More and more each day, Americans appreciate that 96 percent of the world’s customers live outside our borders. The middle class is growing quickly in regions like Southeast Asia, sub-Saharan Africa and South America, and consumers in those markets want the goods and services that U.S. businesses have to offer. In 2014, Pennsylvania’s merchandise exports totaled $40.2 billion, a 42 percent increase since 2009. The state’s largest market was Canada followed by Mexico, China, the United Kingdom, and the Netherlands. In 2014, Keystone State merchandise exports supported over 190,000 good, high-wage jobs, a growth of 13 percent since 2009.
Exports are an economic engine for the region and reflect the state’s diversity, extensive infrastructure and entrepreneurial prowess. However, many Pennsylvania businesses have yet to export or explore their full export potential. The vast majority of the world’s purchasing power is outside of U.S. borders, so if a business is selling only domestically, it’s like leaving money on the table. Many would-be exporters put off exploring overseas sales because they believe exporting is burdensome, their businesses too small, or are unaware of available export assistance. But the reality is that during the last few years, exporting has become much more viable: The combination of the Internet, improved logistics and transportation options, and more free trade agreements has helped turn even the smallest companies into exporters. Additionally, worldwide consumer affinity for quality “Made in America” brands is a major factor driving demand for U.S. products and services.
Although many companies are initially hesitant about exporting for a myriad of reasons, the good news is that many would-be exporters already have an essential element of export success: A good track record of selling in the United States. So, if a business can sell in the United States, one of the world’s most open and competitive markets, it’s highly likely they are a good candidate for making international sales. In fact, small and mid-size businesses employing fewer than 500 people account for 98 percent of U.S. exporting companies. Yet, these businesses account for only about one-third of the total value of U.S. goods’ exports. Now, that’s export potential. Let’s look at current U.S. exporters for a moment. Surprisingly, 59 percent of all U.S. exporters sell to only one market, so there’s great opportunity for these businesses to expand their sales to new countries. On average, companies that export grow faster, pay higher wages, and hire more employees, thus encouraging many businesses to find new sales opportunities in markets where they haven’t previously pursued.
A company that exports only to Mexico, for instance, should explore additional markets in Latin America, where the United States has many free trade agreements. Altogether, the U.S. now has 14 free trade agreements with 20 countries, and exports to these 20 countries represented nearly half of all U.S. goods exported in 2014, and accounted for $19.8 billion (49 percent) of Pennsylvania’s exports in 2014. In fact, during the past 10 years (2005-2014), exports from Pennsylvania to these FTA markets grew by 73 percent, with NAFTA, Korea, Singapore, Australia, and Colombia showing the largest dollar growth during this period.
Companies are being more strategic in their pursuit of FTA markets because many of these markets share common characteristics such as strong consumer demand, a rising middle class, strong GDP growth rates, and greater growth opportunities for U.S. exports as compared to many other countries.
Exporting is good for the bottom line, builds competitiveness, and helps businesses better weather changes in the global economy. Companies that export continue to tailor market strategies to meet growing international demand for high-value U.S. products and services. Businesses are also encouraged to take advantage of the many export and financing programs and services available through the U.S. Government, including the U.S. Commercial Service, U.S. Export-Import Bank, Small Business Administration, and others. For example, the global network of U.S. Commercial Service offices in 108 U.S. cities and U.S. Embassies and Consulates in 75 countries, provide exporters with direct access to overseas markets. For businesses this means local access to export counseling, business matchmaking, trade shows, market research, advocacy, key referrals, and much more.
Businesses will also find it beneficial to read through the U.S. Commerce Department’s A Basic Guide to Exporting, the newly revised publication for nuts-and-bolts information on maximizing overseas success. Throughout its 19 chapters, the book features numerous case studies of successful U.S. companies that export. The book also provides samples of forms needed to export, and points businesses to government-offered export assistance from the U.S. Commercial Service’s worldwide network of offices. Exporting can be rewarding and challenging, but the key to success is having a long-term commitment, developing an export strategy and seeking assistance. By doing so, companies will greatly enhance the chances of taking their business to the next level—offering them economic stability and growth and the possibility of creating more jobs right here in Pennsylvania.
Article written by Tony Ceballos who is Director of the U.S. Commercial Service in Philadelphia. For more information, visit http://export.gov/pennsylvania/philadelphia/index.asp