Despite concerns about exchange rates and global economic conditions, a majority of U.S companies expect an increase in non - U.S. revenue over the next 12 months as they continue to pursue business opportunities in international markets, according to the latest Wells Fargo International Business Indicator. Recognizing ongoing value in doing business globally, 47 percent of U.S companies expect profits from international business activity to increase this year, compared to 39 percent in 2015. Additionally, 87 percent of U.S companies agree that international expansion is needed for long-term growth, with emerging markets providing the greatest opportunities (69 percent).
Released today by the International Group of Wells Fargo & Company (NYSE: WFC), the 2016 International Business Indicator registered a positive score of 65, up modestly from 63 in 2015. The Indicator tracks the strength and direction of the international outlook of U.S. companies, surveying more than 260 U.S. companies with annual revenue of $50 million or more that conduct at least some international business.
“We are seeing strong interest and a highly positive outlook from our Rochester customers in doing business internationally, despite global headwinds from currency and other economic issues,” said Rich Ferrari, senior vice president and head of Wells Fargo’s Middle Market Banking office in Rochester. “International business continues to be extremely important to the economy of the Greater Rochester region and the regional activity reflects these national findings.”
Western Europe Moves to No.1
Surpassing China, the 2015 Indicator’s most-mentioned market, Western Europe is now viewed as the most important international market for U.S. companies, according to 33 percent of survey respondents. While the region continues to experience a mild economic recovery, Western Europe moved from No. 4 in 2015 to the top spot in 2016, while Canada and Mexico fell from the top three. China follows Western Europe with 23 percent, as Asia Pacific, excluding China and Japan (20 percent), and Latin America, excluding Mexico (15 percent), round out the top four.
The growing importance of Western Europe is evident with local businesses in Rochester. Mark S. Peterson, president & CEO of Greater Rochester Enterprise said, “The strong U.S. dollar, in comparison to other markets, and the region’s improving economic conditions, has made Western Europe an increasingly important market for local companies doing business internationally. In Rochester, we’re seeing a significant increase in activity with Western Europe and an increase in foreign direct investment from the region as businesses expand in our market.”
The U.S. Factor
Indicating a dampened outlook for the U.S. business market, less than half (47 percent) of survey respondents expect the U.S. market to improve over the next 12 months, down from 64 percent in 2015. Concerned about growth prospects in the U.S., more than a third (36 percent) expects economic conditions in the U.S. to negatively impact their international business plans, up from 24 percent in 2015. At the same time, a majority of companies agree that low interest rates (66 percent) and depressed energy prices (61 percent) have benefited their business.
With the U.S. presidential election taking center stage, a majority of U.S. companies agree the campaigns are not sufficiently addressing issues of importance to international business. According to the Indicator, while U.S. companies are somewhat divided on whether the election outcome will impact their international business (45 percent agree, 53 percent disagree), 59 percent of companies surveyed do agree that many issues of importance to international business, including corporate taxes, are not being adequately addressed by the presidential campaigns.
U.S. companies continue to invest in global marketplace
The survey found that U.S. companies remain confident about the future of the global marketplace. Six in 10 companies expect their international business activity to increase, while 54 percent believe the international component of their business will become more important in the next 12 months. Forty four percent expect to increase the amount of products/resources they source from outside the U.S., up from 31 percent in 2015. Planning for international growth remains a priority for most U.S. companies, as 63 percent say they expect to increase long-term international business development planning in 2016.
For more information on the Wells Fargo Indicator, including a complete report of the findings and a video overview with Richard Yorke, visit https://www.wellsfargo.com/indicator.
To help local companies enter foreign markets, Greater Rochester Enterprise (GRE) invites business leaders to attend its 2016 Upstate N.Y. Trade Conference, presented by Wells Fargo, on Friday, June 10. Attendees will gain access to expert counsel on the local impact of globalization, opportunities in emerging markets, state and federal international business support programs, international marketing, foreign-trade zones, export compliance and trade finance.
About the Wells Fargo International Business Indicator
On behalf of Wells Fargo, global research firm GfK conducted 262 telephone interviews between December 15, 2015 and February 5, 2016 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 +/-7.3 percentage points at the 95% confidence level.
Wells Fargo’s International Group operates from 35 countries outside the U.S., including branches in Beijing, the Cayman Islands, Dubai International Financial Center (DIFC), Hong Kong, London, Seoul, Shanghai, Singapore, Taipei, Tokyo, and Toronto.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a diversified, community-based financial services company with $1.8 trillion in assets. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through 8,700 locations, 13,000 ATMs, the internet (wellsfargo.com) and mobile banking, and has offices in 36 countries to support customers who conduct business in the global economy. With approximately 265,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 30 on Fortune’s 2015 rankings of America’s largest corporations. Wells Fargo’s vision is to satisfy our customers’ financial needs and help them succeed financially. Wells Fargo perspectives are also available at Wells Fargo Blogs and Wells Fargo Stories.
About Greater Rochester Enterprise
Greater Rochester Enterprise (GRE) is an economic development organization committed to attracting new capital investments and creating regional wealth and new jobs throughout the Greater Rochester, NY region. As a no-cost intermediary, GRE delivers a unified response to economic development and connects businesses with the right people and the right resources to spur business expansion in the region. For more information, please visit www.RochesterBiz.com.
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 2014, GfK’s sales amounted to €1.45 billion. To find out more, visit www.gfk.com.
 The Indicator score represents the average of responses for two questions regarding the level of importance and activity that U.S. companies expect from their international business in the next 12 months. The Indicator score ranges from zero to 100, where 100 indicates an absolute positive outlook, 50 indicates a neutral outlook, and zero indicates an absolute negative outlook.