Export diversification: Guide to selling your products to new markets

Many Canadian exporters depend heavily on a single market. While familiarity may feel safe, it could expose your business to increased risk if market conditions change. An export diversification strategy can help you:

• sell in more than one market
• strengthen resilience
• open new growth opportunities
• be more competitive in global supply chains

This guide is for Canadian businesses who are export-ready and already active in at least one foreign market. It walks you through each stage of market diversification to start selling to new markets, from readiness to scaling. It also shows how the Trade Commissioner Service (TCS) and Canada’s trade and export ecosystem can help at various stages in your export journey.

Before diving into the guide, it’s useful to understand why trade diversification matters, and what risks you're protecting your business from. Focusing your business efforts on one singular market has its own set of risks, as any disruption to this market may threaten your international growth. 

Global markets are ever evolving. Prices can shift, policies evolve, and customer needs are always changing. It's important to anticipate what potential issues may arise to help you react swiftly to changes.

What does it mean to stay proactive? It means you’re keeping a close eye on trends, regulations, and potential market signals, so you can be aware of potential issues that may affect your exports or foreign partnerships.

It’s recommended to review your export plan twice a year, or whenever there is a major economic or political change. These actions can help you identify risks and opportunities early and stay ahead of the competition. Watch for:

• currency fluctuations or trade policy changes
• shifts in consumer preferences or buying power
• emerging competitors or new technologies
• evolving regulations in target markets (for example, environmental standards, data protection laws, or product certifications)
• changes in transportation infrastructure, shipping routes, or logistics costs that might affect delivery timelines or costs
• shifts in digital platforms, online buying behavior, or cross-border e-commerce regulations
• supply chain disruptions or rising input costs
• changes in tariffs, taxes, or customs procedures

Being “on the pulse” of your target export market helps you make informed adjustments, whether that means adapting your pricing, refreshing your marketing strategy, or strengthening relationships with local partners.

Signs that it might be time to explore additional markets include:

• a decline in orders or longer sales cycles in your main market
• rising political, economic instability, or natural disasters
• stricter import rules or higher costs to operate
• a competitor gaining ground or changing market share dynamics
• customer demand for product variations that are difficult to meet

Diversifying helps spread your risk and strengthen resilience. Exploring complementary or emerging markets can position you to capture new opportunities while cushioning your business from downturns.

Expanding from one export market to several is a significant step that requires a higher level of strategy, resources, and coordination. Diversification isn’t about starting from scratch; it’s about scaling what already works, identifying where you can adapt, and ensuring your business can handle the added complexity of multiple markets.

Before pursuing new markets, take a deep look at your current operations and performance:

Assess your export foundation: How stable and profitable are your current export activities? Is your first market running smoothly enough that you can confidently redirect resources to new ones?

Evaluate capacity and scalability: Do you have the financial strength, production capacity, and personnel to manage multiple supply chains, partners, and regulatory frameworks simultaneously? 

Understand market concentration risks: How dependent are you on your primary export market? Would entering a second or third market help reduce exposure to regional or sector-specific risks?

Identify what’s transferable and what’s not: Which of your products, services, or business models can adapt easily to other markets, and which may need localization, certification, or redesign to meet new standards or customer expectations?

Analyze demand and fit: Where else in the world is there proven or emerging demand for what you offer? Can your current infrastructure support the scale needed to serve these markets effectively?

Key actions and considerations:

• Export footprint audit: List current export markets, revenues by country, and percentage exposure. Identify those markets where more than X% of your revenue comes from one country.
• Product/service fit: Which products or services are relatively “portable” with limited modification? Which ones require heavy localization?
• Core capabilities versus adaptation need: What parts of your business model are core and stable (manufacturing and branding) versus what needs adaptation (packaging, regulatory compliance, and after-sales)?
• Intellectual property (IP): Is your IP strategy sufficient for the new market?
• Leadership alignment and target setting: Set internal targets for diversification (“no single market will account for more than 40% of our exports in 5 years”) and ensure stakeholders (executives, finance, and operations) are aligned. Track your progress towards your goals.
• Capacity check: Review whether you have the financial cushion, staff, logistics, supply chain flexibility, and management bandwidth to support expansion.

To help clients identify and expand into new markets, the Marketing Potential Assessment export advisory service will be most important. A Trade Commissioner at a regional office will help you see if your target market is right for your company, improve your competitiveness and refine your business strategy.

Do you want to diversify but are not yet working with the TCS as a client? Start by checking out our client eligibility and connecting with your TCS representative in Canada at your regional office (RO). If you qualify to become a TCS client, and you’re already exporting and looking to diversify, one of our regional offices can connect you with a Trade Commissioner in one of our 160+ cities worldwide and open the door to global opportunities.

