Good afternoon, Mr. Chair and honourable members.
Thanks for much for inviting Export Development Canada to be before the committee today. We appreciate your interest in our work with Canadian exporters and our perspective on international trade, and more specifically on Canadian opportunities in the export sector through e-commerce.
As mentioned, I'm Todd Winterhalt. I am the vice-president of the global trade group at EDC. Maybe I'll add a little bit of context to our story. We are also a financially self-sustaining crown corporation operating at arm's length from the government, providing financial products, insurance, and expert advice to Canadian companies as they seek to export their goods and services throughout the world.
In 2016, just over 7,000 Canadian companies took advantage of EDC's services to pursue international business opportunities representing $104 billion. That includes some 6,000 small and medium-sized businesses that received EDC support to facilitate export trade and investment abroad, activities totalling more than $15 billion.
E-commerce has brought about one of the most important paradigm shifts in the world of international trade and has certainly pushed EDC to adapt its financial solutions to meet the needs of this growing segment.
Globally, we see Chinese and American markets are very substantial, making up about 70% of the total global market share for all e-commerce sales. In 2017, together China and the U.S. e-commerce sales will reach nearly $1.6 trillion, presenting a massive untapped market for Canadian companies. Online growth rates in both countries also outpaced their offline counterparts, with e-commerce annual sales growth rates at approximately 20% in China and 10% in the United States, compared to 3% in offline retail sale growth.
In Canada we conservatively estimate at EDC that there are over 10,000 Canadian companies with the potential to immediately sell their products on international e-commerce platforms. Unfortunately, today Canada’s share of that total market is quite limited. For example, only about 30 Canadian companies are actively selling their products on Alibaba, China’s largest online retailer.
Our research has further shown us that although e-commerce allows Canadian companies to sell globally, sometimes from their own homes, most exporters, as my colleague from Canada Post mentioned, still prefer to test the waters in the U.S. first. Fortunately, of course, our American neighbours host the world’s second-largest e-commerce platform in Amazon.com, last year boasting sales of about $136 billion.
China and the United States aside, we see key markets in the United Kingdom, Germany, and France, all of whom, of course, are positively impacted or implicated in the CETA trade agreement. Another country with which Canada has a free trade agreement in force, South Korea, had $40 billion in online sales in 2016. Clearly, the growth here and the potential for growth is staggering. We do understand, however, that many Canadian companies selling to e-commerce platforms are small and that the world of international trade can appear daunting to a first-time exporter.
This is where EDC hopes to play a bigger role. To respond to what we’re learning in this space, EDC has begun adapting our own services to ensure that Canadian e-commerce companies are fully supported as they seek to export, whether it is for the first time or for the thousandth time. Shopify, for example, represents a great Canadian success story that EDC is happy to be a part of. Our work with Shopify has helped us to better understand the needs of e-commerce companies in Canada and how EDC's financial products can help. Understanding these needs has presented an opportunity for EDC to put a unique spin on many of our own financial offerings.
I'll detail very quickly three of those.
The first is matchmaking.
EDC, often in co-operation with the trade commissioner service, engages in matchmaking efforts to introduce Canadian suppliers to e-commerce platforms like Amazon, JD.com, or Alibaba. In two recent events over the past few months, for example, EDC has helped to introduce well over 200 Canadian companies to two Chinese e-commerce giants in order for them to pitch their products.
Quite simply, these connections matter. It’s no surprise that e-commerce companies have a different set of financial needs from traditional exporters or brick-and-mortar retailers. We have been working to expand our financial products to meet these unique needs, but we have also been changing some of our traditional products, such as accounts receivable insurance, to take on some added flexibility. Indeed, accounts receivable insurance is our most-used product by Canadian e-commerce companies. They need to know that if they ship something overseas, they are covered in the case of nonpayment.
For small companies, losing one shipment to a foreign buyer and not being paid can mean losing a year's worth of cash flow, or even the end of their business altogether. In 2016, EDC provided risk-mitigating insurance to over 70 Canadian companies selling on Amazon, to name just one platform.
Finally, there is working capital. Our working capital solutions can be a great fit for Canadian companies that experience the immediate success that often comes online and that need to ramp up production almost overnight.
Finally, with every segment we see unique challenges and hurdles. However, the growth opportunities in the e-commerce space, coupled with the incredible market access that Canadian companies have through free trade agreements, position our companies to be among the world leaders in this sector.
Thanks again for your time. I look forward to your questions.