OTTAWA, Dec.11, 2014 /CNW/ - Toronto is commonly ranked among the top financial centres in the world and its global presence remains strong, according to the Conference Board of Canada report, Performance and Potential: Toronto's Financial Services Sector 2014.
In the companion report, Going Abroad: Examining the International Footprint of Canada's Financial Services Sector, also released today, close to 40 per cent of Toronto's financial institutions surveyed reported that one-quarter or more of their revenues comes from overseas; meanwhile, more than half of the survey respondents operate in 11 or more countries.
"The financial services sector is an integral part of Toronto's economy but even more encouraging is its reach beyond Canadian borders," said Michael Burt, Director, Industrial Economic Trends, The Conference Board of Canada. "Having an international presence positively enhances the reputation of our financial institutions and benefits the Canadian economy."
- Toronto's financial services sector is a major contributor to both the local and national economy.
- Since 2002, employment in Toronto's financial services sector has grown by 34 per cent, while centres such as New York and Chicago have seen decreases of 6.6 per cent and 10.3 per cent respectively.
- Since the turn of the century Canada's exports of financial services have nearly quadrupled in U.S. dollar terms, rising from US$2.4 billion in 2000 to US$9.5 billion in 2013.
- Foreign affiliates are the primary means Canadian financial institutions use to provide their services to overseas customers.
The report, Performance and Potential: Toronto's Financial Services Sector 2014, reveals that the financial sector accounted for 12.2 per cent of the Toronto region's GDP in 2013. It directly employed nearly a quarter of a million people in the metro area and indirectly supported another 203,000 jobs both locally and nationally.
Moreover, Canadian financial institutions have been developing their presence around the world. According to Going Abroad: Examining the International Footprint of Canada's Financial Services Sector, Canada's exports of financial services have nearly quadrupled since the turn of the century, rising from US$2.4 billion in 2000 to US$9.5 billion in 2013. As well, the use of foreign affiliates has grown, as Canada's stock of financial services outward foreign direct investment (FDI) has more than tripled since 1999, reaching $414 billion in 2013. When Canadian financial institutions provide services to international customers through their Canadian operations, they are essentially providing an export that is a source of income and job creation for Canada.
Although the U.S. remains the primary destination of Canadian financial services FDI, emerging markets are becoming increasingly attractive opportunities for growth. However, barriers to trade and investment tend to be higher in many emerging economies compared with developed economies. According to the report, other challenges when conducting business in foreign markets were:
- accessing the right people;
- gaining a thorough understanding of the local market; and
- developing the company's brand successfully.
Key strategies to overcoming these barriers include:
- understanding and respecting the local culture;
- finding a strong or reputable local partner; and
- having management expertise with local experience.
Both reports, Going Abroad: Examining the International Footprint of Canada's Financial Services Sector, and Performance and Potential: Toronto's Financial Services Sector 2014, were funded by the Toronto Financial Services Alliance (www.tfsa.ca) and are available free of charge from our e-Library.
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SOURCE: Conference Board of Canada
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