In addition to agricultural products and manufactured goods, the United States is also a big exporter of services and retailing. In fact, it leads the world in services exports. Of the approximately $210 billion in annual service exports, over half comes from travel and tourism—money spent by foreign nationals visiting the United States. Tourism is the third largest industry in the United States, contributing $430 billion to its economy each year, and is responsible for creating more than $6 billion in travel and tourism-related jobs. With 102 million tourists per year, the United States ranks second only to China in visitors. By 2020, tourists will spend $2 trillion during their international travels.
Vacation marketers, intensifying their efforts to give tourists the largest variety of activities within the shortest time, have created a boom in theme parks and cruises. Over 40 new cruise vessels were put on the high seas in 2000, with the largest one capable of carrying 6,200 passengers. Theme parks under construction range from a replica of ancient Rome to central Florida’s Jungle Crocs of the world. Over 500 airline alliances have been created to make it easier for giobetrotters seeking undiscovered faraway destinations to reach them from the local airport. National tourism offices around the world are competing aggressively to capture shares of this growing industry.
The most profitable U.S. service exports are business and technical services, such as engineering, financial, computing, Jegal services, and entertainment. In a recent year, worldwide Internet services revenues grew an enormous 71 percent to almost $8 billion. Even more surprising is that the growth is expected to continue at a 60 percent annual rate, passing $78 billion by 2003. The United States is the largest market for Internet service providers.
The financial services industry is also going global via the cyberhighway. The rapid emergence of cross-border securities trading exemplifies how quickly the Internet is gaining acceptance among investors. Charles Schwab Europe has some 14,500 British clients who trade U.S. shares over the Internet. Ameritrade online system allows German and French investors to buy and sell U.S. equities. E*Trade has expanded services to Australia, France, and Sweden. A glance at the increasing number of foreign companies listed on the New York Stock Exchange illustrates the importance of global financial services. Figure 3.4 explains how companies listed on the exchange are changing our world, from drug companies’ research to find a cure for river blindness in Central and West Africa to the launch of a new space telescope for viewing distant galaxies.
Some service exporters are household names: American Express, AT&T, Citigroup, Walt Disney, Wal-Mart, Allstate Insurance, and Federal Express. Many earn a substantial percentage of their revenues from international sales. For instance, U.S. airlines earn 25 percent of their revenues from their international routes. Other service exporters are smaller companies, such as the many software firms that have found overseas markets receptive to their products. Hyperion Software, a Stamford, Connecticut, designer of financial reporting software for large business applications generates half its revenues from overseas sales. While Hyperion uses a direct sales force in North America, it sells through independent local distributors in foreign markets. San Diego—based StarGuide Digital Networks exports both goods (satellite communications equipment) and services (air time on satellites) to majorjapanese corporations.
The movie industry is another major service exporter. Europe and Australia have always been receptive to American films, partly due to the similarities in language and lifestyles. British actor Hugh Grant is as famous in Los Angeles or New York as American actor Robert Redford is in Paris or Sydney. But films traveling to Asia typically have little connection with Eastern culture. The language is different and the music is different. As a result, U.S. movie marketers attempt to develop ties with Asian audiences, a relatively untapped market that currently generates only 18 cents of every dollar spent abroad on nfovie tickets or video sales and rentals. So when Warner Bros. released Lethal Weapon 4 in Hong Kong, it hired local heavy-metal band Beyond to create a music video to be used for promotional purposes only. The band is highly popular in Asia, and the video received heavy airplay in Hong Kong and Taiwan. Even though the song was never a part of the movie itself, it sewed as a commercial for the movie each time it was played.
Retailers ranging from Victoria’s Secret, Foot Locker, and The Gap to Office Depot, Toys “51” Us, and PriceCostco warehouse clubs are opening stores around the world at rapid paces. U.S. retailers do especially well in Asia, where consumers like the convenience and wide selection of American-made products. They are also attracted to products associated with American lifestyles.
During the last three decades, U.S. fast-food franchises have been opening outlets at a phenomenal rate, as the opening story on Taco Bell demonstrates. McDonald’s currently operates over 6,000 outlets in 91 countries. Domino’s Pizza now serves its pies to customers in 1,200 outlets in 46 countries. Arby’s parent company, Florida-based Triarc Restaurant Group, operates over 3,000 outlets in the United States and has recently signed an agreement with Sybra Restaurants UK to take the roast-beef-sandwich chain to London. Over 100 Arby’s restaurants are expected to open during the next 10 years.