**There are over 33,000 mid-market enterprises
in the US, contributing $7.3tr in turnover and employing more than
20.7m people**
**Business services and manufacturing
dominating activity in mid-market space**
**HSBC tapping into this growth potential with
build out of a US mid-market expansion plan**
Mid-market enterprises (MMEs)1 in the US are a major contributor
to US economic prosperity but have only just scratched the surface
of growth potential, according to a newly released HSBC report.
HSBC Commercial Banking, in conjunction with Oxford Economics,
explored the views of 1,400 MME senior executives in 14 countries –
including the US – in addition to in-depth economic analysis.
The findings reveal that despite the heady uplift provided by US
MMEs to economic growth, only a mere seven percent (7%) of their
revenue comes from international business activity.
“Mid-size firms are the backbone of our economy, making
significant contributions to growth and employment. HSBC has long
been serving clients domestically and abroad in this pivotal
space,” said Martin Richards, Head of Corporate Banking for HSBC
USA.
Richards emphasized: “It’s clear there is a substantial amount
of untapped potential for US mid-market companies to enter the
global marketplace. By considering international strategies and
increasing their cross-border activity, MMEs will have access to a
larger customer base, which in turn will positively impact
revenues.”
Domestic and international expansion on the horizon for MMEs,
but not without challenge. HSBC geared up to support
In comparison to global respondents, the study reveals that US
MME decision-makers think revenue growth will be the most important
driver of financial performance, for both existing (33% vs. 29%)
and new (23% vs. 18%) domestic markets. The business leaders cite
collaborating with external partners (50% vs. 44%) and financing
will be priorities for them (41% vs. 35%).
MMEs in the US are also slightly less confident in their local
economy (65% vs. 69%) and identified skill shortages (59% vs. 50%)
as one of the biggest threats they are currently facing.
“These figures signify that the appetite to enter new markets
and partnerships already exists, it’s just a matter of finding the
best approach to magnify their footprint,” said Richards.
Richards continued: “As one of the largest international banks,
HSBC offers clients warm support at every port. We are a
one-stop-shop, which makes us uniquely positioned to deliver
comprehensive banking solutions and sector expertise across
geographies: from structuring cross-currency financing
transactions, to providing access to broader institutional markets,
to acting as their primary operating bank. This sweet spot is
reflective of why we’re further sharpening our strategy and are
strengthening our middle-market franchise.”
HSBC’s middle-market strategy is driven by sector-based,
banker-led initiatives aligned with key industry areas of focus.
These seasoned banking leaders are subject matter experts in their
respective fields, tasked with identifying trends and opportunities
and developing customized strategies tailored to meet clients’
individual needs both domestically and internationally. The
technology and venture capital, professional services, apparel and
food and beverage segments will play a significant role given their
high levels of activity.
Commenting on the growth agenda, Richards said: “More than ever,
MMEs are seeking global partnerships with sector-specialists in
markets that they’ve identified for expansion. That’s why we’re
doubling down on our sector-driven strategy in both established
hubs, like San Francisco and New York, and those that are
continuing to incubate growth.”
Other key findings include:
- US MMEs rely on imports for
approximately 14 percent (14%) of their supply chain purchases.
While Canada and Mexico are important trading partners, the
second-largest source of imports is China.
- US decision makers think that investing
in innovation (63% vs. 58%) is a top priority. This correlates
closely with the belief that they are more likely to be first to
market with new innovations (40% vs. 34%) and be a disruptor (39 %
vs. 28%).
Download the full report here.
Notes to editors
Methodology
The objective of HSBC and Oxford Economics’ 2017
‘Entrepreneurial heartland of MMEs’ research is to estimate the
direct contribution of MMEs in 14 countries, their openness to
trade as well as their wider contribution through supply chain and
consumption ‘multiplier’ effects.
The research covers the following 14 countries: Australia,
Canada, China, France, Germany, Hong Kong, India, Indonesia,
Mexico, Saudi Arabia, Singapore, the UAE, the UK and the US.
In this report, MMEs are defined as companies with between 200
and 2,000 employees. All sectors are covered with the exception of
public administration, education and health, which are more
vulnerable to policy-related factors and are therefore more
difficult to compare across countries.
- MMEs’ direct contribution to their
local economy is measured according to their Gross Value Added
(GVA) contribution to a country’s Gross Domestic Product (GDP), and
to the sales (turnover) and employment they support.
- MME’s openness to trade is measured
using OECD data on imports and exports, assuming that MMEs have a
similar propensity to import and export as other firms in their
country and sector.
- MMEs’ contribution through supply chain
and consumption ‘multiplier’ effects is estimated using detailed
‘input-output’ tables from the OECD and national statistical
offices. The consumption impact reflects the economic activity
supported when employees in MMEs and in their supply chains spend
their wages on other firms’ products and services.
In addition to the economic research, HSBC and Oxford Economics
have conducted a qualitative survey – via phone – of senior
executives at 1,400 MMEs (100 per country), between July and August
2017. Using a standard questionnaire, the survey aimed at exploring
their views on external opportunities and threats, strengths and
weaknesses, strategic priorities over the next three years and
priorities for investment.
HSBC Commercial Banking
For over 150 years we have been where the growth is, connecting
customers to opportunities. Today, HSBC Commercial Banking serves
more than two million businesses across the world, ranging from
small enterprises focused primarily on their home markets through
to corporates operating across borders. Whether it is working
capital, term loans, trade finance or payments and cash management
solutions, we provide the tools and expertise that businesses need
to thrive. As the cornerstone of the HSBC Group, we give businesses
access to a geographic network covering more than 90% of global
trade and capital flows. For more information visit:
http://www.hsbc.com/about-hsbc/structure-and-network/commercial-banking
HSBC Bank USA, National Association (HSBC Bank USA,
N.A.), with total assets of US$191.9bn as of 30 June 2017 (US
GAAP), serves customers through retail banking and wealth
management, commercial banking, private banking, asset management,
and global banking and markets segments. It operates 229 bank
branches throughout the United States. There are 146 in New York as
well as branches in: California; Connecticut; Delaware; Washington,
D.C.; Florida; Maryland; New Jersey; Pennsylvania; Virginia; and
Washington. HSBC Bank USA, N.A. is the principal subsidiary of HSBC
USA Inc., a wholly-owned subsidiary of HSBC North America Holdings
Inc. HSBC Bank USA, N.A. is a Member of the FDIC.
HSBC Holdings plc, the parent company of the HSBC Group,
is headquartered in London. The Group serves customers worldwide
from around 3,900 offices in 67 countries and territories in
Europe, Asia, North and Latin America, and the Middle East and
North Africa. With assets of US$2,492bn at 30 June 2017, HSBC is
one of the world’s largest banking and financial services
organizations.
Disclaimer:
The information contain herein is intended for general market
commentary. It should not be regarded as investment research for
purposes of the rules of the SEC, or any other relevant regulatory
body. Further, the information and any views contained herein may
differ from that contain in HSBC Research Reports subject to FINRA
Rule 2241.
1 For the purpose of this study, mid-markets enterprises are
defined as those with between 200 and 2,000 employees.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180206006015/en/
Media enquiries:Annie Richardson, +1
212-525-3827annie.richardson@us.hsbc.com
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