The findings of this year’s BDO Ambition Survey, released today, are a clear reflection of the impact of the economic and political uncertainty on businesses and investors across the world.
Now in its third consecutive year, the survey always uncovers interesting insights as it examines the expansion plans of CFOs from medium sized companies and assesses their growth prospects overseas.
This year, we interviewed more CFOs than ever before, reaching over 1,000 respondents in 14 countries, across six sectors.
And what the survey shows is that CFOs face a tough dilemma: companies need to grow, but with many domestic economies still slow, they are forced to look for this growth overseas. At the same time, overseas investment is now riskier.
In 2011, red tape and bureaucracy topped the list of CFO concerns, but in 2012 the focus is set firmly on the threats presented by currency fluctuations and geopolitical risk. CFOs now tell us they face greater risk for the same reward and it’s causing them to adopt a more risk-averse approach.
This year, 66% of the CFOs we questioned are setting their sights on a ‘big seven’ of attractive investment destinations: these ‘safe haven’ markets include not only the more established markets of the US, UK and Germany, but also the BRIC countries.
China remains the top investment destination of choice but of particular interest is that the BRIC countries - with Brazil rising to third position in the BDO Global Market Opportunities Index- are now perceived as established markets for investment.
The BRIC countries are inspiring more investment confidence and are seeing a boom in investment, with nearly half of the CFOs interviewed investing in, or planning to enter these markets, compared to less than a third in 2011. Meanwhile, there appears to be no light at the end of the tunnel for Southern Europe. Traditionally a safe investment, CFOs now see parts of Europe as risky as the politically unstable countries of the Middle East.
As a result of this flight to safety, other traditionally established markets, including France and Japan, have also suffered significant fallings in the Index. France drops from the seventh most attractive country for investment to thirteenth, while Japan comes in at twenty-seventh: it was previously ranked seventeenth.
in 2012, CFOs all over the world are finding it more difficult to conduct business abroad - certainly compared with three years ago. They cite the poor economic situation, increased regulation and greater competition as the main reasons for this. Furthermore, approaching new markets with more caution means that the need for good local staff has come to the fore: almost half of the CFOs we spoke to give the need to secure good advice from reliable people on the ground as a major insight for successful international expansion.
Our survey clearly shows that CFOs value accountants and tax advisers ahead of other sources of advice. CFOs know they need local knowledge and it’s not enough to parachute in staff unfamiliar with the new local market and culture.
The BDO network puts us in a strong position to deliver that local expertise wherever our clients decide to invest. We’re constantly helping clients enter new markets: only a couple of weeks ago, I received an email from a natural resources client based in Australia who took the time to feedback on how smooth their entry into the Romanian market had been, and that was partly thanks to the strength of our advice.
The survey also shows that CFOs overwhelmingly see customer service as vital to their international success. This sentiment reflects BDO’s own ‘exceptional client service’ mindset – a topic we discussed at length at our Biennial conference earlier this month.
BDO partners across the world are known for offering sensible, actionable advice grounded in local knowledge and backed by regional and global experience. In China, for example, our firms are Chinese-owned and Chinese-run. BDO firms worldwide have the freedom and flexibility to get client service right for their clients, in their markets. This approach ensures the best outcome for our clients wherever they choose to operate.
Whether you are planning to take your first steps towards international expansion or are a seasoned investor, you should find the results of the BDO Ambition Survey 2012 interesting and the experience of your peers useful.