Теги: export to canada
Canadian footwear market. What Ukrainian producers should take into account

The Canada-Ukraine Free Trade Agreement (CUFTA) has been in force between Ukraine and Canada for over two years. Under this agreement, most Ukrainian goods are not subject to import duties when imported into Canada. Benefits apply to shoes as well, averaging 18% of the customs value, which is our competitive advantage over such powerful global footwear suppliers as China or Vietnam.

Let’s try to understand how easy it is for Ukrainian footwear manufacturers to enter the Canadian market and take advantage of its competitive advantages.

Helicopter view

Canada’s shoe industry volume is expected to reach CAD 7.7 billion in 2019. In Ontario alone, one of Canada’s 10 provinces, there are 1,260 shoe stores.

During a year, an average Canadian family spends approximately CAD 624 on shoes, of which CAD 347 for women and girls, and CAD 277 for men and boys.

Canada is among the top five shoe consuming countries, with the lion’s share being imported. Last year, Canada imported 161 million pairs of shoes from China and Vietnam only (69% of total footwear imports).

The next group of major shoe-supplying countries for Canada are Italy – 8%, Cambodia and Indonesia – 4% each. The remaining footwear imports (15%) come from other countries including Ukraine.

Ukrainian company Belsta participated at Toronto Shoe Show

 

At the same time, Canada also successfully exports shoes. In 2018, shoe production in Canada reached CAD 458 million. Canada ranked 12th in the world of footwear exporters. About 90% of Canadian shoes were exported to the United States.

There are more than 120 footwear industries in Canada, mainly in Ontario (24), Quebec (22) and British Columbia (10). These are mostly small (up to one hundred workers) factories with modern equipment. In total, shoe manufacturing across the country employs about 1.4 thousand people.

Footwear preferences of Canadians

The Canadian footwear market is fairly conservative, especially with regard to winter models. Canadians have special requirements for winter footwear. As they joke, the Canadian year has only two seasons – winter and construction season, and both require good-quality footwear.

The frost-and-snow season in Canada lasts for five months. Therefore, winter footwear should, first and foremost, provide warmth, be waterproof and stability on slippery surfaces. In other words, consumer comfort determines the style of winter footwear.

Some winter footwear models in Canada have been consistently sold for decades. According to Andy Orchard, Cougar Shoes Inc.’s Sales Manager, red-tab winter boots have been in demand in the Canadian men’s, women’s and children’s footwear market for over forty years. “When I was 15 or 16 years old (40 years ago), everyone, absolutely everyone in Canada, wore those boots. The red tabs had to be outside in order to be visible. It was something like a uniform. This model of Cougar winter boots is in demand among Canadians to this day”, – he says.

Ukrainian footwear companies visited Cougar Shoes Inc. in August 2019

 

Ethnic diversity has some influence on Canadian consumer preferences. Especially in such numerous diasporas as Hindu or Chinese. Today, one of five Canadians is born outside Canada. By immigrating to Canada, people bring with them national habits or preferences from their countries of origin. First of all, it concerns traditional food, clothing, and footwear.

External influence on the market

The footwear market in Canada is significantly influenced by the US footwear market trends, which is almost 10 times bigger than the Canadian market. This is natural because about 90% of Canada’s population resides in the 100-mile strip along the US border, and the economies of both countries are closely related.

FN PLATRFORM Show in Las Vegas is one of the most important American footwear shows that determine shoe fashion in Canada. According to Tamara Szames, a Canadian shoe market analyst, the footwear shown at FN PLATRFORM in August will hit store sales next spring. She also emphasizes the increasing influence of fast fashion on the footwear market, especially for summer and sports shoes. This means that the “must-have shoes” that were just shown on the catwalk should be manufactured very quickly because “… if you missed the season shoes you may have missed the whole season”.

Canadians pay little attention whether the materials used to make shoes are natural or not. What is important is water resistance. This is one of the qualities of shoes in Canada that influences the buying decision. And this is not only for winter shoes. Don’t be surprised to read “waterproof” on sandals. The Canadian logic is: if you get caught in the rain in the sandals or stepped into a puddle, they should not get wet through or absorb water. Water should simply trickle down the sandals without creating discomfort.

Ukrainian waterproof shoes at Toronto Shoe Show

 

Recently the so-called “consumer fatigue” from Chinese imports has been increasing in North America. Many consumers are ready to refocus on other manufacturers if they offer comfortable and modern models at attractive prices. Quite often, a lower price is a determining factor for Canadians deciding to buy shoes.

This is what Ukrainian shoe manufacturers should take advantage of. Taking into account all the specifics of the Canadian market and offering an attractive price due to the absence of import duties, the Ukrainian shoe business has every chance to win its place under the changing Canadian sun.

