A weak domestic economy has encouraged a sharp rise in the number of Connecticut companies that are seeking markets overseas, according to a survey released today by the Connecticut Business & Industry Association.
Six years ago, when the CBIA last surveyed state businesses most likely to be selling products internationally, the association found only 35 percent were involved in exporting. This year, the rate more than doubled to 71 percent.
“International business helped them get through the recession and the weak recovery,” said Peter Gioia, an economist and CBIA vice president, in a phone interview. “Companies are looking to shift where their next big opportunity is.”
North America and western Europe continue to be the top two regions for Connecticut exports, according to the survey. But more and more, the survey showed, markets are shifting to Asia and Latin America. Asia is expected to be the top region for exports within the next three years, the survey showed.
And, with the U.S. dollar 25 percent weaker now than it was when the last survey was taken, American products are selling at a discount. This led last year to growth in U.S. exports that outpaced the growth of imports for the first time in five years, a trend that is continuing today.
But along with greater export opportunities, there are also some challenges, Gioia said.
One of the big challenges is in the area of information. More than a third of survey respondents said they don’t know enough about the markets they want to reach.
Another problem area is trade and regulatory barriers, according to business executives. Education is part of the solution to this problem, Gioia said, but altering trade agreements and reducing barriers to trade also will help.
The final obstacle to foreign trade, Gioia said, involves encouraging businesses to update their websites. Currently only about a quarter of businesses surveyed said they had websites capable of processing international orders.
“Too many companies are leaving a lot of potential sales on the table,” he said. “That should be a wake up call.”
The CBIA survey involved nearly 1,200 Connecticut companies, chiefly manufacturers, wholesalers, retailers, insurance and financial services providers and those involved in technology, research and development and agriculture.
“Because their markets are more diverse, companies that export can offset domestic economic cycles in the same way individual investors can protect against downturns in any one financial sector by diversifying their portfolios,” CBIA President and chief executive John Rathgeber said in a statement.
Gioia said small businesses may find challenges in developing markets overseas, but he knows of several companies with fewer than 20 employees that have managed to land significant business in other parts of the world. He added that government officials and private foreign-trade consultants can be helpful in getting businesses moving in the right direction, and the state Department of Economic and Community Development now has financial help available for small businesses that need to go to a foreign trade show or hire a trade consultant.
Foreign-trade missions that have been led by U.S. Rep. Joe Courtney, D-2nd District, and Gov. Dannel P. Malloy also can pay dividends, Gioia said.
“When you’re selling over there, government officials can opens doors,” he said. “For all the criticism congressmen and public officials get for traveling, when traveling on trade shows or trade missions it’s money well spent.”
Other survey highlights are:
- 56% of companies said exporting activities helped them weather the economic slump.
- 72% of the state’s exporters are manufacturing companies, with aerospace firms leading the way.
- 11% of the state’s exporters deal in services, 4% in wholesale trade, 3% in construction, 2% in retail and 2% in consulting.
- 27% of companies not engaged in foreign trade say they would like to be.
‑ 23% of companies not engaged in foreign trade believe their current staff capacity would make it possible.