Are you interested in increasing your company's profit margin by 5 percent? A new study suggests that going international may be the way to do it.
The study, which was commissioned by HSBC Bank USA and carried out by the Economist Intelligence Unit, looked at globally oriented companies in the Southeast over the past six years. It found that these companies enjoyed profit margins of slightly more than 5 percentage points above those of their more domestically oriented peers.
The report also said that the performance of companies with low levels of internationalization fluctuated wildly: They dipped into the red in 2008 and 2009 before profitability returned in 2010-2012. By contrast, the companies that embraced global markets had much more stable profits that rose gradually and then nearly doubled in 2012.
Between 2007 and 2012, the more international companies had a profit margin of 3.5 percent, while their less internationalized peers were unprofitable, showing a -1.5 percent profit margin.
What's more, it didn't matter what sector the Southeast companies were engaged in -- consumer goods, information and communications technologies, healthcare and industrials all showed a relationship between higher profits and greater globalization. The same pattern held true, with few excep
tions, in a national analysis of 259 companies.
"Greater global exposure over the rocky recessional years may have made more international firms more resilient,'' said the study.
Nationwide, the average company studied had 44percent of its sites and 23.9 percent of its employees based outside the United States and earned just over 32 percent of its revenue from international sources.
In the Southeast, which includes Florida, Georgia, North Carolina and South Carolina, the average company analyzed earned just 25percent of its revenue abroad.
Nearly 15 percent of all jobs in Florida were tied to the international sector in 2010, according to the U.S. Trade Representative's Office. In the Southeast, the runner-up was South Carolina with 7.8 percent of its jobs linked to international business.
But when it came to internationally oriented manufacturing jobs, South Carolina led the way, with 28.8 percent of its jobs attributed to this sector. In Florida, just 1.8 percent of manufacturing jobs were tied to exports.