Trade by exporter and importer characteristics: Services, 2019
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Released: 2021-12-07
Small- and medium-sized enterprises continued to be responsible for a higher share of Canada's commercial services exports than large firms in 2019. For imports, the reverse was observed, with large firms accounting for a slightly higher share. Commercial services exports increased 10.2% to $89.7 billion in 2019, while imports rose 8.2% to $86.6 billion.
Commercial services, which cover a range of business and professional services, account for the largest share of Canada's services exports and imports. Commercial services, which are traditionally presented according to the nature of the services exchanged, can also be analyzed in the context of the exporters and importers of services in Canada.
Exports of services led by small- and medium-sized enterprises, while imports led by large enterprises
Similar to 2018, small- and medium-sized enterprises (SMEs), those with fewer than 500 employees, were responsible for a higher proportion of Canada's services exports (48%) than large enterprises (41%) in 2019, while the remaining share could not be allocated to a specific size of enterprise due to data limitations. This result contrasts with the dynamic observed for exporters of goods, where large enterprises accounted for close to 60% of all exports in 2019.
The dominant role of SMEs in Canada's professional, scientific and technical services as well as information and cultural industries mostly explained this higher SME share of services exports. On the other hand, the vast majority of exports from the financial industry were attributed to large enterprises.
For imports of services, the reverse was true. Large firms, those with 500 or more employees, accounted for a slightly higher share (45%) than SMEs (41%). Notably, the contribution of large firms in information and cultural industries, professional and scientific industries and manufacturing industries was particularly important.
Chart 1
Commercial services exports and imports by enterprise size class, 2019
Canadian multinational enterprises generate 30% of commercial services export revenue in 2019
Canadian services traders can also be characterized according to their ownership status to define whether they are multinational or non-multinational enterprises. Multinationals can further be broken down between Canadian and foreign multinationals based on the residency of their ultimate controlling shareholder.
Multinational enterprises accounted for over three-quarters of both Canada's commercial services imports and exports in 2019. They were also responsible for the vast majority of the growth of this activity in 2019. Non-multinational enterprises represented a much lower share, with 11% of all imports and 15% of all exports.
US multinational enterprises operating in Canada represented nearly one-third of both overall imports and exports activity. Canadian multinational enterprises accounted for over one-fifth (24%) of all imports and a higher share of exports (30%) in 2019. Non-US foreign multinational enterprises contributed to a slightly lower extent to both imports (22%) and exports (17%).
Overall, large firms within the multinational enterprises category are the ones contributing the most to commercial services trade, driven primarily by the dominance of large firms in both exports and imports of Canadian multinational enterprises. The opposite was observed for non-multinationals, for which trade activity is dominated by small and medium enterprises.
Chart 2
Commercial services, exports and imports of multinational enterprises, 2019
Trade in services by mode of supply: digital intensity of services exporters
This release includes, for the first time, the digital intensity of exports as part of the profile of services traders, in addition to the existing industry, size of enterprise and multinational status dimensions.
Overall, nearly two-fifths (36%) of commercial services exports were reported to be digitally delivered in 2019, amounting to approximately $30.2 billion of business services. Typically, these are services provided through the use of platforms, applications and other means of transmission of materials online. This first estimate of digital intensity provides the foundation for assessing enterprise-level adaptation over the course of the pandemic in 2020 and 2021.
SMEs account for larger share of commercial services exports but report lower digital intensity
While SMEs accounted for a higher share of commercial services exports in 2019, large enterprises reported the higher digital intensity. Large firms showed a 43% digital intensity, while SMEs reported that approximately 32% of services had been digitally delivered in 2019.
Chart 3
Commercial services, digitally delivered exports of large, and small- and medium-sized enterprises, 2019
Foreign multinationals report higher digital intensity than Canadian multinational enterprises
By multinational status, non-US foreign multinational enterprises operating in Canada reported the highest share of exports digitally delivered at 43%, compared with a share of 36% for US multinational enterprises and 34% for Canadian multinational enterprises. The activities of global leaders in digital intermediary platforms and digital infrastructure operating in Canada spanned all three multinational enterprise groupings.
Non-multinational enterprises, thus not accessing international markets through foreign affiliates, reported a lower share of their exports digitally delivered at 30%, the vast majority by SMEs. Other modes of supply used to deliver exports include the exporter crossing the border to provide the service and the client crossing the border into Canada to receive the service. Also, the Canadian exporter may subcontract an expert located in the export market to provide the service.
Note to readers
This release includes information on international trade in services by exporters and importers characteristics, providing further insights on the profile of Canadian enterprises engaged in cross-border commercial services trade for 2010 to 2019. For more information on Canada's international trade in services, please consult the latest annual release.
In this release, a certain share of export value and import value could not be linked to a particular employment size class as a result of limitations in data sources used to compile data on certain commercial services.
Multinational enterprises are corporations with majority-owned operations in more than one country. The ownership of more than 50% of voting shares by enterprises outside the country is used to identify foreign multinational enterprises Canadian multinational enterprises are defined as enterprises based in Canada that own more than 50% of the voting shares of an enterprise abroad. The data source employed for this characteristic is the most recent available (reference year 2018).
Small- and medium-sized enterprises (SMEs) in Canada can be part of a larger multinational framework. As a result, the analysis of the data by multinational status reflects the activities of these SMEs.
Digitally delivered services exports are provided for the dimensions of multinational status and enterprise size class for 2019. Digitally delivered services exporters are identified through Statistics Canada's International transactions in commercial services survey, within which they are asked to identify the share of their exports that are digitally delivered to their destination per services category.
A background study on the survey module that contributed to the new measurement of digitally delivered services exports, "Canada's services exports through the lens of digital trade," part of Latest Developments in the Canadian Economic Accounts (13-605-X), is available.
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