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Half of US pvt firms eye entry into Bric nations

Press Trust of India  |  New Delhi 

Private firms in the US plan to target countries and other such as Indonesia and South Africa to expand their business over the next one to two years, says a survey.

According to a survey by PwC, titled, 'US Private Company Trendsetter Barometer', 51% of US private companies with an international presence plan to do business in countries (Brazil, Russia, India, and China) in the next one to two years.

In addition, 66% of the respondents are targeting other such as Indonesia, South Korea, South Africa, Poland, Turkey and Mexico.

Overall, 74% of the respondents with a global presence have set their sights on emerging and

The PwC survey captures the views of 236 CEO/CFOs with private companies (128 in the product sector, 108 in the service sector) that report an average enterprise revenue of $278 million annually.

The overwhelming reason for foreign expansion was to broaden their customer base, as cited by 80% of the respondents, whereas just roughly one-quarter of the respondents (24%) are eyeing international markets to lower their cost base.

Other reasons cited for going abroad include facilitating better servicing of global clients (43%), compensating for slow growth at home (33%) and being where competitors are (26%).

Interestingly, 51% of all the US private companies surveyed plan to do business abroad in the next one to two years and 48% already have an international presence.

"Historically, companies expanded into international markets to lower their manufacturing and sourcing costs," PwC Private Company Services practice Partner Ken Esch said.

"The international expansion we're seeing now is well beyond cost arbitrage. It's about increasing sales and accessing new markets to grow the top-line. To achieve those goals, many of our clients are looking abroad, compensating for weakened demand at home," Esch added.

The surveyed executives also estimate that during this one to two-year time frame, growth (14.8%) will outpace domestic sales growth (11.6%).

The top challenges to operating abroad are finding the right business partners (68%), establishing adequate cross-cultural management (64%) and finding sufficient local talent (56%).

Other challenges that were cited by the respondents include security risks (49%), local regulatory requirements (48%) and corruption (46%). These challenges were particularly endemic to doing business in countries, according to the survey respondents.

First Published: Tue, September 20 2011. 14:16 IST