Author – Valeriy Kokot

Ukrainian apparel producers in Canada: Five steps to success

Olga Shtepa, coordinator of the CUTIS project, explained the specifics of the Canadian apparel market and provided five practical tips for Ukrainian apparel manufacturers to become successful exporters to Canada

Canada is a northern country. Due to its mostly cold climate, it is a powerful player in the field of warm clothing and home to such well-known brands as Canada Goose, Mackage, Sentaler, Rudsak or Moose Knuckles. Canadian consumers spent $36 billion CAD on clothing in 2018. Apparel imports in Canada have grown from $10.1 to 12.5 billion CAD over the last four years.

This is definitely good news for Ukrainian companies because thanks to the Canada-Ukraine Free Trade Agreement (CUFTA) and the abolition of import duties, Ukrainian clothing has 18% preferences on the Canadian market compared to imports from such powerful global players as China. All this creates attractive conditions for encouraging Ukrainian clothing manufacturers to export to Canada right now.

Each manufacturer, of course, has its own path and understanding, but based on the experience of the Project, we suggest reflecting on the following basic steps to enter the Canadian market.

The first step is to have an English language website. A simple but user-friendly site that presents the manufacturer’s products and basic company information in good English is the only opportunity to make a positive first impression on international partners. Therefore, if you enter international markets or are interested in attracting foreign buyers you have to consider developing a website, though not an extensive, but at least a business card website.

Clear photos, fabric composition with descriptions of care options, existing sizes and prices are a small list of information you need online.

Price is the main and decisive tool in any market. Therefore, the second and very important step is the detailed and calculated price for your own products for export. It is quite difficult for an enterprise that does not yet have export experience. A detailed analysis of competitors’ retail prices for similar products in a potential retailer’s chain may be useful. You also need to have a clear understanding of further logistics and additional costs associated with shipping products to a buyer overseas (transportation, insurance, brokerage services, importer fee, etc.). Also, depending on who the Canadian buyer is – a big retailer or a small boutique – the retail price of the end consumer must be divided by 3 or 6 to get the approximate manufacturer’s price. Ukrainian manufacturers usually operate in US dollars or euros, so keep in mind the conversion rate of the Canadian dollar. It is also not necessary to include value-added tax into the export price calculations.

I recall a story told by a friend of mine who recently moved to Canada and found his first job. Responsible work in the office, a managerial position, a large company, so he preferred the classic tie suit. His Canadian colleagues were very surprised and kept asking him all day about the cause of such a solemn style. There were lots of options offered – from baptism to funeral, so the next day he was forced to change his “look” to a more democratic one.

It is also not customary to emphasize one’s high position in society or financial status by accessories such as precious watches, jewelry or expensive attire. Wealth is irrelevant, and the determining factor is the person and his or her success. Clothes should be, first and foremost, comfortable and neat, but also affordable. Therefore, Canadians usually buy a lot of clothes to be able to wear something new every day without spending a lot of time washing and ironing.

Canada is a multinational country that is made up of many groups, mostly ethnic, and all have different styles. Indeed, it is quite a common situation when people wear down jackets in combination with flip flops in winter, or shorts with fur winter boots.

In major cities, Toronto and Montreal, the entire transportation system and social infrastructure are designed to stay indoors for months: underground passage with shops and restaurants, direct exit from buildings to underground transportation stops significantly reduce the demand for heavy and warm winter clothing. Understanding these features and forgetting the stereotypes is the third step for a Ukrainian apparel exporter to Canada.

Step four is to get rid of misconceptions about your own products. Our manufacturers believe that it is enough to offer high-quality products made in Ukraine using state-of-art technologies with the equipment of well-known world brands out of natural fabrics in accordance with the latest European trends in fashion and it will be all immediately bought. This scheme may work in Europe, Asia or the Middle East.

The Canadian market is completely different. Canadian buyers have appreciated the quality of Ukrainian products during the CUTIS project trade mission. Ukrainian products compare favorably with competitors as they look modern and follow the latest fashion trends. According to an expert on the Canadian clothing market, Ukrainians can make even stockings look attractive.

In Canada, however, they prefer practical clothes that can be washed in a machine without further ironing – clothes made from fabrics with polyester, viscose and elastane. This saves time considerably. Clothes should be light, comfortable, sensible, inexpensive and, last but not least, attractive. It is not common here to consider purchasing a coat as a family investment. Canadians would rather buy a few less expensive wardrobe items than one thing they will wear for ten years to then preserve for posterity. For many Ukrainian manufacturers, especially those who have experience exporting and selling in international markets, this situation is an unpleasant surprise. Even the free trade agreement between Ukraine and Canada that provides for customs-free import of clothing made in Ukraine does not save the situation. After all, Ukrainian manufacturers have to compete with companies from India, Pakistan, China, whose products, though taxed, are still cheaper than Ukrainian.

