Today Britain produces a range of world-renowned products that are associated with innovation, quality and heritage. Britain also has a very strong service sector – our Universities rank highly on global leader boards, we have world-leading status in science and London is a major financial hub.
Despite our strong global reputation and presence within many different sectors, Britain has a long-running trade deficit. Furthermore, Britain currently trades more with Ireland than it does with the high-growth economies of India, Brazil and China combined.
Within this blog, I will investigate what the public and private sectors are doing to help improve trade with high-growth economies and whether we are actually taking advantage of Britain’s reputation.
Public Sector Efforts
Over the past couple of decades, UK relations with India and China have been something of a rollercoaster ride. Between 1999 and 2009, the UK slipped from a mighty 2nd place, to a meagre 22nd among India’s trading partners. What’s more, recent relations with China have played out like a bad soap opera, involving what Wen Jiabao, China’s former premier, called ‘finger-pointing’.
In recent years, the Government has aimed to develop stronger relationships with these countries in the hopes of negotiating an increasing number of trade and foreign investment deals. For example in October, almost £40 billion worth of deals between China and the UK were signed, during China’s first state visit in 10 years. In a joint statement, Cameron and Xi Jinping claimed they were committed to establishing “a global comprehensive strategic partnership for the 21st century.” The Royals were out in full force during the visit, putting on a good spread at Buckingham Palace at the end of the first day.
Private Sector Efforts
Research conducted by Barclays, shows that 31% of customers in emerging markets have knowingly paid a premium for British products. This contrasts with the figure of 14% for customers in developed economies. Interestingly, at least 50% of respondents in all countries thought the quality of British goods was ‘good’ or ‘very good’. This highlights that the ‘Made in Britain’ mark can add real value to a UK business’s offer abroad, especially amongst developing nations.
Add to this a Royal Warrant or two, and the offer is likely to have enduring appeal amongst the vastly growing middle-upper classes of emerging economies. Royal Warrant holders selling premium products and services are looking more intently at emerging economies as a means of fuelling further growth and profitability. In 2014 China was Jaguar Land Rover’s fastest growing market and Fortnum and Mason opened up a 9,400 sq ft store in Dubai.
Larger organisations often have the financial muscle and expertise to develop a strong brand presence abroad. But how are SMEs – organisations which are unlikely to have these attributes – doing in terms of gaining a lucrative stake in high-growth economies?
A survey by FedEx, looking into Export Growth outlines a positive outlook for British SMEs abroad, with 53% exporting abroad. Additionally, of those who currently export, 73% do so outside of Europe and 16% export to China. This is positive news, particularly as SMEs contribute 51% of GDP and employ 67% of the private sector workforce.
However, it still isn’t plain sailing for British SMEs abroad. 58% of survey respondents claim they would appreciate more support (from trade bodies, the Government or logistics providers) and perceive China and India to be in the top five most challenging global markets to enter.
So to Summarise…
The trade deficit, current public and private sector activity and the strength of our nation’s strong reputation especially in emerging economies all highlight that as a nation we can and need to do more to increase the value of our exports.
Additionally, it will be interesting to see whether the EU referendum with throw a spanner in the works when it comes to Britain’s ability to stimulate export-led growth and if this will change our relationship with the likes of China and India, yet again.