These goals help drive prioritization of which markets to pursue first.

Clarify the “why”: Do you want to reduce risk, expand sales, or access new supply chains?

• Risk reduction: Lower dependence on any one market
• Growth: Tap new revenue pools
• Strategic fit: Aligning with sector trends (green tech, digital, resources)
• Supply chain or components optimization: Locate parts of production in other markets to reduce input costs
• Long-term ambition: Becoming a global leader in your industry

Set targets, for example:

• within 5 years, no single market will represent more than 35 to 40% of our total exports
• grow exports to Asia / Europe / Latin America by X%

Align with business strategy: Make sure international diversification supports your overall growth plan.

Evaluate risks and costs versus rewards: Exporters assess the risks (political, economic, currency, or logistical) and the costs of entering a new market, including shipping, marketing, distribution, and compliance with local laws or certifications. 

This is the “where to go” step. Focus on gathering intelligence, comparing alternatives, and eliminating less viable options, otherwise known as market research. 

Key criteria and frameworks to consider:

• Preferential access/trade agreements: Canada has 15 free trade agreements (FTA) currently in force with other countries in addition to new FTAs in development. Countries that have a free trade agreement (FTA) with Canada may offer your goods or services preferential treatment, such as lower tariffs or simpler processes. Learn more about the benefits of free trade agreements. 
• Competition and local players: Analyze local competition in your target markets. Free trade agreements help by giving you an edge against competition with reduced barriers to accessing a market. Attending key industry-specific events can also help you gather intelligence on local networks and competition. 
• Consumer preferences and cultural fit: Linguistic ties, consumer behavior, and ease of localization or adaptation. Your product will need to compete with already established brands. What can you leverage to ensure your success?
• Market size, growth, and demand trends: Is there a growing middle class, demand for your product category, or unmet demand?
  • For example, many Canadian exporters are eyeing the Indo-Pacific region as a growth frontier; it includes over 40 countries and many large markets. Check out Canada’s Indo-Pacific Strategy to discover which countries are a part of this region and what we’re doing to advance trade relations.
• Ease of doing business and regulatory climate: Research the legal environment, intellectual property protection, import rules, standards, and licensing. Learn more about rules and regulations and protecting your intellectual property.
• Logistics and transport cost: How far or costly is it to ship? What transportation modes dominate (air, sea)? Are alternatives available if one mode of transportation is unavailable?
• Risk environment: Political stability, currency volatility, trade or tariff risk, and regulatory unpredictability.
• Regional clustering/hubs: Once you're in one market, adjacent or regional hubs may be easier to access. For example, a Canadian tech firm with clients in Japan may expand to South Korea, where there is a strong demand for similar solutions and easier supply chain linkages.

From your list of potential markets, you can prioritize the top 2 to 3 markets that hit the balance trade-off between opportunity and risk. Screen potential markets based on size, growth, entry costs, logistics, and trade agreement benefits. Sources like trade data, market reports, and government trade offices (such as the Trade Commissioner Service) help narrow down promising markets.

We provide a variety of services and offerings that can help you identify new markets and know if they’re the right option for your business expansion:

• assess your market potential with intelligence and data from our international network
• explore our searchable country and market pages

Once you pick a target or 2, decide how you will enter and what adjustments you must make. You can get tips on building an export plan in our Step-by-Step Guide to Exporting.

• Direct export: Selling from Canada to a buyer/importer
• Distributor / agent / reseller partnerships: With local firms with market presence
• Joint ventures / equity partnerships: Sharing risk with a local entity
• Licensing / franchising / contract manufacturing: Letting a local entity produce / license your brand
• Digital / e-commerce platforms: Reach customers online
• Offices / presence abroad: Field office, sales office or subsidiary

Check out our Step-by-step guide to exporting: Opening the door: entering your target market to learn about different market entry strategies. Each option has its own inherent advantages and potential disadvantages, and you should consider which will be most beneficial for your company in each specific market. 

Products or services may need to be further adapted to meet local standards, tastes, language, or cultural expectations of your next target market. You can:

• modify packaging, labelling, language, branding to local preferences and regulatory requirements
• adjust pricing strategy (local purchasing power, tariffs, taxes)
• tailor marketing, sales channel, go-to-market models (digital, retail, institutional)
• comply with import regulations, customs, standards, certifications

• Leverage government programs (the Business Benefits Finder) to identify funding, advisory, or partnership opportunities that can reduce risk as you expand. 
• Start small: Use phased pilots or test shipments in select markets to gauge demand and identify potential risks before fully scaling up. 
• Build the right network: Work with Trade Commissioners, local market advisors, and in-market legal or regulatory consultants to help you anticipate and navigate challenges early. 
• Balance risk and reward: Many exporters, especially those entering new markets at a pilot stage, choose to self-insure, offsetting potential export losses against early sales revenue. 
• Consider financial tools for higher exposure: As your export volume grows, explore export credit insurance, factoring, trade finance, or letters of credit to protect against payment or delivery risks. 