Step Five: prepare for the presentation of your products to a potential buyer. It would seem nothing complicated. However, this is a very important step in finding orders in the Canadian market. Large Canadian buyers are “spoiled” and accustomed to queues of potential suppliers in their waiting rooms. For example, during the CUTIS trade mission, one of the well-known buyers said that they received an average of 180 emails a day with commercial offers from around the world. So you can imagine what an unusual offer and what quality that should be to get their attention! Businesses negotiating with Canadians should be well informed and aware of the smallest details of their offers. Awareness and honesty are highly valued. Canadians do not accept evasion from answers. Our favorite phrase “how much will you give?” works great in Odessa but is perceived as unprofessionalism in Canada. Parrying a question puts an end to any further communication. Even exchange of business cards has certain specifics, which many do not even know.

There is a logical question: since everything is so difficult, is it worth doing? What is so attractive about the Canadian market and why should Ukrainian manufacturers go there?

The Canadian market means, first and foremost, stability. Having got a new supplier, a Canadian buyer is inclined to cooperate on a long-term basis – for ten, twenty or thirty years, and this is by far not the most impressive duration.

The purchasing power of Canadians is much higher than that of Ukrainians or Poles. In 2018, for instance, Canadian consumers spent CAD 8,650 on goods and services (FMCG). Ukrainians, by comparison, spent only about CAD 4,000. Payments under the agreement with a Canadian buyer will be in freely convertible currency. In addition, Canada is the closest neighbor to the most economically developed country – the United States, and it is much easier to cross the southern border than to try making contacts in the US from Ukraine.

As part of its activities, the Project has produced a lot of practical and theoretical information that will be of use to any manufacturer planning to export to Canada. The most up to date are industry-specific manuals that bring together all knowledge base on the exports of footwear, clothing, furniture, goods and ICT services. If you need a “live” consultation you can contact the Canada-Ukraine Chamber of Commerce, which provides practical advice and consults on exports to Canada for over 25 years.

Ukrainian manufacturers have already achieved considerable success in making the products that meet high international standards, so now there is a little left to do: to offer it professionally to Canadian consumers.

Do you know what our main advantage is compared with Chinese, Indonesians and others? The ability to learn very quickly regardless of the internal or external circumstances. This is our main competitive advantage and the key to success.

Author: Olga Shtepa, coordinator of the CUTIS project 

Source: NV.UA

Exports of organic products to Canada: what has changed over the past year

The demand for organic products is increasing worldwide. Canada is no exception. It is precisely this conclusion that can be made after reading the World of Organic Agriculture 2019 Report, which was recently published by the leading organizations FIBL and IFOAM.

Global trends

Thus, according to the 2017 results, sales of organic food and beverages reached a record high of 90 billion euros. Since 2000, this figure has grown 5.5 times, and compared with the year 2016 – by 8%.

North America and Europe remain leaders in the consumption of organic products – they account for 90% of total global sales. The United States occupies the first place with the rest of the world considerably lagging behind; about half of the world organic produce market is in the United States. Germany and France follow.

Canada with 3 billion euros of its organic market volume is no more within the world’s top five organic markets. Now it ranks sixth in the global ranking.

Australia, Argentina and China have become leaders with the largest areas of organic farming.

Sales of organic products in supermarket chains in 2017

Specifics of the Canadian organic market

Major Canadian organic producers are located mainly in the provinces of Ontario, Quebec and British Columbia. The reason is simple. It is these regions that are characterized by the bigger size of the market (population density) and its maturity, that is, willingness to pay more for organics.

Understanding the prospects of the organic market, Canadian government officials are taking steps to support it. For example, the province of Quebec set a goal to double the area of land under organic farming by 2025 compared to 2015.

Canada produces organic products mostly in such segments as dairy, ready-made food and bakery products. Of course, a lot of organic maple syrup is produced.

Food and drinks account for 93.5% of Canada’s organic market. Due to the strong consumer demand, the Canadian organic market is growing faster than the average food industry. In the period of 2012-2017, the sector’s average annual growth rate was 8.4%.

According to statistics, two thirds of Canadians bought organic products weekly in 2017. In 2016, only 56% of them did.

Millennials are fans of organic goods. More than 83% of people born in 1981-1999 buy organic products every week.

