Activities of Canadian majority-owned affiliates abroad, 2014
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Released: 2016-11-15
Canadian majority-owned foreign affiliate sales increased for the third consecutive year in 2014 to reach $541.8 billion. From 2011 to 2014, sales growth was concentrated in service-producing industries, where sales rose 31% due in part to merger and acquisition activity.
Following a 10.0% increase in 2013, foreign affiliate sales in the United States rose 4.4% in 2014 to $298.4 billion. During this two-year period, the Canadian dollar declined 9.5% against the US dollar, which increased the Canadian-dollar value of foreign affiliate sales in the United States.
Sales in the rest of the world were lower in 2014. The most significant decline came in the South and Central American region, where sales fell 4.3%. In Europe, sales edged down 0.8% following strong growth the two previous years, while sales in Asia/Oceania were almost unchanged (-0.2%).
Chart 1
Canadian majority-owned foreign affiliate sales by region
Despite the overall decline in sales outside of the North American and Caribbean region, some countries reported significant increases during the year, most notably China (+12.2%), Norway (+10.1%) and Sweden (+14.7%). The increase in China followed two years of flat growth, while sales in Norway and Sweden combined have more than tripled since 2011.
Sales growth concentrated in the service sector
On an industry basis, most of the sales growth in 2014 was concentrated in services-producing industries, with foreign affiliates in this sector increasing their sales by 6.3%. This was in contrast to a 2.2% sales decline in goods-producing industries during the year. The service sector's share of overall sales has increased significantly in recent years, rising from 46% in 2011 to 53% in 2014.
Chart 2
Canadian majority-owned foreign affiliate sales by sector
Within the services category, sales by foreign affiliates in the retail trade sector rose 18.5% to $45.3 billion as activity increased in both North America and Europe. Sales in the retail trade sector have more than doubled since 2011, due in part to increased merger and acquisition activity by Canadian firms. Most of the remaining growth in the service sector came from the professional, scientific and technical services (+23.3%), transportation and warehousing (+11.4%) and finance and insurance (+3.1%) industries.
In the goods-producing sector, sales by foreign affiliates declined in both the mining and oil and gas extraction (-4.2%) and manufacturing (-1.7%) industries.
Employment levels flat following two years of growth
After rising by almost 10% from 2011 to 2013, overall employment levels for foreign affiliates were unchanged in 2014 at 1.24 million. On a regional basis, employment rose by 1.1% in North America and the Caribbean and by 1.7% in South and Central America. Employment in all other regions declined during the year, led by a 9.4% drop in Africa. Foreign affiliates in both Europe and Asia/Oceania also reported lower employment levels.
Chart 3
Canadian majority-owned foreign affiliate employment by region
On a country basis, the United States, United Kingdom, Brazil, China, Malaysia and Peru reported the largest increases in employment during the year, with declines primarily in Australia, France, Thailand and Argentina.
While Canadian firms had established majority-owned foreign affiliates in over 100 countries as of 2014, their activity in most of these countries was fairly limited, with only 15 countries having more than 10,000 employees working for Canadian majority-owned foreign affiliates.
On an industry basis, retail trade posted another year of strong growth (+14.6%) in 2014, with employment levels in this industry growing significantly since 2011. The finance and insurance (+4.0%) and mining and oil and gas extraction (+2.9%) industries were the other main contributors to employment growth during the year. The most significant decline came in the other services category (-8.4%).
Despite little change in employment over the two previous years, the manufacturing industry remained the largest foreign affiliate employer in 2014 with a 34% share of overall employment, down from 36% in 2011.
Balance sheets of Canadian majority-owned foreign affiliates continue to grow in 2014
As well as generating significant levels of sales and employment, Canadian majority-owned foreign affiliates also controlled $3.1 trillion worth of assets in 2014, up 8.5% from 2013. During the same period their liabilities increased 10.3% to $2.4 trillion.
Most assets and liabilities were controlled by foreign affiliates in the finance and insurance sector, which had a 73% share of total assets and an 86% share of liabilities in 2014. These shares have remained relatively stable since 2011.
Service sector now accounts for the majority of Canadian foreign affiliate activity
With growth in the service sector outpacing that of the goods sector in recent years, the former now accounts for the majority of foreign affiliate sales (53%) and employment (51%). This trend has been most apparent in Europe, where the service sector's share of sales increased from 34% in 2011 to 46% in 2014, while the share for employment rose from 25% to 41% during the same period.
In the North American and Caribbean region, the service sector already accounts for the majority of foreign-affiliate activity with around a 60% share of both sales and employment. In the rest of the world, foreign-affiliate activity remains focused on the goods sector, mainly the manufacturing and mining and oil and gas extraction industries.
Note to readers
With the release of 2013 data, Statistics Canada expanded the level of published detail related to the program on the 'Activities of Canadian majority-owned affiliates abroad.' As well as expanding the level of published country detail, the expanded statistics for the first time covered the operations of the depository credit intermediation industry (North American Industrial Classification System 5221), increasing comparability with US estimates. In addition, a regional dimension was added to the industry level estimates.
The expanded statistics also include additional variables, starting last year with total assets and this year with the addition of total liabilities. Other variables (for example, affiliates trade and fixed assets) will be added to the series in future releases.
While the newly published data initially cover the period from 2011 to 2014, Statistics Canada will be undertaking work to link the new estimates with the terminated foreign affiliate statistics data to establish a time series with as much detail as possible, the latter constrained by limits associated with the historical source data.
To be consistent with international practices for measuring the activities of foreign affiliates abroad, only the information on Canadian majority-owned foreign affiliates is included. The figures for Canadian majority-owned foreign affiliates represent the total sales, employment and assets of those affiliates, even if the Canadian ownership is less than 100%.
Contact information
For more information, contact us (toll-free 1-800-263-1136; 514-283-8300; STATCAN.infostats-infostats.STATCAN@canada.ca).
To enquire about the concepts, methods and data quality of this release, contact Marc Atkins (613-790-7339; marc.atkins@canada.ca), International Accounts and Trade Division.
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