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.’’
Raúl Castro has steered Cuba on a course toward more private enterprise. Other reforms include legalization of the buying and selling of real estate and cars, and new travel rules that allow Cubans to travel abroad more freely. But there have been criticisms that some of Raúl Castro’s more market-oriented reforms have been half-hearted.
Castañeda also noted that during Raúl’s tenure the Cuban economy has been heavily subsidized by Venezuela. “Cuba has advanced in recent years thanks to Venezuela and remittances,’’ he said.
The role of Cuban exiles in sustaining the Cuban economy through remittances, gifts and visits to the island can’t be overlooked, he said.
The Miami-based Havana Consulting Group estimates that $2.6 billion in cash remittances were sent to Cuba in 2012 and $2.5 million in products, or in-kind remittances, were transferred. Together, they exceeded the combined revenue from Cuba’s tourism industry ($2.61 billion), nickel exports ($1.4 billion), pharmaceutical exports ($500,000), and sugar exports ($391,000).
HAVE A GREAT IDEA?
The deadline is approaching for the business competition called “La Idea,” which is scouring the Americas for innovative partnerships between U.S. and Latin American entrepreneurs that promote small businesses and create jobs.
Entrepreneurs can get applications and more information at www.laidea.co. Applications must be submitted by 5 p.m. Eastern Time on Sept. 20.
The 10 top ideas will win a spot in a Finalist Showcase where entrepreneurs will pitch their ideas before a panel of celebrity judges. The program will be covered by Univisión. Winners receive a $50,000 prize as well as business-support services.
“La Idea” is a partnership between the U.S. Department of State, the U.S. Agency for International Development, Boom Financial, the Inter-American Development Bank, the Overseas Private Investment Corporation, the Small Business Administration, Univisión Media, WellSpace, Acción and FHI 360.
• The Latin Chamber of Commerce USA — CAMACOL is organizing a business development trade mission to Asunción, Paraguay, on Oct. 27-31. The trip will include seminars on how to do business in Paraguay, a briefing from the U.S. embassy, networking luncheons and dinner, and one-on-one matchmaking sessions.
Miami’s top imports from Paraguay in 2012 included gold, door and window frames, handbags, wallets, jewelry cases, saddles and harnesses, and cigars and cigarettes. Top exports from the Miami Customs District to Paraguay were computers, landline and cellular phones, video and other games, TVs, television equipment, camcorders, digital cameras, computer parts, perfumes and electronic integrated circuits.
The registration deadline is Oct. 10.
For more information: Betty Gradera, 305-642-3870, firstname.lastname@example.org
• The 17th Annual Americas Food and Beverage Show will be held Oct. 28-29 at the Miami Beach Convention Center. The show, which is organized by the World Trade Center Miami, will feature more than 400 food and beverage companies from 23 countries and two days of seminars. Last year, the show, which is the largest of its kind in the Western Hemisphere, generated $190 million in sales and attracted 9,500 buyers. This year, sales are expected to top $200 million.
“We expect more than 10,000 people to visit the show and pursue trade opportunities with companies and businesses throughout the Americas,’’ said Charlotte Gallogly, president of World Trade Center Miami.
For more information: www.americasfood andbeverage.com