The BC government looks to be taking a sector approach to its tariff response, this approach has been in place since 2011 and was first used under the Christy Clark government’s job strategy where key sectors such as agriculture, natural gas, forestry, mining, technology, tourism, transportation and education were identified as priority sectors.

Today BC is in a much different economic situation and with the demise of Small Business BC and the lack of recognition that the financial sector plays in terms of export, construction, small business financing, the sector approach looks limited in addressing the common issues across all sectors. These issues are:

• scaling up small businesses to integrate into the supply chains of major projects
• diversifying trade, lack of competitive export financing options for small businesses
• competitive construction financing for affordable housing

The acquisition of HSBC Canada in 2024 by Royal Bank of Canada (RBC), removed export and small business banking executives from the Vancouver ecosystem and transitioned the top leadership to Ontario. It also put small business exporters in BC at the mercy of EDC which typically does not want to support small business exporters due to the lower profitability on their deals versus large exporters. Underwriting export financing deals for Asia would have a higher cost versus underwriting export deals to the USA , the reason HSBC was able to do it is because they had a large and established operation across Asia and more scale and efficient operations than EDC.

HSBC Canada was established in Vancouver in 1981 and played a key role in BC diversifying its trade from the US to China through HSBC China and its ability to do counterparty due diligence and risk assessments across Asia through its physical offices and long history in the region. RBC does not have the extensive Asian branch network and must rely on a partnership with Export Development Canada (EDC) to do export financing in 15 key markets, one could argue that Canada and BC’s export financing ecosystem has lost its market diversification capability and concentrated export financing in a few large institutions and EDC which is under the federal government.

CCUA sees RBC and EDC focusing on the US market more so going forward than the HSBC Canada approach which was focused on Southern China specifically the Pearl River delta region where Hong Kong, Shenzhen and Guangzhou are located[1]. This will be because RBC does not have as much experience in China as HSBC and its expansion strategy is focused on the USA not China or Asia.

A company in Canada is limited to the markets it exports to based on the EDC market presence, a little more research needs to be done on the increase cost of export financing in Canada based on RBC having to rely on EDC for counter party and risk assessments in Asia, Europe and South America.

Small Business BC (SBBC) closed down in 2024 after 40 years of operation, it was started in the 80s under the provincial government to capture the small business opportunities from Expo 86. SBBC’s mandate was to support the establishment of small businesses, and it also ran the Export Navigator program supporting small businesses in building exporting capacity. The export navigator program looks to be focused on reaching out to BC exporters more so than the outcomes of actual export deals.

The financial ecosystem and small business competitiveness have noticeably eroded over 2024 and that is why the BC Government may want to consider changing its approach to focus on industry competitiveness through policy and start looking at the systemic issues around competitiveness that face all sectors which look to be underpinned by the financial system and its eroding capabilities. Red flags on BC’s financial system are also showing up in the Global Financial Centers Index where Vancouver use to rank in the top 20 in 2015 but is now at the bottom of the rankings as of 2024 in terms of the competitiveness of its financial system.[2]

Export Financing capabilities, small business support and scaling up businesses in BC through the supply chains of major projects is a more integrated long -term approach to small and medium sized business engagement versus looking at individual sector competitiveness. For example, if we look at the mining sector through one lens for fast tracking major projects and not considering the SMEs in the supply chain we miss the opportunity to scale BC small businesses into medium sized businesses.

EDC Summary[3]