When U.S. businesses expand their operations overseas, more of them will go to Europe than to any other place.
That's a fact.
Regardless of which region or trade agreement happens to be in vogue at the moment -- NAFTA, Pacific Rim, Eastern Europe, Russia, the former Soviet states, China, whatever -- when a U.S. company decides to expand its presence internationally, the odds are greatest that it's headed for Europe, and specifically Western Europe.
Ever wonder why that is? After all, when the media focuses on international business, it's much more likely that it will feature one of the above regions than it is to talk about Europe.
In my opinion, it's probably because what those other regions mainly offer is potential -- potential markets, potential work force, etc. When we as Americans look at most of the rest of the world, we see opportunity. Our eyes light up as we dream about getting in on the ground floor of something big. Our frontier spirit goes into overdrive just thinking about it.
After all, it's hard to argue with a potential market of one billion Chinese. That's a lot of potential consumers and, if you're manufacturing televisions or automobiles or refrigerators, that's a whole lot of potential revenue. The problem is, if most of them don't make enough money to buy any of those products, the actual size of the market is considerably less.
| It's a lot like buying stocks -- the rewards are greatest when the risks are high. You might consider Europe a low to moderate risk, depending upon where in Europe you decide go. |
Sure, you can be there on the ground floor and wait for the market to develop, but your money might be better spent (and returned) by operating in a more established consumer market.
That's one reason U.S. companies keep heading for Europe. In Europe it's not about potential -- it's about reality. The population is roughly the same as in the United States. Income levels are basically the same as ours -- in fact, in some cases they're actually higher. Education, productivity, technology ... they're all essentially on par with us.
So if you're a businessperson and you want to expand overseas -- and make money while you're at it -- Europe is still the most logical place to head for.
That's not to say that you can't make money in the other parts of the world. Obviously you can, because fortunes are being made there every day. It's just that in Europe the accommodations you'll need to make in order to operate your business will not be quite as great.
After all, the reason you're even considering expanding overseas is because your business has succeeded and it's time for your company to grow some more.
You just want to be able to set up a new facility and begin production as quickly as you can. You want to be able to hire people who can understand your technology and operating process. You want to be able to hire local managers with the background, skill and intelligence to run your overseas operations on a day-to-day basis.
It's a lot like buying stocks -- the rewards are greatest when the risks are high. You might consider Europe a low to moderate risk, depending upon where in Europe you decide go.
It's a comfortable choice for most Americans. That's probably why they keep making it.
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