According to new research from TMF Group, in association with Forbes Insights, over a third (36.4%) of US-based multinationals still see the developing markets of South America 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, over a third (36.4%) of US-based multinationals plan to invest in the emerging markets of South America over the next two years
  • 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 Raimundo Diaz, Regional Head of the Americas for TMF Group said: "It's pleasing to see that, despite global downturns in investment, US businesses still recognize the potential and opportunity offered by South America's key markets."

He continued: "Revived interest in base metals and other commodities have acted as a catalyst for growth in countries such as Peru, Brazil and Chile but strong manufacturing and technological advancements across the region have also helped to maintain levels of investment.

"Chile, for example, is the world's largest producer of copper and given the talks of increased infrastructure spending in the US, copper-related assets are on the rise. Peru has extensive copper and gold reserves too."

He went on: "Brazil has also consolidated it position in recent years. It's currently the ninth largest economy in the world and offers investment opportunities across a range of sectors including: mining, power, real estate and agribusiness.

"Colombia too has ambitious plans. It's large scale infrastructure investment program 'Post-4G', offers investors the chance to get involved in significant projects like airports and roadways over the next 10 years."

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.

Diaz concluded: "The importance of local knowledge when entering a new market 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."

Find out more about TMF Group and download the full report.

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