Opening the Western Trade Front
The 6,000 Connecticut companies that export products set new records, with $16.5 billion in commodities trade amid an all-time high of $2.3 trillion in U.S. exports, according to a new survey.
The 2015 International Trade Survey of Connecticut Businesses also found that western Europe now exceeds North America as a trade destination–a first in the survey’s history.
The survey shows that the vast majority (89%) of Connecticut businesses engaged in international trade are small and midsize enterprises employing fewer than 500 workers.
“With more than 95% of the world’s consumers living outside of the United States, exporting is key to our economic competitiveness,” said Pete Gioia, CBIA vice president and economist.
“Connecticut ranks 27th for exporting among all states and 18th per capita, so there is room to grow,” said Gioia.
According to the survey, the largest foreign markets for Connecticut exporters are:
- Western Europe (32%)
- North America: Canada/Mexico (26%)
- Northern Asia/Pacific Rim: China, Japan, and Taiwan (18%).
Connecticut companies plan to expand their sales in northern Asia, with 26% respondents looking at doing so in the next three years compared to 18% today.
Many companies are veterans in exporting, having participating in international trade for more than 20 years (46%), and 10-20 years (37%).
The reasons that many entered foreign markets are not surprising: increase company sales (52%), follow their clients (24%), and diversify business (16%).
Doing business aboard is not without its risks and hurdles.
According to the survey, the most common barriers include: lack of knowledge of foreign markets (18%), cost competition and payment delays/defaults (both 17%), and trade/regulatory barriers (15%).
Companies also were asked how state government policies affect their exporting activities.
Most recommended reducing the costs, taxes, and regulatory burden on businesses and adopting more business-friendly policies.
Seventy-nine percent of businesses said current state taxes are a disincentive to doing business in Connecticut.
Improving tax policy—including preserving tax incentives that not only offset some of the costs of doing business here but also encourage companies—could go a long way toward making Connecticut a better state for exporters.
Seventy-three percent of Connecticut exporters surveyed take advantage of the state’s R&D tax credit, 33% take the domestic production deduction, 24% take advantage of IC-DISC, and 24% benefit from other Connecticut tax incentives.
The 2015 International Survey of Connecticut Businesses was emailed between March and April 2015 to approximately 1,300 Connecticut businesses with export potential.
Most are manufacturers, however, service firms and other businesses with export potential were included as well. The survey had 140 respondents, for a 10.8% response rate and a +/– 8.45% margin of error.
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