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COUNTRY PROFILE REPORT: USA
COUNTRY PROFILE REPORT: USA
Austrade’s International Business Survey (AIBS) is an important source of insight into the activities and opinions of Australia’s internationally-active businesses (IBs). Supported by Austrade, Efic and the Export Council of Australia and conducted by the University of Sydney, AIBS 2016 is the third survey in the AIBS series and builds upon the work of its two predecessors to help inform our understanding of Australia’s international business engagement at the firm level.
While much analysis of Australia’s international economic performance takes place at the macro level and focuses on aggregates such as total exports and the trade balance, AIBS provides a window onto how individual Australian businesses are adapting to the changing global economy and our place in it.
AIBS 2016 is based on online survey work conducted during late 2015 and early 2016 and captures the responses of 913 Australian companies drawn from 19 industry sectors (and 93 sub-sectors) and operating across more than 100 international markets. Thirty-three per cent of respondents are from the manufacturing sector, which once again is the single largest source of survey participants, while around half of respondents are drawn from a range of services industries.
AIBS 2016 does a particularly good job of capturing the views of internationally-experienced small and medium-sized enterprises (SMEs): about 90 per cent of survey respondents have less than 200 employees while 63 per cent have been earning international revenues for a decade or longer. More comprehensive background on this year’s survey participants is available towards the end of this Highlights Report as well as from the main survey report, which has been compiled by the University of Sydney.
AIBS 2016 Detailed insights into Australia’s international business engagement
UNITED STATES
This report provides the results of Australia’s International Business Survey (AIBS) 2016. This
latest report follows AIBS surveys of internationally-active businesses published in 2015 and
2014.
A total of 167 companies (representing around 18 per cent of survey respondents)
nominated the United States as their first most important overseas market. As reflected in
Figure 1, strong growth/ profit opportunities were cited as the most important reason by 66
per cent for targeting the market, followed by the low barriers to trade and investment in
the country (cited by 40 per cent of companies).
Figure 1 Key reasons for targeting the United States as the first overseas market
Survey question: Why was this market your first target?
Number of respondents = 167
4%
4%
15%
15%
16%
18%
38%
39%
40%
66%
23%
26%
26%
27%
25%
27%
47%
46%
42%
21%
73%
70%
59%
58%
60%
55%
14%
15%
18%
13%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Trade mission or similar
Proximity
Presence of family or personal contacts
Advice from external advisors / other businesses
Presence of FTA or other market access agreement
Followed similar firms / competitors
Familiar culture / language
Easy / safe business environment
Low barriers to trade / investment
Strong growth / profit opportunities
Very important Moderately important Not important
Among the companies that identified the United States as their most important overseas
market, 43 per cent were from the manufacturing sector, and 11 per cent were
professional, scientific and technical services companies (Figure 2). Information, media and
telecommunications, (8 per cent of companies) was another top sector that considered the
United States to be its most important market.
Figure 2 Main businesses – United States
Survey question: What is the main business of your company?
Number of responses = 213
Note: the sample consists of companies that identify U.S. as either top 1 or top 2 country from which they have earned international
revenue in the past year.
1%
1%
1%
2%
3%
4%
5%
6%
7%
7%
8%
11%
43%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
Electricity, gas, water and waste services (n=2)
Transport postal and warehousing (n=2)
Construction (n=3)
Education and training (n=5)
Mining (n=7)
Arts and recreation services (n=9)
Other services (n=10)
Agricultural, forestry and fishing (n=12)
Retail trade (n=14)
Wholesale trade (n=15)
Information media and telecommunications (n=16)
Professional, scientific and technical services (n=24)
Manufacturing (n=92)
Companies are most likely to service the United States market directly from Australia, with
52 per cent of respondents indicating this as their preferred servicing mode (Figure 3). A
smaller percentage of companies (18 per cent) prefer servicing the market through an agent
or distributor based in the United States.
Figure 3 Main mode of servicing exports to the United States
Survey question: What is the main mode of servicing for the top two countries from which
you have earned international revenue in the past year?
Number of responses = 200
Note: the sample consists of companies that identify U.S. as either top 1 or top 2 country from which they have earned international
revenue in the past year.
Directly from Australia , 52%
Through an agent or distributor overseas,
18%
Through an agent or distributor in
Australia, 2%
Licensing and franchising, 4%
Foreign sales branch or subsidiary, 15%
Joint venture, 3%
Online sales from third party website, 2%
Online sales from own website, 6%
Among the companies that identified the United States as their most important overseas
market, around 52 per cent perceive that doing business in the country is the same as doing
business in Australia (Figure 4).
