The value of the U.S. dollar is languishing near levels not seen this low since July of 2008.As of today, the value of one U.S. dollar is 0.6999 Euro or, conversely, one euro buys roughly one and a half U.S. dollars. If you’re wondering why you’re taking fewer vacations and there are more tourists around, this is why. They can buy more here now and you can’t afford to leave.
In case you haven’t heard (and if you’re in the franchise world I’m sure you have), the Subway sandwich has served up some major competition to the hamburger giant, McDonald’s. Worldwide, Subway had 33,749 restaurants at the end of 2010. McDonald’s trailed 12 units behind with 33,737. A great deal of each of the franchise giants’ growth is due to their expanding appetite for the Far East.
It’s no secret that for years U.S. manufacturers have outsourced jobs to places like China, India and Vietnam. It simply costs U.S. businesses less to pay Chinese or Indian workers to do the same amount of work as an American, at least for now. Over the past 25 years, considerable global economic growth has been the product of manufacturing growth. As a result, Asian countries (as well as basically everyone else) have benefitted. Quite frankly, more manufacturing jobs have resulted in increased productivity and profits for businesses. Since 2005, the value of the Chinese yuan (pronounced yen) has increased by over 20 percent versus the U.S. dollar.
U.S. franchise brands are already doing well in China, Singapore, Vietnam and Malaysia. The franchise industry has a window of opportunity to take advantage of Asia’s growing economies and subsequently their growing purchasing power while the value of the U.S. dollar is roughly six and a half times more than the yuan.
In case you needed more convincing as to the validity of international franchising, here are a few more facts you should know:
- Over 95 percent of the world’s potential consumers are outside of the United States.
- India’s franchising sector is growing at an approximate rate of 30 percent annually.
- Vietnam’s franchise market has experienced an average growth rate of 30 percent in recent years.
- According to William Edwards, CFE, the key international markets that are expected to have strong franchise growth in 2011 include China and Vietnam.
Related reading:
1. Wall Street Journal: Subway Runs Past McDonald’s Chain: http://online.wsj.com/article/SB10001424052748703386704576186432177464052.html
2. Weak Dollar Boosting Quarterly Earnings – Wall Street Journal