Activities of Canadian majority-owned affiliates abroad, 2016
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Employment at Canadian majority-owned affiliates operating abroad increased for the fifth consecutive year in 2016, rising 4.9% from 2015 to 1.39 million. Higher employment activity at affiliates in the United States and Mexico led the growth. Sales of foreign affiliates (+2.6%) also rose during the year, albeit at a slower pace than in the previous three years.
United States and Mexico account for most of the growth in foreign affiliate employment
The North America and Caribbean region accounted for around two-thirds of the employment growth of Canadian majority-owned foreign affiliates in 2016, primarily as a result of higher employment levels in the United States (+5.9%) and Mexico (+10.7%).
Foreign affiliate employment also increased in most other regions of the world in 2016, led by Asia/Oceania (+4.6%) and Europe (+3.3%). The only decline came in Africa, where employment levels at Canadian majority-owned foreign affiliates (-0.7%) edged down following two years of increases.
On a sectoral basis, the growth in employment for 2016 was primarily in service industries (+7.4%). Employment in the retail industry was up 17.7%, mostly as a result of increased merger and acquisition activity, with most of the remaining growth in the service sector coming from the wholesale trade (+12.7%) and finance and insurance (+6.8%) industries.
In the goods producing sector, the growth in foreign affiliate employment was concentrated in the manufacturing industry (+4.6%), which recorded a third consecutive annual increase. This was offset in part by lower employment in the mining and oil and gas extraction industry (-2.5%).
In line with the growth in Canadian direct investment flows, which totalled around $400 billion from 2011 to 2016, Canadian majority-owned foreign affiliates increased their overall employment levels by over 20% during the same period, a gain of more than 250,000 employees.
While Canadian firms have established majority-owned foreign affiliates in around 150 countries as of 2016, their activity in most of these countries is still fairly limited, with the top 30 countries accounting for around 90% of the total employment and sales of Canadian majority-owned foreign affiliates.
Sales growth moderates
Following three years of strong growth, sales of goods and services by Canadian majority-owned affiliates operating abroad moderated somewhat in 2016, rising 2.6% to $658.4 billion. From 2011 to 2016, sales of Canadian majority-owned affiliates increased by almost 40%.
While all regions of the world reported higher foreign affiliate sales in 2016—led by Africa (+10.2%), Asia/Oceania (+4.2%) and Europe (+4.1%)—overall sales growth was held back by the 1.6% increase in the North America and Caribbean region, which accounts for around 60% of overall foreign affiliate sales.
On a sectoral basis, the service sector (+4.7%) accounted for most of the sales growth in 2016, while sales in the goods producing sector (+0.5%) rose at their slowest rate since 2012.
Within the service sector, sales by Canadian majority-owned foreign affiliates in the 'other services' industry—which is made up of a variety of industries including real estate, administrative and support services, and arts, entertainment and recreation—rose by 27.6% in 2016, mostly as a result of higher sales in the North America and Caribbean region. Sales of Canadian majority-owned foreign affiliates in the retail trade sector rose 13.5% as activity increased in both North America and Europe. Foreign affiliate sales in the retail trade sector have tripled from 2011 to 2016, due in large part to increased merger and acquisition activity by Canadian firms.
In the goods producing sector, Canadian majority-owned foreign affiliates in the manufacturing industry increased their sales in most parts of the world, but this was offset by lower sales in the mining and oil and gas extraction industry in the Asia/Oceania and North America and Caribbean regions.
Balance sheets of Canadian majority-owned foreign affiliates continue to grow
As well as generating significant levels of sales and employment, Canadian majority-owned affiliates also held $3.9 trillion worth of assets in 2016, up 4.2% from 2015. During the same period, their liabilities increased 3.9% to $2.8 trillion. By way of comparison, corporations resident in Canada controlled $20 trillion in total assets as of the end of 2016.
Most assets and liabilities were held by foreign affiliates in the finance and insurance sector, which accounted for 72% of total assets and 84% of all liabilities as of the end of 2016.
Note to readers
To be consistent with international practices for measuring the activities of foreign affiliates abroad, only the figures for Canadian majority-owned foreign affiliates are included in this release. These figures represent the total sales, employment and assets of those affiliates, even if the Canadian ownership is less than 100%.
The Canadian enterprise that controls the majority-owned foreign affiliate may itself be ultimately under the control of a foreign parent company. In 2016, Canadian majority-owned foreign affiliates that were ultimately controlled by foreign parents accounted for around 15% of foreign affiliate sales and employment, and around 7% of assets.
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