Most Respondents Recognize the Importance of International Expansion to their Long-Term Success ...

Respondents strongly acknowledge need for international expansion but there is wide deviation and their motivation is based both on the inevitability of this trend as well as attractions that international expansion offers.

The response to this first question was strongly positive with a mean ranking of 6.93 and median of 8. At the same time the deviation of 3.18 was extremely high. 42% of respondents indicated the strongest 9-10 ranking noting the extremely high value they place on international expansion, while 22% of respondents indicated a response of 1-3. This implies they do not view it as an important concern.

The key point is most respondents understand that international expansion is in their interest. As a President of a Semiconductor Design Firm commented, "Manufacturing is moving overseas, mostly to Asia, and engineering services must follow the market. I would prefer to work domestically, but as Bob Dylan said..."the times they are-a-changing". There just isn't enough available work in the US."

Some respondents, such as the President of a $1-10M Tool Making Company sought to fight the trend noting, "I believe we should try and keep the work in the USA and STOP IMPORTS WITH HIGHER TARRIFF'S". Others, however, proclaimed the inevitability of this movement. This could be seen in the words of a President of a Metal Forming Company who noted "I am forced to expand into China by my customers, not that my product will be less expensive to manufacture there, due to the fact we are not labor intensive. The real China issues are taxes and tariffs, high tax in the US and tariffs shipping products from the US in to China. We now produce product less expensively in the US ... but must produce them in China for customers who assemble over there."

An International Sales Manager expanded further on this theme, emphasizing, "If you deal with a factory in Malaysia it is one thing to bring something from the US, but one can achieve more by developing it there. That saves time and a lot of money and many world-class companies are also setting up R&D there at the same time. That is both interesting and disturbing. China is graduating thousands of engineers a year and they are making dirt. Maybe not a 100% equal in capabilities but you have to take the whole process into question. If the customer is there, then the local engineer will be able to respond more effectively. If you do it from here, and then find out it is not right -- what do you do? Otherwise you go to the beta site they say it is pretty good but we need some adjustments. For a component it is not as essential we do it all over there. It is very expensive and we would need more talent and investment. For a system or end product, however, it makes a lot of sense."

While many decried the difficulties of competing with low cost foreign labor, others highlighted the ability of international markets to provide new revenue sources. This can be seen in the contrast between a Midwest-based VP Sales who noted "I think the US economy is going to have a problem due to China's business expansion", a Manager of a Southeast-based Consumer Manufacturer who stated "Not sure without help from the US government, if we will be able to compete over the next 10 years" and a Silicon Valley-based VP of Software Development who commented "Historically high-tech companies used to expand internationally to gain access to lower cost resources (development & manufacturing). In the next few years, I believe that markets are shifting to Asia."

Ultimately, however, as the owner of a Marketing Firm acknowledged, "US Domestic based companies are competing internationally whether they realize it or not. They need to consider that as part of their trading zone and should know what foreign companies are competing with them."

This is true for both large as well as small firms. While realizing its importance, many respondents believed the move toward international expansion could endanger their own businesses and careers. As one Sales Representative for a Major Component Manufacturer stated, "If I am running a business I have to acknowledge the need to sell offshore or my competitors will. That’s where all the volume and money is right now. Personally I am a little concerned my job may go off to China. If I buy a DVD from China it is a 1/4 of the price of anywhere else. We have been very successful selling overseas. We have fired people in the US and quadrupled salespeople in the Far East. I have been lucky enough to hold my job but need to recognize the trend."

Respondents' quotes

"Short-sighted individuals and legal entities rush overseas and this works for the short term, but for the long term it will not."

"My firm helps North American companies capitalize on Eastern European technical talent via project based engagements and setting up managed, remote-staffs. We are dependent on the global expansion of the labor market."

"Each market outside of North America poses their own unique challenges. However, expansion into these new markets will allow less dependence on North American based business to achieve growth goals."

"I think the US economy is going to have a problem due to China’s business expansion."

"Without help from the US government, my company may struggle to remain competitive over the next 10 years."

"All our customers and growth markets will be in Asia."

"I believe we should try and keep the work in the United States and stop imports with higher tariffs."

"I do consulting on a part-time basis. I have worked with both European and Asian companies but do not think this critical."

"My firm has been forced to expand in China by our customers, not that my product will be less expensive to manufacture in China, due to the fact we are not labor intensive. The real China issues are taxes and tariffs, high tax in the US and tariffs shipping products from US to China. We now produce product less expensive in US, due to China tariffs and shipping cost - but we must produce in China for our customers who assemble in China."

"Our firm is in the knowledge management business. Sharing the knowledge accumulated in the developed nations with those less developed is a key aspect of this business."

"Global expansion is planned over the next 4-10 years, as we endorse expansion into foreign markets."

"Manufacturing is moving overseas, mostly to Asia, and engineering services must follow the market. I would prefer to work domestically, but as Bob Dylan said...'the times they are-a-changing'. There just isn't enough available work in the US."

"International expansion will become more critical in the near future."

"Sales expansion is important for our company, but overseas expansion will not happen."

"The growing security market is opening doors for new technology."

"Our company, like most is concerned with global markets."

"Seventy percent of our revenues now come from International markets."

"US based companies are competing internationally whether they realize it or not. They need to consider that as part of their trading zone and should know what foreign companies are competing with them."

"Our firm sells electronic components and as long as the customers keep moving their factories to Asia we have no choice but to follow."

"My company is expanding into high volume consumer and industrial products that will be manufactured offshore for foreign and US markets."

"We are now manufacturing products in China. We also outsource several private label products from other countries. The trend will be to engineer products in the US and to have more manufacturing in other countries."

"Our company must manufacture in China to ship to Chinese customers due to politically imposed import restrictions and cost structure."

"It is difficult to compete in many areas because of the low labor rates. It is costly to compete in Europe with all of the social taxes and high inflation due to the Euro."

"International expansion is important in certain areas of my business."

"To prosper, I believe that all major manufactures must compete in the world market."

"Our firm has already sourced development to an international location. However, we maintain no international sales."

"In the beginning, there were city wide economies. Then we started to truck things and got state-wide economies. Now we have a national economy and people would never question it. One day, we will have a world-wide economy. You can fight it all you want, but you can't beat it. We only hope to be able to get in while it is still ground floor."

"Historically, high-tech companies used to expand internationally to gain access to lower cost resources (development & manufacturing). In the next few years, I believe that markets are shifting to Asia."

"As we have been developing the world highest technologies in the global industry, we need to provide our products and service globally to have suitable business."

"The Semiconductor/Electronics industries were among the first one to expand manufacturing over seas. Labor always played a major roll in being able to compete on a domestic and world-wide scale. This has been on-going for the past 35 years and more."

"We do professional services in the ESL space. It will be important for us to gather some international experience since the US is way behind in this design space."

"We will grow by moving up the food chain by moving into defense and aerospace rather than opening an off-shore facility."