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U.S. Companies Seek to Increase Sales Abroad While Tackling Global Economic Challenges
28 May 2009
China, India and Brazil among the most attractive markets.
New York - HSBC Bank USA, N.A. announced today the results of its second annual survey of U.S. mid-sized companies, a vital yet under-researched segment of the U.S. economy accounting for nearly US$6 trillion in annual sales.1 The poll of 500 senior financial executives from companies with annual sales between US$20 million and US$5 billion focused on the opportunities and challenges they face when operating in multiple markets worldwide either by selling or sourcing goods and services.
HSBC's U.S. Survey on International Business found that the portion of executives planning to increase their overseas sales targets rose from 49% in 2008 to 56% in 2009, underscoring continued interest for global expansion even during the midst of worldwide economic challenges. Once again, emerging markets stood out for their appeal to US businesses, with China, India and Brazil ranking as the top three most attractive markets for the second consecutive year.
However, the survey also notes that growth in U.S. companies' overseas revenue has slowed significantly, with only 52% of corporate financial executives saying international sales are outpacing domestic sales, compared to 67% a year prior.
"While overseas sales growth has slowed in the face of current economic conditions, U.S. executives remain fully committed to long-term global expansion," said Christopher P. Davies, senior executive vice president and head of commercial banking for HSBC - North America.
Anecdotes from the survey respondents show how companies are adjusting to the economic headwinds to maintain their global growth. One respondent is increasing his company's presence in smaller markets to avoid the risk of exposure to a single large market. Another is watching exchange rates more often to ensure that her company gets the best rate when transferring money abroad.
The optimism for overseas markets persists in the face of lingering effects of the market downturn. The survey found that 43% are increasing communication with bankers to maintain access to existing credit lines. Nearly one-third (30%) said they are concerned or very concerned about the solvency and reliability of overseas customers. Many are tightening their own credit policies when dealing with partners: nearly half of respondents (48%) are more actively collecting receivables; 40% imposing stricter credit policies with customers.
As one survey respondent noted: "New customers are given smaller credit limits and receive no new merchandise until previous invoices are paid."
Additional findings from HSBC's U.S. Survey on International Business include:
- A majority of respondents (65%) expect their company will be stronger over the long-term once the current market turns around.
- Over two-thirds (67%) say they have learned to take a deeper look into every part of the company's infrastructure to increase efficiency.
- The leading factors limiting international growth continue to be 'foreign competitors' (44%); the 'high cost of doing business internationally' (38%); and 'difficulty in maintaining strong customer and vendor relations at a distance' (30%).
- Nearly half (48%) of respondents incur debt denominated in a foreign currency, up slightly from last year (44%).
"U.S. companies continue to look beyond their home markets as they plan their companies' future growth," said Davies. "Many are taking steps now to ensure that they are well positioned for opportunities that emerge when the global economy improves."
From March 25-27, senior financial decision-makers (CEOs, CFOs, corporate treasurers, senior partners or other senior financial executives) from 501 companies engaging in international business were polled for their responses. The survey included a nearly even distribution of companies along a spectrum of annual sales ranging from US$20 million to US$5 billion.
About HSBC Bank USA, N.A.
HSBC Bank USA, N.A. is the principal subsidiary of HSBC USA, Inc. It has more than 470 bank branches throughout the United States, with over 380 in New York State. The Bank also operates in Florida, California, D.C., Washington, D.C. Pennsylvania, New Jersey, Delaware, Oregon, Washington, Maryland, Illinois, Connecticut and Virginia.
HSBC is the principal subsidiary of HSBC USA Inc., an indirectly-held, wholly-owned subsidiary of HSBC North America Holdings Inc. HSBC USA Inc. is one of the nation's largest bank holding companies by assets. Deposits in the United States are offered by HSBC Bank USA, N.A. Member FDIC.
HSBC Holdings plc
HSBC Holdings plc, the parent company of the HSBC Group, is headquartered in London. The Group serves customers worldwide from around 9,500 offices in 86 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa. With assets of US$2,527 billion at 31 December 2008, HSBC is one of the world's largest banking and financial services organisations. HSBC is marketed worldwide as 'the world's local bank'.
- Juanita Gutiérrez
1 Source: U.S. Census Bureau, 2006
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