian small businesses have been turning to ecommerce when looking for office supplies or other B2B products, offering a new niche for US companies targeting businesses. In addition, Canada’s environmental and energy industries provide many new opportunities, including sectors like renewable energy, oil and gas, and mining.
However, the currency of our northern neighbors is usually valued below the USD, which means that you may get goods, parts, or even services cheaper than in the US.
Introduction to Canada
Canada, the northern neighbor of the US, has ten provinces and three territories. Canada is a federal parliamentary constitutional monarchy and a member of the Commonwealth of Nations. The Constitution of Canada divides the powers and responsibilities of government between the provinces and the federal level. The provinces have authority over several policies, including health care, traffic law, welfare, and education (although the federal government may launch national policies in areas that are mainly the provinces’ responsibility).
The US is Canada’s biggest trading partner; the trade of goods and services totaled at about $628 billion in 2016. Canadian practices, laws, and business culture are quite similar to the US; however, recognizing and honoring the differences is important if you want to establish a good working relationship. Read our comprehensive guide and find out everything you need to know before doing business with Canada.
Because of Canada’s climate and geography, most of the population resides in the southern part of the country, near the US border (making it really convenient for doing business with the US). The most populous provinces are Quebec, Ontario, Alberta, and British Columbia.
Ottawa is the capital (it’s also bilingual) and houses a population of about 900,000 inhabitants, making it the fourth largest city in Canada. The city’s largest employers are the public sector and the high-tech industry.
The largest city is Toronto (2,700,000 inhabitants). Toronto is the financial and economic center of Canada; the city houses major financial institutions and acts as an industry center of media, telecommunications, publishing, film productions, and IT. Because of its size and strategic location on Lake Ontario, the city is an important hub for trade, both national and international. If you want to do business in Canada, chances are you don’t have to go further than Toronto.
Montreal, with its 1,700,000 inhabitants is the second largest city in Canada, and the largest French speaking one. The city is known for its aerospace, pharmaceuticals, electronics, apparel manufacturing, software engineering, and telecommunications industries. Montreal is a great hub of commerce, especially for consumer goods, grains, sugar, petroleum, and machinery.
Calgary has 1,200,000 inhabitants. Its main industries are oil, gas and mining, plastics and chemical-production, aerospace and telecommunications.
Vancouver (British Columbia)
Located on the coast of the Pacific Ocean, Vancouver has 630,000 inhabitants. The city is one of the largest industrial centers of Canada, giving home to industries like forestry and mining, aerospace, film production, software development, biotechnology, as well as health and lifestyle. Port Metro Vancouver is Canada’s largest port and oversees a trade of about CAD $172 billion per year.
The currency of Canada is the Canadian dollar (CAD), its value always slightly behind the USD.
Canada has two official languages: English and French. The usage of French depends on the province: except for Quebec, you should be able to get by with English without a problem. However, if you’re doing business in Quebec, or you really want to make an impression, inquire whether you need to bring a French interpreter for your meeting.
Here’s a list of statutory holidays in Canada. Some are only observed in select provinces, and on some holidays several companies may still be open for business. Make sure to ask about these when scheduling a meeting. Oh, and do not make fun of celebrating Thanksgiving in October.
|New Year||January 1||Nationwide|
|Family Day||Second Monday in February||British Columbia only|
|Islander Day||Third Monday in February||Prince Edward Island only|
|Heritage Day||Third Monday in February||Nova Scotia only|
|Family Day||Third Monday in February||Alberta, Ontario and Saskatchewan only|
|Louis Riel Day||Third Monday in February||Manitoba only|
|Heritage Day||on the Friday before the last Sunday in February||Yukon only|
|Good Friday||Friday before Easter Sunday||Nationwide|
|Easter Monday||Monday after Easter Sunday||It’s not compulsory to give this day off; companies can decide whether they want to be open for business|
|Victoria Day (called National Patriots' Day in Quebec)||Monday on or before May 22||Nationwide|
|National Aboriginal Day||June 21||Northwest Territories and Yukon only|
|Quebec's National Day||June 24||Quebec only|
|Canada Day||July 1||Nationwide|
|Nunavut Day||July 9||Nunavut only|
|Civic Holiday||First Monday in August (All except Quebec and Yukon)||Not all companies are closed; make sure to check if your supplier is open for business|
|Discovery Day||Third Monday of August||Yukon only|
|Labour Day||First Monday of September||Nationwide|
|Thanksgiving Day||Second Monday in October||Nationwide|
|Remembrance Day||November 11||Alberta, British Columbia, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nunavut, Prince Edward Island, Saskatchewan, and Yukon
(Not all companies are closed; make sure to check if your supplier is open for business)
|Christmas Day||December 25||Nationwide|
|Boxing Day||December 26||It’s not compulsory to give this day off; companies can decide whether they want to be open for business|
In general, if a statutory holiday falls on a weekend, the holiday is observed on the following weekday. Business might be slower in March, when most public schools let out for a week or two (March break), and some families might take a vacation. The dates of March break vary from province to province; but don’t worry, your business partners will inform you if they’re going to be out of office.
