U.S. Mid-Sized Companies More Focused On Global Expansion, Despite Economy, To Propel Growth, Profits, KPMG Survey Finds

NEW YORK, Aug. 9, 2012 /PRNewswire/ -- Overseas markets are proving fruitful for mid market companies and, despite the state of the global economy, international expansion has become an increasing priority for executives and an integral part of their growth strategy and revenue stream, according to the KPMG Mid Market Global Expansion Survey – Global Rewards Within Reach.

The KPMG Global Enterprise Institute, focused on global mid market companies, surveyed 1,150 executives from mid market companies in the U.S., Canada, Brazil and Mexico – nearly 500 respondents from the U.S. – to gauge success overseas, to assess plans for future expansion and to better understand key challenges and risks.

In doing so, KPMG found that while the majority of executives surveyed say the global credit crisis has impacted their ability to implement plans for expansion into international markets, 80 percent of U.S. mid market executives think their global expansion plans have been successful in the last two years.  This sentiment represents a significant improvement from KPMG's previous Mid Market Global Expansion Surveys in 2009 (50 percent) and 2007 (43 percent).

Furthermore, 74 percent of U.S. respondents say company leadership is very focused on overseas expansion (up from 52 percent in 2009 and 39 percent in 2007). Similarly, 75 percent say that global expansion is integral to their company's growth strategy (up from 53 percent in 2009 and 37 percent in 2007. 

"Our earlier surveys found that international expansion was a piece of the growth puzzle for middle market companies," said Jerry Jolly, KPMG partner and leader of the Mid-Market practice.  "And today, despite the state of the global economy, our survey cements the fact that mid market companies are turning to different geographic markets to foster the growth they are looking for.  Those mid market companies conducting business overseas are seeking to build on the momentum they've generated."

And, KPMG found U.S. execs to be very bullish on the impact these new international markets have had on their revenue streams.  In fact, 78 percent say they plan to increase non-domestic revenues from foreign operations and customers – up significantly from 66 percent in 2009.

When asked how they intend to expand overseas over the next five years, 73 percent of U.S. execs say they plan to increase facilities, offices and plants in the next five years – up from 41 percent in 2009.  Additionally, 72 percent of U.S. respondents say they'll increase the number of employees overseas - up from 50 percent in 2009. 

The KPMG survey also found that execs say economic factors in the U.S. and abroad have the most influence on global expansion decisions.  In fact, with 58 percent saying the U.S. economy is worse than last year, expansion overseas is being increasingly seen as a way to generate revenue growth.  

"What middle market company leaders have conveyed to us, to an even greater extent in this year's survey, is that there is plenty of market potential in new countries and in extending services to new markets," said KPMG's Jolly.  "Our survey results show that many more companies recognize opportunity and see the allure of new markets for generating new profitability and revenue.  It is no longer a question of testing the waters. These companies are going global."

In reviewing the challenges to growing their global operations, the economies of the prospective foreign countries, the economic conditions – both domestically and in target foreign countries – was the most significant factor.  Other challenges cited by executives as significant concerns include government regulations and compliance; managing financial risks; tax issues and compliance; and currency risks. 

About the KPMG Mid Market Global Expansion survey
Based on responses from 1,150 senior leaders of mid-sized companies based in the U.S., Canada, Mexico and Brazil, the survey was conducted between October and December 2011. U.S.-based respondents made up 44 percent of the total, 22 percent were based in Canada and 17 percent were based in both Brazil and Mexico.

KPMG's Global Enterprise Institute, focused on global mid market companies, was established to enable business leaders to share knowledge, gain insights, and access thought leadership about key mid market issues and emerging trends. Complete survey results and report are available HERE.

About KPMG LLP
KPMG LLP, the audit, tax and advisory firm (www.kpmg.com/us), is the U.S. member firm of KPMG International Cooperative ("KPMG International.") KPMG International's member firms have 145,000 people, including more than 8,000 partners, in 152 countries.

SOURCE KPMG LLP