Figure 4 Ease of doing business in the United States
Survey question: What is the ease of doing business for the top two countries from which
you have earned international revenue in the past year?
Number of responses = 200
Note: the sample consists of companies that identify U.S. as either top 1 or top 2 country from which they have earned international
revenue in the past year.
Much more difficult, 4%
More difficult , 27%
Same, 52%
Easier, 9%
Much easier, 9%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Ease of doing business (%)
A reputation for dependability and reliability was cited by 85 per cent of respondents as the
most important factor for ensuring market success in United States (Figure 5). Other
important key market success factors identified were a reputation for honesty and
trustworthiness (cited by 84 per cent of companies) and a reputation for innovation and
adaptability (cited by 76 per cent of companies).
Figure 5 Key factors in ensuring success in your top two international markets –
United States
Survey question: How important are the following to ensuring success in your top two
international markets?
Number of responses = 213
Note: the sample consists of companies that identify U.S. as either top 1 or top 2 country from which they have earned international
revenue in the past year.
25%
30%
43%
44%
44%
45%
48%
53%
65%
69%
70%
76%
84%
85%
38%
31%
32%
38%
42%
36%
37%
35%
28%
24%
25%
18%
15%
14%
28%
25%
21%
12%
10%
11%
12%
9%
5%
4%
3%
5%
9%
14%
4%
6%
4%
8%
3%
2%
2%
3%
1%
1%
1%
1%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Enhanced access to key markets via FTAs or similar
Access to competitive finance
A strong national (Australian) brand
Access to highly-skilled labour
Access to high-quality market information
Access to low-cost production
Access to best-practice management skills
Access to best-practice technology
A competitive exchange rate
A reputation for value for money
A strong company or product brand
A reputation for innovation and adaptability
A reputation for honesty and trustworthiness
A reputation for dependability and reliability
Very important Moderately important Not important Not applicable
Access to EMDG or similar grants was cited by 41 per cent of respondents as the most
important factor they considered when they targeted the United States as their top
overseas market (Figure 6). Other important factors for consideration were understanding
market compliance and risk (cited by 36 per cent of companies) and education around
intellectual property and trademark protection (cited by 32 per cent of companies).
Figure 6 Key factors in targeting your most important current market – United
States Survey question: When you targeted your most important current market, how important were the following:
Number of responses = 146
Note: the sample consists of companies that identify U.S. as top 1 country from which they have earned international
revenue in the past year.
9%
9%
10%
13%
14%
17%
18%
23%
24%
25%
27%
32%
36%
41%
20%
38%
28%
36%
28%
36%
36%
38%
42%
24%
38%
38%
39%
17%
54%
34%
41%
36%
42%
36%
36%
28%
24%
35%
25%
22%
16%
27%
17%
18%
21%
15%
15%
12%
9%
12%
10%
16%
10%
8%
9%
15%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Participation in trade missions
Help and advice with local language and business culture
Purchase of specific, tailored advice on market conditions…
Education around Non-Tariff Barriers
Access to official Australian support in-market
Information on local agents and other relevant contacts
General information on local economic and political…
General information on local customs and border procedures
Education around international pricing for the market
Access to finance
General information on local business taxes and regulations
Education around IP and trade mark protection
Understanding market compliance and risk
Access to EMDG or similar grants
Very important Moderately important Not important Not applicable
Around 40 per cent of respondents identified networking and gaining access to foreign
business/industry networks as the most important way to effectively understand and
operate successfully within the business culture of the United States (Figure 7). Other
important approaches identified were digital skills – including social media and e-commerce
skills -- identified by 39 per cent of companies, and a local business partner (identified by 29
per cent of companies).
Figure 7 Key factors in understanding and operating in the business culture –
United States Survey question: How important are the following for understanding and operating in the business culture of your
most important market (on a scale of 1-5, multiple choice):
Number of responses = 146
Note: the sample consists of companies that identify U.S. as top 1 country from which they have earned international
revenue in the past year.