Communication from the US
Just like Americans, Canadians are used to sending and receiving emails. Initial inquiries should be polite and more reserved; address your partner with “Mr” or “Ms”. As the relationship progresses, you might switch to first name basis and a more informal tone.
Making calls from the US
Canada’s international phone code is +1, which is the same as the US. This means you don’t need to do anything different to place a call to Canada. But be aware, even though the phone numbers are the same, long distance charges may apply when placing calls to Canada. Be sure to check with your carrier before placing the call.
Traveling to Canada
Just like us
Canada uses the metric system, but because the country only switched to it in the 1970s, most people (especially in the western provinces) still understand what inches, miles and Fahrenheit means. Cars drive on the right side of the road.
All basic conditions (wifi, cell phone services, chain hotels and restaurants, plugs and sockets, etc.) are very similar to the US, so you don’t need to worry about those when traveling to Canada.
US passport holders don’t need a visa or an eTA to enter Canada.
Major trade shows/events
Trade shows provide an excellent platform to showcase your business and attract partners, suppliers as well as customers. As a small business, you might feel you have less resources and time to attend a trade show. Don’t be discouraged: even with a tighter budget, participating at trade shows is well worth the investment. Here are a few tips on how to make the most of a trade show:
- Be visible. Make sure your booth catches the eye of participants.
- Advertise your presence on Social Media.
- Bring refreshments and offer them to people.
- Create games, sweepstakers, and other fun activities to attract people.
- Look for potential partners offering complementary products or services to yours.
- Don’t forget to follow up with people you made contact with over the show.
Canada hosts many trade shows that provide excellent opportunities for US small businesses to attract Canadian partners and customers. Here’s a list of the most popular trade shows.
|Toronto Gift Fair||Toronto, ON||Fall and Spring||Retail products, gifts|
|Alberta Gift Fair||Edmonton, AB||Fall and Spring||Retail products, gifts|
|Trends the Apparel Show||Edmonton, AB||March and September||Apparel and clothing|
|ABA Show Montreal||Montreal, QC||Spring||Hair and beauty|
|ABA Show Toronto||Toronto, ON||Spring||Hair and beauty|
|The Buildings Show||Toronto, ON||Fall||Construction and design|
|Canada’s Bridal Show||Toronto, ON||Winter and Fall||All things wedding|
|ESI Toronto||Toronto, ON||Spring||Beauty|
|ESI Montreal||Montreal, QC||Fall||Beauty|
Canadian culture is built on equality: regardless of race, age, and gender, everybody deserves the same respectful treatment. This core value is represented in business culture as well: men and women are equally present in high-ranking positions.
Honesty, punctuality, good manners, and a deep knowledge of the issue at hand are valued by Canadian businesspeople
Canadians are usually polite and tactful. They are less straightforward and use more subtleties in their communication than Americans. Similarly to the British, Canadians have a kind of self-deprecating humor which doesn’t indicate a lack of self-confidence (and also doesn’t invite you to agree with them or even point out their flaws). Read between the lines and pay close attention to your partner’s facial expressions as these usually provide a clue to the response they’re expecting.
Canadians tend to be more reserved than most Americans. This doesn’t mean they’re not happy or enthusiastic with how negotiations are going, they’re just not showing it as openly as we do.
For the most part, communicating over the phone or via email works fine. If you’ve planned a personal meeting with your business partners, make sure to check whether you need a French translator (if you’re doing business in Quebec, you will most likely need one, unless you speak French of course).
When talking on the phone, you can start and finish each conversation with a few pleasantries. Similarly, starting an email with a line like “I hope you are well,” and wishing your business partner a good day will make a good impression.
The First Meeting
When meeting for the first time, Canadians greet each other with a handshake, look each other in the eye, and address each other as “Mr.” or “Ms.”. During the first meeting, your business partner may invite you to address them by their first name; it’s polite to reciprocate this.
Business dress code is usually formal, especially for negotiations. Make sure to check out the weather forecast and wear appropriate clothing, especially during the winter where snow might be an issue. (Over the winter, Canadians tend to have a pair of office shoes that they slip on when they arrive for work. Nobody wants to be stuck in heavy snowboots for a whole day.)
Canadians value punctuality. Being late more than 15 minutes is considered rude; if an unforeseeable circumstance arises, make sure to let your partner know you’ll be late and apologize, even if it’s not your fault.
Introductions usually occur according to rank and not gender. Eye contact is held while talking to each other. However, make sure not to stare.
Exchanging business cards is customary during a first meeting. If you really want to impress your business partner, bring a card in both English and French.
