Asia Pacific ranked top area for expansion by European, American companies
Research published today by Standard Chartered Bank reveals that while corporations in the West are prioritising their home regions of Europe (84 per cent) and North America (74 per cent) as a source of growth, Asia Pacific (55 per cent) remains a target for their international expansion strategies.
The survey of CFOs’ and treasurers’ ambitions, concerns and goals shows how the Covid-19 pandemic has reshaped many Western organisations’ focus. Over half (51 per cent) were worried about its impact on growth outside the home region, with supply chain failure identified as the top challenge to liquidity.
The most significant perceived challenge to expansion is the ability to understand and comply with local regulations (32 per cent), which was cited especially by technology companies (52 per cent).
When it came to financing international growth, equity capital markets (76 per cent) were the preferred choice of funding. Alternatively, 44 per cent of American respondents were inclined to use cash from across the business for funding, compared with 39 per cent among Europeans. Likewise, use of venture capital, such as private placements, was more common, with a more established private placement market in the United States than Europe.
Almost one-third (32 per cent) of respondents said their top supply chain priority was to diversify their supplier base beyond their home market. This was followed closely with the need to digitise trade (28 per cent). The lowest priority cited for trade and supply chains outside the home market was environmental, social and governance (ESG) criteria and sustainability issues. Only 2 per cent nominated it as their top supply chain priority.
“During what is a challenging time for corporations all over the world, expansion into new markets remains a key way for corporations of all sizes and industries to diversify and grow their business, both through new customer and supplier relationships,” said Tracy Clarke, Standard Chartered’s regional CEO for Europe and Americas.
“This research has shown, by exploring ambitions, concerns and priorities, how the Covid-19 pandemic has reshaped plans for today and the future, and with it, the knock-on impacts for liquidity, trade and even digitisation. What is clear though is that significant opportunities remain.”
Said Mike Vrontamitis, head of Trade for Europe and Americas: “International trade is a cornerstone of companies expanding their client base and increasing the resilience of their supply chains by diversifying outside of their home market creating prosperity and jobs.
“In a world where resilience is more important than ever companies are focusing on managing foreign exchange volatility as well as digitisation and vertical integration of their supply chains. It is no surprise given the increased geopolitical tensions that companies are also highlighting the need for local advice from experts. It is disappointing to see how few companies have ESG issues as a top priority given the opportunity of a ‘green’ recovery.”
The survey was conducted from May 25 to June 5 on 300 respondents equally split between Europe (UK, Ireland, France, Germany, Turkey, Sweden, Denmark, Finland, Norway) and the Americas (US, Canada, Brazil).
