- Europe and the Middle East most attractive markets for expansion over the coming years
- Businesses expect expansions to take an average of 16 months before they become profitable
- 82% of respondents believe that they are now reaping the benefits of the decisions they made relating to their expansion plans during the pandemic
Appetite for international expansion is high as UK businesses looking to resume their expansion plans following years of disruption due to the Covid-19 pandemic, according to new research by Auxadi, a leading provider of accounting, tax and payroll services to private equity, real estate, and multinationals.
The research, which explored the expansion plans of 100 global businesses already operating in more than one jurisdiction, found that 97% of respondents were planning on expanding into new markets by the end of 2023.
The most attractive markets are Continental Europe, selected as attractive by 74% of respondents, followed by Middle East (59%), Central America and South America (both 56%), and North America (53%).
This appetite for expansion is fuelled by a belief among respondents that their actions during the pandemic were ultimately beneficial for their business. Overall, 82% of respondents believe that the changes they made to their expansion plans over the past two years have left them in a situation now where they are reaping the benefits, either through having made significant changes (38%), slight changes (34%) or even doing nothing at all (10%). Less than a fifth (18%) of respondents, meanwhile, felt that they were now having to make up ground following the pandemic.
Overall expansion optimism is high among businesses, with two fifths (40%) of those expanding believing that their investments will become profitable within a year and the overall average anticipated timeframe for profitability standing at 16 months. North America, at one year and two months, is viewed as the market that will yield returns the fastest, ahead of Europe and Central America (both one year and three months).
When asked about the key drivers that impact a firm’s choice of jurisdiction to expand into, the top factors were listed as the potential for growth and capturing market share (53%), demand for similar products (50%), market conditions – either economic or political (43%) and the ease of setting up a business (41%). Interestingly, despite a spike in the number of Covid-19 cases globally, a country’s track record in dealing with the virus was rated as the least important driver, with just 4% of respondents citing this as a key factor.
Raimundo Diaz, Global Head of International Corporations at Auxadi said: “Since the start of the pandemic expansion plans have had to be re-evaluated and revised, which has led to a pent-up demand for growth. It’s promising to see that so many businesses have been able to adapt to market conditions and use this flexibility to their benefit, exemplified by the fact that four fifths of UK businesses feel that they navigated the pandemic with the right business strategy to put them in a strong position to profit in 2022.
“This research suggests that businesses will be embarking on bold and expansive international growth plans this year, with a slight preference for established markets, something understandable after a crisis but also strong demand for emerging economies as well. 2022 promises to be an exciting time for business growth as they look to put the difficulties of the past few years behind them.”
To view a copy of Auxadi’s ‘Taking the bull by the horns: International Expansion trends for 2022’ report, please visit: LINK.