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NOVEMBER 2018
Business Lesson
they age and their resources dwindle.
If the pound weakens, exporting will
become more profitable, as the price
of UK goods will then become more
competitive. For UK local capital, it
would then be wise to put investment
into local businesses which export goods
abroad. It would be natural to see the UK
government being more open to non-EU
markets and bringing non-EU FDI into
the UK. This is increasing already, but
due to the ongoing decline in the pound,
bigger injections from outside can be
expected.
The engine of the UK’s post-Brexit
economy could actually depend on
exporting to non-EU countries. For us
to be able to rely on this, however, we
need to jump out of our proverbial box
and start looking for new friends and
business partners outside of the EU.
One particularly exciting new
market the UK could exploit is Asia.
The emerging economies of Asia hold
immense potential for UK business
partnerships. Increasing salaries mean
Asia has the fastest-growing middle-
class in the world. It also boasts the
highest number of millionaires and
billionaires of any continent. As a result,
Asia’s population has an increasingly
disposable income and consumption is
increasing. The demand for products
and brands is at an all-time high and
this is set to continue for the foreseeable
future. Healthcare spending alone is
expected to exceed $3.5trillion by 2020.
Indeed, collectively, Asia represents
60 per cent of the total
buying power of the
world. Exporting to Asia
gives UK businesses
access to a population
of 4.6billion people – 75
per cent of the world’s
population.
Millennials in Asian
countries are starting
to lead the market with
an open mind which
appreciates western
culture and products. The UK in
particular has a real privilege in this
market. There is a particularly strong
demand for high-quality British-made
goods. One obvious reason for this
is that half of Asian countries are
either still part of the Commonwealth
or an ex-colony. Indeed, research
from Barclays Corporate Banking found
that 64 per cent of consumers in India,
57 per cent in China and 48 per cent in
the UAE were prepared to pay more
for goods made in the UK, because they
perceive the quality to be higher. Local
Asian markets appreciate UK-made
goods for their heritage and quality and
the rich story behind them.
The latest figures from the
Department for International Trade
already show a significant uplift in
exports to Asia. UK exports to India
grew by 31.8 per cent in the year to
March 2018, whilst exports to China
grew by 15.3 per cent. It is time to look
to newly-risen markets such as these
and start a new phase of negotiation to
sign new trade deals and secure the UK’s
position in these markets and ensure it
withstands further global competition.
Once the route to Asian markets is
set up for SMEs in the UK, it will be
much easier for UK goods to move to
bigger and more sustainable markets.
This will, however, need a lot of work
– the cultural and legal differences
between Asian countries and the UK
cannot be ignored and must be expertly
handled.
To realise their vision for the UK
to become a "21st-century exporting
superpower", the government needs
to work in much more creative and
supportive ways to help UK SMEs
export their goods abroad, rather than
focussing on global brands. They must
hold hands with small businesses to
help their products reach the other
side of the world safely and punctually,
release more funds to SMEs and focus
on facilitating better relationships
between SMEs and overseas markets.
The government should also vet
collaborating parties in international
business to help SMEs lower the risk
of exporting and help them to improve
their grasp of the overseas market
to avoid cultural/legal/economic
misunderstandings and potential traps.
Production-wise, the government
estimates that over 400,000 UK brands
and small business have the potential to
export decent products that carry the value
and heritage of Great Britain. All these
suppliers lack are the required resources to
penetrate international markets, especially
markets outside the US or EU.
If the UK government can
successfully implement their export
strategy, forge lucrative and sustainable
relationships with new international
trading partners and support small
businesses so they have the ability to
exploit export opportunities, this could
have the power to overturn the negative
forecasts for the UK’s economy post-
Brexit. While everyone else worries
about the UK’s future political structure
and international relationships,
especially between the UK and the EU,
Liam Fox’s plan paves a path to success
for UK business.
Siddharth Shankar is CEO of Tails Trading,
an innovative new solution helping UK
SMEs to export their goods to Asia.
“
Research from
Barclays Corporate
Banking found
that 64 per cent
of consumers in
India, 57 per cent
in China and 48
per cent in the UAE
were prepared to
pay more for goods
made in the UK
”