[May 15, 2017]

Tried and tested vs. expanding and emerging markets: Where are US-businesses looking to expand and invest in 2017/18?

Although outbound FDI from the US is forecast to fall in 2017, US-based multinationals still see investment outside the US market as central to their corporate growth plans - according to new research from TMF Group, a global provider of corporate and administrative services, and Forbes Insights.

The study 'Venture Further: what drives international expansion and investment by US businesses?' canvassed the views of 250 US-based C-Suite Executives to explore the motivations and challenges of US-headquartered multinationals in taking their organization into a new international market. Respondents were drawn from a wide selection of industries and from organizations with annual revenues ranging in size from $250 million to over $5 billion.

Respondents were asked into what regions their organizations had invested in the last two years, as well as where they planned to invest in 2017/18.

• The results showed that the developed economies of Northern and Western Europe (including France, Germany, the UK and Ireland) as well as the rest of North America (i.e. Canada) remain the most favoured destinations for investment over the next two years for half of the businesses surveyed, .though that represents a notable decline from even higher investment activity levels over the preceding two years.
• Despite the FDI downturn, the emerging markets of South America also remain a destination of choice for over a third (36.4%).
• However, a significant uplift in interest was recorded for Australia and New Zealand, potentially a precursor for resurgent sentiment toward the Asia Pacific (APAC) region with 9.2% more respondents saying that they would invest in the region over the next two years than had done over the last two years.
• A smaller increase (+3.2%), but still one that bucked the global downward trend, was also recorded for Eastern Europe, where a number of markets are emerging as nascent innovation and technology hubs

In addition, the survey asked what motivated US-businesses to explore new foreign markets and what challenges they had faced.

• The most common motivators were to open new markets and gain market share (45.6%) and expand existing operations (42%). However, just over a quarter were looking for new resources to enhance their business: to find new talent and skills (28.8%) and new sources of capital (26.8%).
• Having entered a foreign market, there was some uniformity across respondents in the challenges they faced. Getting the business established with banking and accounting records (31.6%), identifying premises and/or a process agent (31.2%) and selecting and incorporating the right entity type (30%).
• Additional issues were presented in finding and providing official evidence of a company's 'good standing' (28.8%) and complying with local data protection and privacy laws (28.4%).
• Contrary to much of the current conventional wisdom, only 12% of C-Suite Executives surveyed cited cost-saving as a motivator for international investment/expansion, hinting that cost-driven offshoring may have largely run its course.

Commenting on the key findings, Raimundo Diaz, Regional Head of the Americas for TMF Group, said: "It's encouraging to note that, while overall outbound FDI may drop slightly, US-businesses are still actively exploring new markets to pursue their corporate growth.

"After all, the world is full of business opportunities; new markets to enter, new demand to satisfy. Companies are only limited by their ambition."

He continued: "Of course, the challenge of getting established in a new market will be more or less complex according to jurisdiction: everything from selecting and incorporating a new entity, establishing banking and accounting processes and records to complying with local data protection laws. Detailed market knowledge is vital."

Reflecting on their experiences respondents were asked if they could give a peer - considering international investment or expansion - one piece of advice, what it would be.

• More than a third (36%) stressed the importance of research and pre-planning: to be clear on your reasons for investment or expansion and to thoroughly investigate and understand the territories political, economic, social and legal landscape.

Diaz concluded: "The importance of local knowledge when entering a new market cannot be underestimated. Whether you are looking to extend or enhance existing operations or looking for new opportunities, it is important to fully understand the local complexities of any given market to make sure your operations are - and remain - fully compliant with what could be a rapidly changing regulatory landscape."

To find out more about TMF Group and to download the full report: tmf-group.com/venturefurther.

TMF Group will also host a webinar on the Venture Further study and the trends shaping the international investment and expansion plans of US companies on May 31, 2017 at 1:00 p.m. EDT. Participants can register by clicking here.

NOTES TO EDITORS

TMF Group helps global companies expand and invest seamlessly across international borders. Its expert accountants, legal, HR and payroll professionals located around the world assist clients with their corporate structures, finance vehicles and investments. With business services offered in more than 80 countries, TMF Group is the global expert that understands local needs. www.tmf-group.com

Forbes Insights is the strategic research and thought leadership practice of Forbes Media. By leveraging proprietary databases of senior-level executives in the Forbes community, Forbes Insights conducts research on a host of topics of interest to C-level executives, senior marketing professionals, small business owners and those who aspire to positions of leadership, as well as providing deep insights into issues and trends surrounding wealth creation and wealth management. www.forbes.com/forbesinsights/

VENTURE FURTHER: What drives international expansion and investment by US businesses?

In March 2017, TMF Group - in association with Forbes Insights - canvassed the views (via an online poll) of 250 C-suite Executives from US-headquartered multinational companies to understand their motivations and challenges in taking their organization into a new international market. The respondents were drawn from a wide selection of industries and from organizations with annual revenues ranging in size from $250 million to over $5 billion.

• 250 US-based C-Suite Executives from multinational companies: CEO, CFO, COO and CLO.
• Nearly three-quarters of respondents (71.6%) worked for organizations with annual revenues of over $1 billion.
• The majority (70.8%) were also responsible for overseeing operations in more than 6 countries, while one in four (24.8%) for operations in over 10 international markets.

View source version on businesswire.com: http://www.businesswire.com/news/home/20170515005187/en/

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