According to new research from TMF Group, in association with Forbes Insights, 4 in 10 US-based multinationals now see Australia and New Zealand as central to their corporate investment and growth plans.

The study, 'Venture Further: what drives international expansion and investment by US businesses?', canvassed the views of 250 US-based C-Suite Executives to explore the motivations and challenges of US-headquartered multinationals in taking their organization into a new international market. Respondents were drawn from a wide selection of industries and from organizations with annual revenues ranging in size from $250 million to over $5 billion. Respondents were asked into what regions their organizations had invested in the last two years, as well as where they planned to invest in 2017/18.

Key findings included:

  • Despite global FDI downturn, US-based multinationals predict 9.2% uplift in Australasian investments in 2017/18
  • 1 in 4 investors are looking for new talent or sources of capital
  • 1 in 3 stress the importance of thorough research and local market knowledge

Commenting on the findings Tracii Soh Chin Nan, Managing Director of TMF Australia, said: "It's gratifying to see that, despite downturns in investment in other global regions, more US businesses are looking to Australia and its neighbors as an investment market over the next two years."

Australia's demonstrated economic resilience, adaptability and record of steady growth make it an attractive environment in which to do business. The economy has grown every consecutive year since 1999 and is rated AAA by all three global rating agencies.

He continued: "In terms of investment management, Australia also has the largest pool of funds under management in Asia. In particular, in recent years, many multinational companies have sought investments in the perceived safety of the Australian property market. 

"It's also not just commercial and residential property that offers investment opportunities. In 2016, 7.7 million hectares of Australia's 325 million hectares of agricultural land was owned by US investors. Indeed, major agricultural commodities comprise a significant part of Australia's export market alongside mining output (gold, iron ore and uranium) and fuel extraction (liquefied natural gas)."

In addition, the survey investigated what motivated US-businesses to explore new foreign markets and what challenges they had faced. It also asked respondents what one piece of advice they would give to a peer considering international expansion.

Alongside expanding operations and increasing market share, findings showed that respondents were looking also to find new talent and skills and new sources of capital. They also faced similar challenges in selecting and establishing a new entity, including the establishment of financial processes and compliance with local regulation.

Tracii Soh Chin Nan concluded: "The importance of local knowledge when entering a new market – even one as developed as Australia - cannot be underestimated.  Whether you are looking to extend or enhance existing operations or looking for new opportunities, it is important to fully understand the local complexities of any given market to make sure your operations are – and remain – fully compliant with what could be a rapidly changing regulatory landscape."

To find out more about TMF Group and to download the full report: tmf-group.com/venturefurther

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