Canada imports a lot of organic goods, which is a great opportunity for Ukrainian companies. In particular, Canada imported organic goods for 637 million Canadian dollars in 2016.

At the moment, Ukraine primarily exports organic raw materials to Canada, although it would be more profitable to export processed products. The best prospects on the Canadian market are for such groups of goods as dried and frozen vegetables, vegetable oils, juices and drinks, jams, pastilles, honey, and the like.

According to the Open Register of the Organic Standard Certification Company nine Ukrainian producers have successfully passed certification under Canadian COR organic standards as of May 2019.

Some Ukrainian organic producers already have successful cases selling their own products to this market. For example, PE “Agroecology”, one of the largest Ukrainian organic producers (more information can be found from the video https://youtu.be/zsVQUao58Dc).

If your company is also interested in obtaining a Canadian organic standard, please, be informed that the CUTIS Project co-finances such certification (for more information, follow the link https://cutisproject.org/news/new-opportunities-from-cutis-project/).

Changes in Canadian legislation

On January 15, 2019, the Safe Food for Canadians Regulations (SFFC) entered into force, which in fact prescribe a policy for the production and sale of foodstuffs. This is a new document that combines food sector regulations.

The issues of producing, importing and exporting organic products are regulated by Section 13 of the SFFC. Thereunder, any food products, seeds or animal feed claimed as organic are subject to control by the Canada Food Inspection Agency (CFIA) regulatory authority.

However, CFIA does not control the flow of organic cannabis, cosmetics, food for pets and biologically active additives. The mention of cannabis in this list is an attempt to clarify the situation with its legalization in Canada since the fall of 2018.

Starting from January 15, 2021 organic products from the organic aquaculture sector will be subject to the SFFC provisions as well.

Regulatory changes in the field of organic production will come into force not immediately but gradually over the next 12-30 months (by January 2020 – July 2021). Obviously, this is due to the smooth transition of Canada’s organic sector to the new regulatory regime.

Attention of Ukrainian exporters of organic products to Canada: production of organic products eligible for sale in Canada is governed by the following Canadian organic standards (CAN/CGSB 32.310 – Organic Production Systems – General Principles and Management Standards; CAN/CGSB 32.311 – Organic Production Systems – Permitted Substances Lists). It is important to keep in mind, however, that there are plans to revise them in 2020.

In addition, organic products will be separated within the Automated Import Reference System (AIRS). What is this system? This is a resource for obtaining information on the terms of import of certain categories of agricultural products into Canada. By entering the product category name, you will receive detailed information about the terms of import. In 2019, organic fresh fruits and vegetables will be the first categories to apply this approach. This will make life easier for importers to Canada: they will have access to detailed regulatory instructions for certain categories of organic products.

This is to remind that the Canada-Ukraine Trade and Investment Support Project (CUTIS Project) is a 5-year (2016-2021) initiative of the Canadian government aimed at increasing exports from Ukraine to Canada and investments from Canada to Ukraine. The Project is funded by the Canadian Government through Global Affairs Canada. The Project is being implemented by the Conference Board of Canada in cooperation with the Canada-Ukraine Chamber of Commerce.

Zoya Pavlenko, Environmental Expert, Canada-Ukraine Trade and Investment Support Project (CUTIS)

Source: Agroportal.ua

Ukrainian manufacturers of clothing and footwear on the Canadian market: everything is just starting

The Canadian market is getting closer to Ukrainian business. According to the Ministry of Economic Development and Trade of Ukraine, Ukraine exported goods to Canada for $ 45.5 million during the first eight months of 2018. This is almost half (+ 45,8%) more than for the same period in 2017.

It is important to note the positive trend. Even 5-10 years ago that was large business that considered entering the Canadian market, while now more and more domestic small and medium-sized enterprises want to try their hand in Canada.

The growth of export performance was also facilitated by the introduction of the Canada-Ukraine Free Trade Agreement (CUFTA), which has opened up additional opportunities for domestic companies to export to the promising Canadian market. The agreement, which entered into force on 1 August 2017, in particular, provides for the abolition of import duties for 98% of Ukrainian goods.

Focus at small and medium businesses

The Canada-Ukraine Trade and Investment Support (CUTIS) Project is a powerful auxiliary tool for development of exports to Canada. CUTIS is a five year (2016 – 2021) international technical assistance project funded by the Canadian Government through the Global affairs Canada and implemented by the Conference Board of Canada in partnership with the Canada-Ukraine Chamber of Commerce.

Currently, CUTIS is implementing U CAN EXPORT – the first wave of the program to support exports to Canada in five priority sectors: clothing, footwear, furniture, confectionery, and the IT sector. The project focuses on small and medium-sized enterprises (SMEs), which, according to the project, have good prospects in the Canadian market.