10%
14%
18%
21%
27%
29%
39%
40%
15%
11%
13%
16%
12%
16%
18%
20%
22%
21%
18%
16%
14%
19%
14%
17%
18%
18%
15%
16%
8%
12%
12%
11%
24%
27%
24%
21%
21%
13%
11%
8%
10%
8%
12%
11%
18%
10%
5%
4%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Use of professional service firms
Networking with Australian companies in the samemarkets
Networking or access - foreign government networks
Australian employees with cross cultural or languageskills
Overseas employees with cross cultural or languageskills
A local business partner
Digital skills – social media in market, and e-commerce skills
Networking or access – foreign business/industry networks
Very important 5 4 3 2 Not important 1 Not applicable
The survey found that more than 70 per cent of respondents have opted to make a direct
investment overseas. Among those who have made an investment in the United States, 56
per cent indicate that their main motivation for doing so was to better access the target
market (Figure 8). Other reasons were to better access the global market (15 per cent of
companies) and to build their brand (13 per cent of companies).
Figure 8 Key motives in making direct investment in the United States
Survey question: Most important motives of the investment
Number of responses =52
Note: the sample consists of companies that identify United States as either top 1 or top 2 or top 3 market in which they have made direct
investment over the last 3 years.
2%
2%
4%
8%
13%
15%
56%
0% 10% 20% 30% 40% 50% 60%
To lower production cost (n=1)
Other (n=1)
To increase efficiency (n=2)
To access service customers (n=4)
To build brand (n=7)
To better access the global market (n=8)
To better access the target market (n=29)
The survey also found that close to 30 per cent of respondents have received capital from
overseas investors. Among those who have received an investment from investors from the
United States, 34 per cent indicate that the main motivation for the overseas investor was
to achieve financial returns (Figure 9). Other reasons were to access particular skills/
technology (28 per cent of companies) and to better access the Australian brand (17 per
cent of companies).
Figure 9 Key reasons for receiving investment from the United States
Survey question: Most important motives of the investors
Number of responses =29
Note: the sample consists of companies that identify United States as either top 1 or top 2 or top 3 market in which they have received
investment over the last 3 years.
3%
3%
7%
7%
17%
28%
34%
0% 5% 10% 15% 20% 25% 30% 35% 40%
To access Australia’s natural resources (n=1)
Other (n=1)
To better service the domestic Australian markets (n=2)
To better access Pacific or Asian markets (n=2)
To access the Australian brand (n=5)
To access particular skills/technology (n=8)
Financial return (n=10)
As shown in Figure 10, respondents have a positive outlook on their business operations in
the United States, with 48 per cent indicating that they expect their business to do better
and 26 per cent expecting their business to do much better than last year.
Figure 10 Overall outlook – United States
Survey question: What is the overall outlook for your company’s international operations in
2016 compared to 2015?
Number of responses = 213
Note: the sample consists of companies that identify United States as either top 1 or top 2 country from which they have earned
international revenue in the past year.
Much better (n=56), 26%
Better (n=103), 48%
Same (n=46), 22%
Worse (n=5), 2% Much worse (n=3), 1%
Australia’s International Business Survey 2016 is the follow-up to the inaugural survey of Australia’s international businesses published in 2014, and AIBS 2015. The findings of this report are distinctive and significant because they provide key insights into the nature, needs, concerns and future plans of the overall Australian international business community from the company perspective. AIBS is one of Australia’s largest and most in-depth surveys of internationally-active businesses (IBs). AIBS 2016 is the latest survey in the series and introduces several new questions. AIBS 2016 reports on the views of 913 Australian IBs drawn from 19 industry sectors (and 93 sub-sectors) and operating across more than 100 international markets. AIBS 2016 was commissioned by the Export Council of Australia (ECA), with the support of Austrade and Efic (Export Finance and Insurance Corporation), and was conducted by the University of Sydney (USYD).
ACKNOWLEDGEMENTS
AIBS partners would like to thank all of the state and federal government agencies that supported the AIBS initiative in 2014-2016, as well as our industry and bilateral chamber partners.
AIBS 2016 CONTRIBUTORS
Austrade ■ Mark Thirlwell, Chief Economist ■ Divya Skene, Economist
Export Council of Australia (ECA) ■ Lisa McAuley, CEO ■ Stacey Mills-Smith, Trade Policy & Research Manager
Efic ■ Cassandra Winzenried, Senior Economist ■ Geir Kristiansen, Senior Manager, Insights, & Analytics
The University of Sydney ■ Sid Gray, Professor of International Business, University of Sydney Business School ■ Wei Li, Lecturer in International Business, University of Sydney Business School ■ Sandra Seno-Alday, Lecturer in International Business, University of Sydney Business School ■ Catherine Welch, Associate Professor of International Business, University of Sydney Business
School
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