Positioning for the U.S. recovery – opportunities in a bounce back

Written by Rab Memari

Many Australian businesses with foreign operations do not currently consider the US market as a safe place to invest or do business in. With the international economic crisis in full swing, businesses are holding back on foreign investments and reducing their exposure to foreign markets. The tendency of businesses to ‘pull back home’ their resources and concentrate on their home markets during times of crises has been a curious subject of research in international business. The reasons for such a strategy are not always justified by a commercial logic. Home markets are typically viewed as a psychological comfort zone and concentrating on them is not always the most effective strategy, even in times of crisis.

Recovery of the US economy

The US government has taken some dramatic steps to prevent the US economy from sliding further and to facilitate an environment for a swift recovery. Interest rates in the US are essentially at zero and the Federal Reserve has injected more than US$2 trillion into the economy, apart from the US$787 federal stimulus programme, three quarters of which has already been allocated. Commodity and equity prices will most likely be the first to bounce back along with consumer demand. It is expected that a recovery will occur by the end of the first quarter of 2010.

Opportunities in the US

Despite the doom and gloom, the US market still offers plenty of business opportunities. In the short to medium term, no other market in the world compares to the US market with regard to demand. Despite the competitive nature of the market, it has one of the friendliest commercial and legal environments, a steady supply of skilled labour and to top it up a free trade agreement with Australia. If you have a product or service that is successful in the Australian market and it has a distinct competitive advantage, it is definitely worthwhile looking into the US market.

I notice that many of my clients are initially overwhelmed by the scope and nature of the US market. A medium sized state within the US is as large a market as all of Australia. With the right products and services coupled with an effective strategy, you can position yourself in the US market relatively easily and cost effectively. The economic crisis has made the costs of labour, land and even capital in the US relatively cheap and hence made it a good time to start the process of entering the market. The US market also provides unrivalled access to the Canadian and Mexican markets, through sophisticated distribution channels and established networks. Furthermore, individual States within the US are currently clamouring for investments and providing excellent incentives.

For more information about this topic or if you are interested in strategies to grow your business in other international markets, please contact Rab Memari, International Market Researcher (Australian Business International Trade Services) on 1800 505 529 or email international.trade@australianbusiness.com.au

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