After receiving applications from interested companies, there were two stages of selection. As a result, 8 clothing manufacturers and 8 shoe manufacturers were selected, which, in collaboration with the project, were presented in Toronto in August 2018. For the selected companies, training was conducted with the participation of leading Canadian experts. The experts accompanied the participating companies and provided them with professional advice both during the trip and during the preparation for exhibitions.

Toronto Shoe Show

Toronto Shoe Show was held in Toronto on 19 – 21 August 21. More than 700 brands of European footwear and accessories were represented at the exhibition.

Ukrainian shoe industry was presented by well-known brands:

  • Belsta (Bilhorod-Dnistrovsky, one of the largest producers of indoor footwear in Ukraine;
  • Caman (мBrovary, producing stylish men’s and women’s shoes, as well as specialized sports shoes);
  • InBlu (a joint Ukrainian-Italian company producing footwear at the Kyiv Shoe Factory);
  • KaDar (Lutsk, focusing on the production of casual men’s shoes);
  • Kredo (Khmelnytskiy, specializing in winter shoes on EBA sole);
  • Krok (Zhytomyr, one of the largest manufacturers of industrial and military footwear);
  • Litma (Khmelnytskiy, an extremely wide range of rubber footwear);
  • Olteya (Zhytomyr, specializing in the production of women’s leather shoes).

Toronto’s trade show was another proof that Ukrainian shoes are a great combination of comfort, quality and contemporary design.

What conclusions can be drawn from the exhibition?

Firstly, everyday footwear is most in demand, as it is light, flexible and comfortable. More formal models belong to the niche products. Sneakers is the most popular kind of shoes for both sexes and all age groups.

Winter boots is the most competitive segment of the footwear market, as they are a necessity in the Canadian climate. Moreover, Ukrainian producers should focus on products of high-quality raw materials. The importance of high-tech materials, such as waterproof leather, is growing.

Brand is a key factor in the footwear market for both sexes and all types of shoes: consumers generally have a high level of loyalty to shoes brands. Canadians are willing to pay a high price for good-quality branded shoes.

Therefore, it makes sense for Ukrainian companies to look closer at the possibility of manufacturing footwear under private label for Canadian companies, since the market introduction of a Ukrainian brand would require large marketing costs, which is not feasible for all enterprises.

Apparel Textile Sourcing Canada

Apparel Textile Sourcing Canada was held on 20-22 August and brought together more than 500 apparel manufacturers from more than 20 countries around the world. This is the largest exhibition in Canada designed to match representatives of the fashion industry, clothing and textile manufacturers, as well as retailers.

Ukrainian garment makers found themselves in a company with businesses from China, Canada, the USA, Switzerland, India, Bangladesh, Vietnam, Pakistan, Sri Lanka, Nepal, South Korea, Indonesia, Colombia, Guatemala, Mexico and Peru.

The domestic light industry in Canada was introduced by both well-known trademarks and small startup enterprises:

  • Andre TAN (women’s designer clothes);
  • Berserk Sport (sportswear);
  • Bukvica (men’s and women’s clothing, accessories);
  • AnnaFoxy (women’s casual clothing, lingerie, accessories);
  • RITO (men’s and women’s knitted garments);
  • Soho Chic (women’s clothes);
  • Rubizhne Stocking Manufacture (socks);
  • Lagrand (Lesya Factory, women’s and men’s trousers).

For the first time, five Ukrainian brands (Andre TAN, Soho chic, Berserk Sport, Bukviсa and Rito) participated in the fashion show that took place within the framework of the exhibition. This indicates the high level of models developed and sewn in Ukraine.

Participation of domestic companies in the exhibitions of this level proves that Ukrainian products are an optimal combination of the best fabrics, audacious designer designs, solutions, affordable prices and the highest quality standards.

What should other Ukrainian clothing manufacturers that are interested in entering the Canadian market focus on? In fact, two opposite trends are visible. On the one hand, there is a growing demand for so-called “one-time” clothes – affordable clothing that you do not need to try on. Popularity of the sports style is growing: due to the dress code change, sportswear is becoming increasingly popular at work.

On the other hand, there are still many consumers who consider quality of fabrics as a priority. Organic cotton remains popular, but the focus shifts to recycled fabric.

As a summary, we would like to point out that, despite the fact that Canada is a highly competitive market, it can and must be approached. The main thing for the companies is to be ready for export and not to be afraid to change and adjust to the requirements and tastes of demanding Canadian consumers.

Natalia Pavlyuk, Senior Assistant, CUTIS Project in Ukraine

Source: magazine “All about the textile industry”