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One-fifth of California small businesses express plans to expand internationally by 2013

29 March 2011

California small business confidence tepid

Hiring expected in sales, marketing, operations, and research and development

The HSBC Small Business Confidence Monitor today revealed that California small business confidence is tepid at 101, trailing overall North American confidence by seven points. While small businesses across the U.S. express some concern with the local economy, California businesses recognize opportunities of international expansion with 22 percent citing plans to expand international business relations within the next two years, some taking their first step into international markets.

The HSBC Small Business Confidence Monitor measured small businesses' outlook on economic growth as well as global plans for expansion. For the first time, a California snapshot was created as an extension of the HSBC Small Business Confidence Monitor, the largest international survey of its kind covering more than 6,300 small and medium enterprises (SMEs) in 21 markets throughout Asia, the Middle East, Europe, North America and Latin America.

Based on the survey results, the majority (70 percent) of California small businesses conducting international business will continue their existing activities within the next two years, compared with only 44 percent of small businesses surveyed in 20 markets outside of California/United States. Businesses cited increasing revenues (67 percent) and reaching new customers (37 percent) as the top two reasons for engaging in international business. Of all California small businesses surveyed, 45 percent expect revenue to increase from outside the U.S. in 2011, with 27 percent expecting this to be more than 25 percent of revenue during 2011. Sixty percent of California small businesses are expecting to increase revenue by at least 10 percent this year.

"California businesses see good prospects to diversify their revenues and attract new customers by tapping into overseas markets," said Mark Luppi, Executive Vice President and Head of Business Banking for HSBC North America. "At the end of 2010, almost one-fifth of California small businesses were operating internationally and it is clear that an increasing number of companies see this as an opportunity to grow within the coming years."

During the first half of 2011, California small businesses plan to hire or invest more in the following key areas compared to the same quarter in 2010: (1) marketing and sales (59 percent), (2) operations and (3) administration (31 percent), as well as (4) research and development (19 percent).

In order to take the first step to expand globally, 23 percent of California small businesses indicated they are in need of ways to reach international customers, and 21 percent believe they lack the tools to find overseas business partners. The HSBC survey also found the top three barriers for California small businesses conducting international business include:

  • Understanding local regulations and legal complexities (22 percent)
  • Lack of knowledge in areas such as taxation and regulations (20 percent)
  • Lack of demand for goods and services in overseas markets (20 percent)

"HSBC has insights, data and the experience to help West Coast companies navigate international markets and identify opportunities, especially in fast growing emerging markets," added Mark Luppi.

More details of the survey

The survey was conducted by research company TNS in December 2010. In California, the sample size included 150 small businesses with annual turnover less than US $20 million. The Small Business Confidence Monitor results were used to calculate an index ranging from 0 to 200 where 200 represents the highest confidence level, 0 represents the lowest, and 100, neutral.

Notes to editors:

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