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 five 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 exceptions, 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, which analyzed the level of sales and foreign operations among public companies.
Nationwide, the average company studied had 44 percent 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 included Florida, Georgia, North Carolina and South Carolina, the average company analyzed earned just 25 percent 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.
REFORMS AND FIDEL
Fidel Castro celebrated his 87th birthday Tuesday — quietly. Although ill health forced the Cuban leader to cede power to his younger brother Raúl in 2006 and he is rarely seen in public, his influence continues to mark Cuba.
At the recent annual meeting of the Association for the Study of the Cuban economy in Miami, Rolando H. Castañeda, an international economic consultant, made the argument that economic reforms made by Fidel Castro continue to have more impact than the more recent economic reforms of his brother.
Castañeda pointed out that it was on Fidel Castro’s watch that remittances were legalized, tourism was promoted in earnest, and Cuba’s dual currency system, which uses the Cuban convertible peso and the Cuban peso — the currency Cubans use for their everyday purchases — was instituted.
“This transformed Cuba’s economy in the 1990s,’’ he said. “The successes of Raúl Castro aren’t nearly as clear.’’