SAN FRANCISCO - June 5, 2014
The global marketplace is no longer the exclusive domain of large corporations as mid-sized U.S. companies focus on doing business internationally in order to be financially successful. According to a new survey released today from Wells Fargo’s International Group, part of Wells Fargo & Company (NYSE: WFC), among 250 U.S. companies with $50 million or more in annual revenue, 69 percent of mid-sized companies plan to increase international business over the next year – and more than half expect an increase in revenue and profits from their international activity. The Wells Fargo International Business Indicator (PDF)* was launched to track the outlook and activity of companies that conduct at least some international business.
“U.S. companies are bullish on international business (PDF)*,” said Sanjiv Sanghvi, head of Wells Fargo’s Global Banking Group. “They view international markets as growth opportunities for their products, services and supply chains. The results of our inaugural International Business Indicator provide insights into the ‘why, how and where’ of the international strategies for these U.S. companies.”
“It's going to become increasingly important for companies to have operations overseas. There are tremendous growth opportunities overseas and we're seeing that the margins are a lot higher there as well.” - Food Production, Vice President
In the face of a tough competitive environment and current economic conditions, companies are looking outside the U.S. to grow their businesses. Seventy nine percent of companies said a competitive marketplace is driving their international plans, with 77 percent citing global economic conditions, and 73 percent saying labor costs. While companies continue to expand their international activity, companies said they are concerned that political stability and regulations - both at home and abroad – may negatively impact their international business.
“Our international customers are growing internationally and taking us with them.” - Lodging/Personal Services/ Business Services, Managing Director
When developing their international strategy, companies can turn to a number of different sources for information. The most valued source, by a wide margin, is feedback from customers and suppliers, which was cited by 55 percent of companies. Fewer than half as many look to government agencies (20 percent) or industry and trade resources (17 percent) to help with decisions about international business.
“We're looking to expand into South America, certainly into Brazil. It's a huge market, especially with the World Cup and the Olympic Games coming there over the next couple of years. That's really been a goal of ours for 2014.” – Manufacturing, C-Suite
Companies looking to expand internationally say they are more focused on U.S. neighbors, with Latin America and Canada leading the list of regions where they plan to increase business activity. Fifty-six percent of companies plan to increase activity in Latin America (including Mexico) followed by 49 percent in Canada and 48 percent in Asia Pacific (excluding China). U.S. businesses are also planning to increase activity in China (41 percent) and Western Europe (35 percent) while they are currently less focused on Middle East and Africa (28 percent) and Central and Eastern Europe (23 percent).
“We want to better understand the global business climate as well as the challenges and opportuni-ties facing decision makers at these mid-market and large corporate companies,” said Sanghvi. “We believe the indicator studies will be valuable tools for tracking and analyzing the sentiments, intentions and strategies of U.S. companies so that we can best help them succeed in today’s global marketplace.”
About Wells Fargo International Business Indicator
On behalf of Wells Fargo, global research firm GfK conducted 254 telephone interviews between February 19 and April 28, 2014 with executives at U.S. companies with $50 million or more in annual revenue that conduct business internationally. Additionally, participants had to be associate vice president/director level or above, with either direct decision-making or some influence over the company’s international business plans and/or strategies. The margin of error on the total is 6.7 percentage points at the 95% confidence level. Ten executives from the initial survey also participated in a more intensive qualitative telephone interview for additional insights; these interviews were conducted between April 22 and May 8, 2014.
About Wells Fargo & Company
Wells Fargo’s International Group operates from 36 countries, including branches in the Cayman Islands, Dubai International Financial Center (DIFC), Hong Kong, London, Seoul, Shanghai, Singapore, Taipei, Tokyo and Toronto. The company provides middle market businesses, corporations, financial institutions, and multilateral organizations with a wide range of international solutions.
Wells Fargo & Company (NYSE: WFC) is a nationwide, diversified, community-based financial services company with $1.5 trillion in assets. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 9,000 locations, 12,500 ATMs, and the internet (wellsfargo.com), and has offices in 36 countries to support customers who conduct business in the global economy. With more than 265,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 29 on Fortune’s 2014 rankings of America’s largest corporations. Wells Fargo’s vision is to satisfy all our customers’ financial needs and help them succeed financially. Wells Fargo perspectives and stories are also available at wellsfargo.com/stories.
GfK is one of the world’s largest research companies, with more than 13,000 experts working to discover new insights into the way people live, think and shop, in over 100 markets, every day. GfK is constantly innovating and using the latest technologies and the smartest methodologies to give its clients the clearest understanding of the most important people in the world: their customers. In 2012, GfK’s sales amounted to €1.51 billion. To find out more, visit www.gfk.com .