Expanding into multiple markets requires more than assigning roles, it demands coordination across teams, timelines, and markets to maintain focus and momentum.

• Clarify accountability across markets: Instead of assigning a single “market lead,” consider a cross-functional team or regional lead structure that connects sales, marketing, operations, and compliance for cohesive decision-making.
• Prioritize and sequence market entries: Establish milestones not just for launch but for scaling, resource allocation, and performance tracking across several markets at once.
• Align budgets and capacity: Ensure financial planning, staffing, and production are integrated across all target markets, so one expansion doesn’t drain resources from another.
• Manage complexity over time: Monitor cash flow and ROI at the portfolio level, looking across all markets, to determine where to double down or pause investment.

Market potential assessment service: If you’re ready to diversify or you’re a TCS client who has already identified a new market, you can request a market potential assessment service.

Once you’ve identified promising markets, it’s time to test your assumptions in the real world. Visiting the market gives you firsthand insight into the local business culture, buyer expectations, and regulations. Meeting potential partners, distributors, and customers helps you test whether your value proposition connects and confirm that your product or service fits local channels and meets compliance requirements.

These in-person experiences can reveal nuances you won’t find in research, from pricing dynamics to logistical realities, helping you decide whether to proceed, pivot, or refine your approach. Learning which market is not a fit for your company can be priceless. Exploring without committing can save significant time and resources, and help you focus on markets with stronger potential.

We at the TCS offer funding, connections, and programs to help you validate your business on the ground:

• Request a qualified contacts service to get connected with potential buyers, partners, or other contacts in your target markets.
• Trade missions and events: We provide support and facilitate business-to-business meetings at trade events in Canada and overseas. By taking part in initiatives like these, you can gain important exposure, network with local businesses, and explore international opportunities, all of which helps accelerate your global growth.
• CanExport Funding: Get financial support to explore new international business opportunities or connect with R&D partners. CanExport offers various programs with specific eligibility criteria and application periods.
• Canadian Technology Accelerators: Accelerate your growth in key tech hubs across North America, Europe, and Asia through the CTA. Companies with an existing technology in cleantech, life sciences, and information and communications technologies can gain industry insights, expert mentorship, and strategic connections with potential partners and investors.
• Canadian International Innovation Program (CIIP): Access funding and partnerships for R&D collaborations in specific partner countries.

Entering new markets is only the start. Diversification requires continuous oversight across markets, balancing resources, performance, and risk to maximize long-term growth.

• Evaluate market performance holistically: Track not only sales and margins, but also comparative performance across markets, such as cost to serve, profitability, and growth trajectory.
• Assess against strategic objectives: Review whether each market contributes to your overall diversification goals, stability, innovation, risk mitigation, or new revenue streams.
• Leverage insights across markets: Use learnings from one market to refine strategies in others, from customer feedback to partnership models and operational efficiencies.
• Adjust your global mix strategically: Be ready to double down in high-performing markets, pivot where conditions change, or responsibly exit those that drain resources.
• Expand intelligently: Once a market is stable, explore logical next steps, such as entering regional clusters, adjacent customer segments, or higher-value tiers.
• Invest to deepen presence: Strengthen your foothold through localized marketing, service, talent, or R&D tailored to high-performing markets.

Over time, this disciplined approach helps you build a more balanced, resilient, and globally competitive export portfolio.

To make diversification sustainable, embed it into your corporate DNA.

• Integrate diversification into annual strategic planning to keep it aligned with business goals and resources.
• Reassess market concentration risks regularly to stay alert to overexposure or emerging opportunities.
• Invest in long-term capabilities such as multilingual staff, global logistics expertise, and regulatory compliance teams.
• Deepen your market presence by introducing adjacent products or services that complement your existing offerings.
• Track global megatrends: Digitalization, sustainability, supply chain shifts and adapt your market priorities accordingly.
• Grow through regional clusters: Once established in one market, expand strategically to nearby hubs (from Germany to the Netherlands, or from Singapore to Malaysia).
• Diversify your offerings: Explore opportunities to introduce complementary products or services in your current markets.
• Embed resilience: Treat diversification as an ongoing business discipline, not a one-time initiative.

Exporters often seek guidance and connections through:

• The Trade Commissioner Service 
• Provincial trade offices or industry associations
• Business Development Bank of Canada (BDC)
• Export Development Canada (EDC)

These services help identify opportunities, assess risks, and connect with qualified buyers or partners.

Export from Canada by discovering more support from us and our partners.