Businesses in the Richmond region have untapped potential to export more products and services to global markets, but many aren’t aware of how to do so, a recent survey shows.
The survey of 200 local businesses found that 83 percent are not exporting their products and services. About half the respondents said they would consider exporting if they could identify the right markets and obtain financing.
The research was conducted by the Center for Urban and Regional Analysis at Virginia Commonwealth University as part of an ongoing project to help the Richmond region’s economy grow by selling more goods and services in international markets.
Large international investments in the Richmond region get a lot of attention, but less attention is given to local businesses that grow by selling in foreign markets, said John Accordino, a professor of urban and regional planning at VCU and director of the Center for Urban and Regional Analysis.
“You can grow your economy from within by expanding the markets for your businesses,” Accordino said. “The global market is huge. The Chinese middle class is expanding. They are going to buy our products. People out there like American products.”
About 81 percent of global economic growth in the next five years is expected to be in markets outside the United States, according to the International Monetary Fund.
During a meeting on the survey findings at VCU on Wednesday, Accordino presented research showing that exporting companies tend to grow faster than non-exporting ones, and they are likely to make higher revenue per employee.
About half the surveyed businesses that don’t export said they are not doing so because they believe their products or services are non-exportable.
An additional 35 percent said they don’t export because they think the U.S. market is sufficient, or they are not interested in foreign markets.
Eight percent said they don’t know what to export, 4 percent said they can’t get financing to expand into foreign markets and 11 percent said they are uncertain about doing business in foreign markets with different regulations and cultures.
About 45 percent of the non-exporting companies said they would consider exporting if they had easier access to financing, and if they could find the right markets and “trouble-free” transactions and shipping.
Half the respondents said they were not aware that federal, state and local governments provide export assistance to businesses.
The VCU research is part of a larger project backed by a $140,000 grant, awarded this year by JPMorgan Chase, to support the development of strategies for increasing exports in the Richmond area.
VCU is working in collaboration with the Greater Richmond Partnership, a regional economic development organization, and other public and private partners.
Brett Vassey, president and chief executive officer of the Virginia Manufacturers Association, said the survey results are consistent with what he has seen among manufacturers: About half of companies that don’t export could export, but they aren’t sure how.
He said building the region’s export economy is “a smart strategy.”
“That is much different than just going out and fishing for companies and throwing money at them to come and build a facility in Richmond,” Vassey said. “It is a way to look at economic growth that is far more sustainable over the long haul. It helps existing businesses.”
Vassey said export growth is a key strategy for the manufacturers association. “We have set a goal of 50 percent export growth by 2025,” he said. “We want to grow by $8 billion in exports output by 2025, just in manufacturing.”