Exchange a few pleasantries before getting to the point.
A safe topic for small talk is sports (especially hockey, football, baseball, and golf), the weather, or cultural events. Avoid comparing Canada to the US, as well as mentioning possible difficulties arising out of Canada’s bilingual nature.
Business negotiations usually occur at neutral places, like company meeting rooms. There’s no need to bring a gift to a negotiation. However, if your partner invites you to their home, it’s polite to bring a small gift, like a bottle of wine or a bouquet of flowers.
The success of your negotiations with Canadian businesspeople lies in mutual respect. Be confident, straightforward and knowledgeable about your company and your goals, but don’t be overly blunt or too proud of your achievements. Put the emphasis on the mutual gains secured by your partnership, and address your partner’s possible concerns with respect.
Be confident about your company and products, but don’t exaggerate. Canadians may be uncomfortable with overt enthusiasm and might interpret it as bragging.
During negotiations, you can expect your Canadian partner to listen to you carefully and wait patiently for their turn to speak. Whether positive or negative, Canadians are less likely to utter passionate remarks. Disagreement is always expressed in a respectful manner.
Refreshments are sometimes offered during longer meetings or negotiations, however, alcoholic beverages are usually not consumed in a business environment. Smoking indoors is not allowed. If you want to smoke a cigarette, ask your business partner about designated smoking areas.
Regulations and Permits
Canada’s trade policies are regulated by the federal government.
Importing from Canada
Sourcing products and parts from overseas is a great tool for cutting costs and gaining a competitive advantage. Canada is an excellent country to import from because of its proximity, the quality of production, and great prices. Here are a few rules you need to follow if you decide to import from Canada.
Importing to the US is regulated by the U.S. Customs and Border Protection (CBP). Even though the CBP doesn’t require you to have a license or permit for importing, depending on the nature of goods you’re procuring (such as food products, plants and animals, prescription medication, dairy, name-brand apparel, etc.), other agencies might need these types of documents. In addition, you may also need to get a license from your state or local authorities.
As a member of NAFTA, the US has eliminated duties and tariffs on most goods originating from Canada. However, you need to provide a Certificate of Origin to the US authorities which proves that the merchandise (or a large-enough percentage of it) is indeed from Canada.
When your goods reach the US border, you need to file your entry documents at the port of entry with the CBP and you may also have to notify any other agencies that gave you a permit to import. The entry documents are:
- Entry Manifest (CBP Form 7533) or Application and Special Permit for Immediate Delivery (CBP Form 3461) or other form of merchandise release required by the port director,
- Evidence of right to make entry,
- Commercial invoice or a pro forma invoice when the commercial invoice cannot be produced,
- Packing lists, if appropriate,
- Other documents necessary to determine merchandise admissibility.
The CBP then examines your shipment. Since your merchandise comes from Canada, you may be eligible for immediate release, provided the CBP finds everything in order. If you’re applying for immediate delivery, you need to file CBP Form 3461 before your merchandise arrives at the border. After your goods are released, you have ten business days to pay any estimated duties.
Exporting to Canada
There are two ways to export your goods to Canada.
You may look for a Canadian partner who will distribute your goods inside Canada, acting as the importer of record and taking care of everything on the Canadian side of the border. This would take many troubles off your back, but you’d also lose a lot of the advantages.
However, you can choose to become a Non-Resident Importer (NRI) and handle everything yourself. This could give you many competitive advantages, including setting prices and attracting customers in Canada. Read our blog posts about the advantages of becoming an NRI, and a step-by-step guide on how to do it!
Canada is a relatively scam-free country; however, there have been cases of online fraud and scams targeting small businesses that you need to be aware of.
If you receive an unsolicited email offering office supplies or other merchandise at a price that seems too good to be true, it’s probably a scam. In addition to that, more sophisticated fraudsters may even pretend to be your established business partner, asking you to update your payment information and forward a payment immediately. Make sure to contact your business partner through your usual channels and verify if the information you received is correct.
While Canada may seem like a natural extension of your business in the US, it’s not necessarily as easy to pay your Canadian suppliers as it is your American ones. The two countries offer very different banking systems, and you’ll be hard pressed to find a bank that works in both countries.
In addition, if you truly want to take advantage of the cheaper cost of goods to do the exchange rate, you’ll want to avoid wire transfers through your bank. They add points to their exchange rates so you end up paying more for the Canadian Dollar than you should.
However, with Veem, what you see is what you get. Not only are the exchange rates competitive, there are no hidden wire transfer fees to worry about. That means you get to keep more of your money when you do business with Canada.
Payments through Veem are also trackable, so your supplier knows exactly when they’re going to get paid. And they’re safer than through your traditional bank. Now transferring money to Canada is as easy as sending an email. It’s cheap, secure, and hassle-free.
For even more information on doing business in Canada, check out these government resources: