Asia continues to be a priority with Africa and the Middle East gaining interest
NEW YORK, March 11, 2021 — Despite ongoing uncertainties in the current operating climate and varied rates of economic recovery from the COVID-19 pandemic, a majority of the U.S. companies expect an increase in global expansion over the next 6-12 months, according to the latest Standard Chartered Borderless Business Study.
Recognizing the ongoing value in conducting business globally, 49% of US companies surveyed saw their best growth opportunities outside of their home region, compared to 35% in June 2020. Outside of North Americas, Europe has become a more important growth target for US companies. 52% now identify as Europe as their most important region for outbound investment. This is followed by Asia, which continues to be identified as a major growth market. Over 85% of US companies surveyed are already conducting or considering a wide range of activities, including sourcing, exporting, and manufacturing. Countries like Japan, China, Australia, and India drive the most interest.
In addition to Asia (42%), responses also indicated an increased focus on Africa (15%) and the Middle East (37%) given their rich resources and high potential consumer bases. In Africa, it is unsurprising that South Africa, Algeria, Egypt, and Nigeria are the primary growth targets and the three top oil-producing nations – UAE, Saudi Arabia and Qatar – are the primary focus for U.S. businesses in the Middle East region.
The survey also explored companies’ concerns and challenges when expanding internationally.
Top barriers to global expansion
The most significant challenges highlighted by the U.S. businesses is understanding local regulations (41%).
Other challenges include:
* Building relationship with suppliers and adapting supply chain logistics (19%);
* Sourcing funding and managing liquidity (10%) and managing FX or currency risk (10%).
Top liquidity challenges
When looking at liquidity issues, 54% of U.S. respondents believed that continued access to existing credit facilities or meeting increased collateral requirements to be the most difficult challenge.
Other challenges include:
* The inability to rapidly mobilize liquidity (50%);
* Supply chain failure or interruption (46%).
“In today’s global economy, overseas expansion is a necessity and US companies are looking to the rest of 2021 with increased confidence,” said Jeremy Amias, Vice Chair at Standard Chartered Americas. “Unsurprisingly As international expansion evolves, we expect that understanding regulations and closing the knowledge gap to maximize the growth potential of these regions will remain a key point to address in US companies’ international growth story.”
Note to Editors
About the Borderless Business Study
Conducted between November and December 2020, over 1,000 CFOs and senior treasury professionals of companies with a turnover exceeding $500m located in USA, UK, Germany and France took part in the survey.
- Each country was equally represented with 25% of respondents.
- 50% of respondents represented companies with a turnover of $500m – $1bn; the remaining 50% represented companies with a turnover exceeding $1bn.
- The technology sector comprised 16% of responses. Thereafter, other industry sectors representation varied between 6-8%. Financial services were excluded from the survey.
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