Indicator score down to 63; international
business still important long-term
Amid concerns of weak global economic conditions, U.S. companies
anticipate a decrease in the volume of exports and profits stemming
from international business this year, according to the latest
Wells Fargo International Business Indicator. Thirty-nine percent
of the U.S. companies surveyed expect to see an increase in profits
from their international business in 2015, down from 51 percent in
2014. Similarly, only 30 percent expect to see exports increase in
2015, compared to 50 percent in 2014. However, despite dampened
short-term expectations, a majority of companies remain bullish on
future international business, with 80 percent agreeing that U.S.
companies should consider expanding internationally for long-term
growth.
Released today by the International Group of Wells Fargo &
Company (NYSE:WFC), the Wells Fargo International Business
Indicator tracks the strength and direction of the international
outlook of U.S. companies, surveying more than 250 U.S. companies
with annual revenue of $50 million or more that conduct at least
some international business.
“The latest Indicator results reflect what we’re seeing in the
marketplace and hearing from our customers,” said Sanjiv Sanghvi,
head of Wells Fargo Global Banking. “Continued concern about global
economic conditions, slowing growth in China, the value of the U.S.
dollar and its effect on exports, are impacting short-term
international business activity. However, while the near-term
outlook has softened, U.S. companies value international markets
for business development and we expect to continue to see them
investing in the global marketplace as they plan for long-term
growth.”
Expectations cool for short-term international
activity
Continuing in positive territory for the second consecutive
year, the overall 2015 Wells Fargo Business Indictor score fell
five points from 68 in 2014 to 63 in 2015, reflecting the dampened
short-term outlook. Only 37 percent of U.S. companies surveyed said
they see the global business climate improving this year. As a
result, only 54 percent of companies surveyed said they plan to
increase activity in 2015, a decline from 69 percent in 2014.
U.S. companies see long-term value in international
expansion
U.S. companies remain confident about the future of the global
marketplace. A majority of the U.S. companies surveyed (60 percent)
expect to increase international business development planning in
2015. Additionally, nearly half (49 percent) believe business
outside the U.S. will be increasingly important to their overall
financial success in the coming year.
Factors impacting international decisions
According to the Indicator, U.S. businesses expect international
business factors, including regulations at home (57 percent) and
abroad (56 percent); political stability abroad (51 percent); and
currency and exchange rates (39 percent) to have a negative impact
on their businesses in 2015.
When assessing new international markets to enter, U.S.
companies are most concerned with the following factors: political
stability (89 percent), infrastructure (82 percent), trade
regulations (82 percent), ability to enforce contracts (80
percent), ease of trading (80 percent) and availability of skilled
labor (79 percent).
U.S. neighbors, China remain key markets; Brazil, India also
eyed for future growth
According to the Indicator, U.S. companies consider Canada and
China as the most important countries today for international
business, followed closely by Mexico and Western Europe:
- China 23 percent
- Canada 23 percent
- Mexico 20 percent
- Western Europe 19 percent
Looking out two to three years, U.S. companies also believe
China (25 percent) and Mexico (22 percent ) are the top two
“hot-spots” for their future growth, with Brazil and India (each 13
percent) also showing promise.
The International Business Indicator score represents the
average of responses for two questions regarding the level of
importance and activity that U.S. companies expect from their
international business in the next 12 months. The Indicator score
ranges from zero to 100, where 100 indicates an absolute positive
outlook, 50 indicates a neutral outlook, and zero indicates an
absolute negative outlook.
For more information on the Wells Fargo Indicator, including a
complete report of the findings and a video overview with Sanjiv
Sanghvi, visit https://www.wellsfargo.com/indicator.
About the Wells Fargo International Business
Indicator
On behalf of Wells Fargo, global research firm GfK conducted 253
telephone interviews between December 12, 2014 and February 6, 2015
with executives at U.S. companies with $50 million or more in
annual revenue that conduct business internationally. Additionally,
participants had to be associate vice president/director level or
above, with either direct decision-making or some influence over
the company’s international business plans and/or strategies. The
margin of error on the total is +/-7.9 percentage points at the 95%
confidence level.
About Wells Fargo & Company
Wells Fargo operates from 36 countries, including branches in
the Cayman Islands, Dubai International Financial Center (DIFC),
Hong Kong, London, Seoul, Shanghai, Singapore, Taipei, Tokyo and
Toronto. The company provides middle market businesses,
corporations, financial institutions, and multilateral
organizations with a wide range of international solutions.
Wells Fargo & Company (NYSE: WFC) is a nationwide,
diversified, community-based financial services company with $1.7
trillion in assets. Founded in 1852 and headquartered in San
Francisco, Wells Fargo provides banking, insurance, investments,
mortgage, and consumer and commercial finance through more than
8,700 locations, 12,500 ATMs, and the internet (wellsfargo.com) and
mobile banking, and has offices in 36 countries to support
customers who conduct business in the global economy. With
approximately 265,000 team members, Wells Fargo serves one in three
households in the United States. Wells Fargo & Company was
ranked No. 29 on Fortune’s 2014 rankings of America’s largest
corporations.
About GfK
GfK is one of the world’s largest research companies, with more
than 13,000 experts working to discover new insights into the way
people live, think and shop, in over 100 markets, every day. GfK is
constantly innovating and using the latest technologies and the
smartest methodologies to give its clients the clearest
understanding of the most important people in the world: their
customers. In 2014, GfK’s sales amounted to €1.45 billion. To find
out more, visit www.gfk.com.
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Wells Fargo & CompanyMediaKathryn Ellis,
1-415-222-3767kathryn.d.ellis@wellsfargo.com@KatieEllisWF
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