Market Overview

US Small and Middle Market Exporters Expect International Sales Will Continue to Grow, According to American Express Grow Global Survey

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Although exporters are cautious of trade uncertainties, a significant
majority see international markets as a growth opportunity

U.S. small and middle market enterprises (SMEs) who export are
optimistic about their global sales potential, according to the 2018
American Express Grow Global Survey
. The third annual survey of over
500 domestically-based companies selling outside of the U.S. found that
nine out of ten (90%) see international markets as a major growth
opportunity. Exporters expect short- and long-term increases: 75%
predict that the percentage of their company's total revenue from
exported goods or services will increase over the next 12 months and 76%
expect growth over the next five years. These exporters are also
optimistic about forecasting future revenues, with 30% anticipating that
the revenue their company derives from exports will increase by more
than 50% over the next five years, up from only 18% who projected this
level of increase in 2017.

While U.S. SMEs who export are optimistic about international
opportunities, more than two thirds (71%) said that changing global
economics are a significant challenge. Exporters expressed caution due
to uncertainty around trade agreements (39%) and U.S. trade policies
(38%). Over the last 12 months, many exporters changed their exporting
strategy due to trade agreements and policies (32%) as well as political
instability (28%).

Despite their concerns around the global trade landscape, exporters are
investing in their international operations. Respondents report that, on
average, they invest 36% of their annual sales and marketing budget into
entering and growing international markets.

"Exporting is often seen as a challenging path to growth, but our
research finds that small and mid-sized companies that begin exporting
generally see the strategy quickly become a substantial part of their
business and provide secondary benefits in recruitment and domestic
operations," said Brendan Walsh, Executive Vice President in the Global
Commercial Services division at American Express. "We continue to see
optimism and success among U.S. exporters, and we encourage SMEs to
consider international sales by doing their due diligence about the
potential range of opportunities."

IDENTIFYING INTERNATIONAL MARKET OPPORTUNITIES

Changing global economics impact opportunities around the world. When
asked which region offered the greatest opportunity over the next five
years, a quarter (25%) of exporters said North America (Canada/Mexico),
down from 34% in 2017 and 2016. Now North America is virtually tied with
Asia (26%) and Europe (25%) as the top regions for international growth
opportunities. Areas that experienced increased optimism were the Middle
East (10%, up from 5% in 2017) and Oceania (5%, up from 1% in 2017).

In new analysis this year, the surveyed exporters identified government
contracts as an opportunity to explore global growth. Nearly a third
(32%) of the respondents identified new international markets based on
U.S. government contracting opportunities they qualify to fulfill, and
16% of respondents said they are currently doing business
internationally because of a government contract.

TECHNOLOGY HELPING TO SCALE EXPORTS

More than three quarters (78%) said exporting became a substantial part
of their business within three years or less of selling globally, and a
major reason is online technologies have helped companies find new
international markets – especially receiving inbound requests through
their website. More than four in ten (45%) identified new international
markets to target based on their company's website traffic, and 30% said
they are currently doing business in international markets because a
customer found their product online. When exporters' website traffic
alerts them to a new market opportunity, the next steps they take
include further researching the market (60%), exploring the market for
partners (59%) and traveling to the market itself (55%).

Additionally, respondents are adjusting their exporting strategies due
to emerging technology trends in the industry. Four in ten (43%) said
technology that makes exporting easier to scale has changed their
strategy in the last 12 months. The technologies most likely to have a
significant impact on their plans to sell internationally include
fintech (36%), artificial intelligence (35%) and the internet of things
(35%). Interestingly, the adoption of supply chain technology (e.g.,
machine learning, robotics, etc.) divides companies: 34% said that the
adoption of this technology will lead their company to increase efforts
in international trade, while 31% said it will lead them to be more
cautious.

GLOBAL LESSONS FOR DOMESTIC OPERATIONS

As U.S. exporters remain optimistic on revenue growth through
international business, companies also often experience positive impacts
on their domestic operation as a result of exporting. A strong majority
of SME exporters agree that selling to countries outside of the U.S. has
led their company to implement changes to the products or services that
they offer (83%) and make adjustments (when necessary) to the way they
market to domestic customers (84%). A significant amount of exporters
report that selling internationally also impacts domestic hiring, in
terms of attracting and retaining new talent (85%).

Along with positive impacts to domestic operations, eight in ten (80%)
companies said that selling internationally opens up more flexible
financing options. In addition, their exposure in international markets
helped them become aware of new financing options (75%) and had a
positive impact on their ability to obtain financing (79%).

RESOURCES FOR SMES TO GET STARTED AND GROW GLOBAL

While technological advances help companies find new global markets and
make them more accessible, companies rely on additional resources to
help them grow their international business. Small and mid-sized
companies said they most often learn about international markets where
they do business by networking (45%), seeking out resources in markets
of interest such as employees and distributors (43%), joining trade and
business associations (39%) and reviewing the online materials of
potential trade partners and customers (38%). Additionally, nearly
one-third tap the resources of government agencies (30%) like the U.S.
Department of Commerce's Export Assistance Centers (USEACs) and the U.S.
Small Business Administration (27%), as well as corporate training
programs (31%), such as American Express Grow GlobalSM.
Through the Grow Global program, American Express offers exporting
advice and best practices to help SMEs.

AMERICAN EXPRESS GROW GLOBAL

The American Express Grow Global program, launched in 2015, brings
together global trade experts, exporting officials and business leaders
to provide valuable resources for U.S small and middle market companies
to sell internationally. The program includes free events and online
resources that connect owners and decision makers with exporting
officials and international buyers. Resource guides cover topics
including finding profitable international clients, how to navigate
existing government and private resources and leveraging marketing and
sales for international growth.

To learn more about the American Express Grow Global program, visit amex.co/businessgrowth.

METHODOLOGY

Research findings are based on a survey conducted by Morar HPI fielded
across the US July 17th - 19th, 2018. The survey queried 528 full-time
employees with decision making authority at companies ranging in size
from $250,000 to less than $1 billion in annual revenues, who report
that a portion of their company's annual revenue is currently derived
from the sale of goods or services outside of the United States. Results
of any survey are subject to sampling variation. The survey has a margin
of error of +/- 4.3% at the 95% level of confidence for the overall
sample.

Studies referenced in 2017 and 2016 were provided by Teneo Strategy
using the same methodology as this 2018 survey.

ABOUT AMERICAN EXPRESS GLOBAL COMMERCIAL SERVICES

Through our Global Commercial Services division, American Express offers
powerful backing and support that helps companies of all sizes gain
financial savings, control and efficiency. We provide a suite of payment
and lending products, solutions for travel and everyday business
spending, cross border payments, global currency solutions, and business
financing.

To learn more about Global Commercial Services, visit business.americanexpress.com.

ABOUT AMERICAN EXPRESS

American Express is a global services company, providing customers with
access to products, insights and experiences that enrich lives and build
business success. Learn more at americanexpress.com and
connect with us on facebook.com/americanexpress,
instagram.com/americanexpress,
linkedin.com/company/american-express,
twitter.com/americanexpress,
and youtube.com/americanexpress.

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