Asia, South America, Middle East most appealing
Despite ongoing uncertainty in global markets, mid-sized companies in the Americas are determined to grow their overseas presence over the next five years, according to a survey of by KPMG.
Among mid-sized companies that are active abroad, 58 per cent plan to expand their global presence; while more than two-thirds (68 per cent) expect to see increased revenues from foreign operations over the next five years.
"With the value of exports to the United States softening and the wavering U.S. market, mid-sized Canadian companies are looking elsewhere for potential growth opportunities," said Dennis Fortnum, Canadian managing partner at KPMG Enterprise. "Emerging markets in Asia, South America and the Middle East are appealing because of their low-cost sourcing, high-growth sales and expansion opportunities."
The report, Global Rewards Within Reach, found:
•Six out of 10 companies surveyed said that their revenues from foreign sources had increased between 2009 and 2011.
•On average, respondents expect that foreign revenue will grow 34 per cent over the next five years.
•Foreign partnerships are the preferred route of expansion, with 84 per cent of respondents saying that would be their preferred method of expansion.
Although the U.S. remains a key avenue for growth, more private Canadian companies are choosing to diversify internationally to fuel growth now and not wait for the U.S. economy to rebound.
While Canadian private companies understand the benefits that come with trading close to home, an emerging-market strategy is essential for growth in a global economy. KPMG identifies key success factors for Canadian private companies as they establish and expand their global presence:
•Employ multiple strategies: Activities should be increased across a number of areas to build global presence, including strategic acquisitions, partnerships or joint ventures, and the use of foreign vendors or distributors.
•Engage business leadership: A clear, strategic focus at the leadership level is a vital component and strongly correlated to achieving success in global expansion objectives.
•Plan ahead to mitigate risks: For many companies, it may be their first time doing business in these countries; understanding the local economy and assessing availability of capital take more planning and greater due diligence.
