According to new research from TMF Group, in association with Forbes Insights, 4 in 10 US-based multinationals now see Australia and New Zealand as central to their corporate investment and growth plans.
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.
Key findings included:
Despite global FDI downturn, US-based multinationals
predict 9.2% uplift in Australasian investments in 2017/18
1 in 4 investors are looking for new talent or sources of
capital
1 in 3 stress the importance of thorough research and local market
knowledge
Commenting on the findings Tracii Soh Chin Nan, Managing Director
of TMF Australia, said: "It's gratifying to see that,
despite downturns in investment in other global regions, more US
businesses are looking to Australia and its neighbors as an
investment market over the next two years."
Australia's demonstrated economic resilience, adaptability and
record of steady growth make it an attractive environment in which
to do business. The economy has grown every consecutive year since
1999 and is rated AAA by all three global rating agencies.
He continued: "In terms of investment management, Australia
also has the largest pool of funds under management in Asia. In
particular, in recent years, many multinational companies have
sought investments in the perceived safety of the Australian
property market.
"It's also not just commercial and residential property
that offers investment opportunities. In 2016, 7.7 million hectares
of Australia's 325 million hectares of agricultural land was
owned by US investors. Indeed, major agricultural commodities
comprise a significant part of Australia's export market
alongside mining output (gold, iron ore and uranium) and fuel
extraction (liquefied natural gas)."
In addition, the survey investigated what motivated US-businesses
to explore new foreign markets and what challenges they had faced.
It also asked respondents what one piece of advice they would give
to a peer considering international expansion.
Alongside expanding operations and increasing market share,
findings showed that respondents were looking also to find new
talent and skills and new sources of capital. They also faced
similar challenges in selecting and establishing a new entity,
including the establishment of financial processes and compliance
with local regulation.
Tracii Soh Chin Nan concluded: "The importance of local
knowledge when entering a new market – even one as developed
as Australia - 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
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