A joint report by Google and Temasek Holdings has predicted that the Southeast Asian internet economy is expected to be worth $200bn within the next seven years.
The report, called ‘e-Conomy Southeast Asia Spotlight 2017’, noted that growth last year outstripped expectations by 35%, worth $50bn at the end of the year.
E-Commerce sales have been identified as a key driver of growth, reaching just under $11bn in gross merchandise volume – 50% higher than in 2016. Two critical sectors for growth include mobile-first platforms such as Shopee and Tokopedia, as well as ride-hailing services with the likes of Grab, Uber and Go-Jek.
However, the report suggested that the key growth limitation in the SEA region was the lack of tech talent, especially homegrown.
Opportunity for tech infrastructure & specialist exporters
Whilst major countries within the Southeast Asian zone such as Japan, China and South Korea report between 53% and 91% internet penetration, emerging markets still struggle with limited internet usage, despite high take-up on mobile phone usage.
Despite this, the region is regularly earmarked as a key growth economy when it comes to mobile usage, advertising and digital spend.
And whilst Western giants such as Facebook have been vying for a piece of the Chinese market for years with varying success (recent reports suggest company execs leaving in droves with the development of a censored version of the social app developed to launch Facebook into the market), less tapped opportunities in Bangladesh, Myanmar and Vietnam could all prove fruitful for exporters.
One massive factor is the price of advertising in the APAC zone. For example, it’s far cheaper to reach millions of potential consumers in India than it is in the saturated Chinese market – for consumer goods anyhow.
Read more: New Government export strategy aims to make Britain ‘21st Century exporting superpower’
As Anand Chakravarthy, MD of Essence in India notes; “Low costs of media, as compared to many countries in the APAC region, is an advantage because in India, media costs are approximately five times lower than that of China.
“India also has a rapidly evolving digital ecosystem, with the largest base of online consumers, high mobile phone penetration and increasingly connected devices.”
India’s middle class is booming, as is the gross domestic product growth in Bangladesh.
All this suggests two great opportunities for exporters. First, the services, technology and know-how to further spur-on digital economy infrastructure and growth. Second, to cost-effectively market products and services to billions of people.
And governments in these regions are more than invested in digitech growth acceleration. As CEO of agency network MACOMM/Dentsu suggests: “The government of Bangladesh’s amicable policies towards foreign investment has already drawn strong interests from global brands such as Honda, Samsung, Alibaba, LG, CBL Munchee etc.
“All of these names have already made strong investments in manufacturing infrastructure to serve the business potentials of consumer growth of their brands.”
Read more: International marketing services
The big factor to remember for marketing exporters expanding into these regions, however, is the sheer scale. Whereas hyper-local advertising in the UK might mean adding ‘mad fer it’ to a car billboard outside Manchester Piccadilly train station, countries like India are the size of five or six countries combined. Each zone with its own customs, language, culture, food and vitally – socio-economics. Hyper-local advertising in India, therefore, means tailoring messages to be relevant for a populus residing on a land-mass the size of France or Ukraine, not Lancashire.
But with the right planning, strategy and execution, the opportunities for both service providers and product sellers are vast.
A new study has found that three-quarters of UK small and medium-sized businesses currently exporting are yet to factor in and formulate a specific post-Brexit strategy.
The report, released by the Chartered Institute of Marketing and PwC Research, warned that whilst many firms are expecting to see export volumes and revenues grow over the next three years, just 34% of those asked said they had a specific export strategy.
Brexit may have also held sway in the number of firms who stated they were unlikely to start exporting anytime soon, 59% in fact.
However, it’s not just the impending departure from the European Union that’s holding firms back. The report also quizzed businesses on the effects any skill gap has on their exporting outlook.
According to respondents, lack of skills and internal know-how was a greater barrier to exporting than tariffs, in particular with international marketing.
Thirty-three per cent also stated they lacked the confidence required to approach new markets and territories, with just 13% stating tariffs were the most off-putting barrier.
Read more: Over 5,000 UK forms paused export plans over Brexit, but are they being too cautious?
Chris Daly, CEO, Chartered Institute of Marketing said of the findings: “With Brexit approaching our research has uncovered a worrying level of complacency from British business.
“Too many firms appear to be crossing their fingers and hoping exports will continue to grow. Without a clear strategy to break into new markets, business is in for a shock when the UK leaves the European Union.
“These findings must serve as a wake-up call for businesses to think again on how they make themselves export ready.”
Opportunities and Advice
The outcome of various reports into UK SMEs and exporting attitudes has been a tale of confidence and retreat of late. Whilst the above study denotes a lack of readiness and global outlook for many, other reports indicate that firms are increasingly outward-looking in their expansion plans.
But one common line thread carries through both – the lack of in-house knowledge, experience and availability of advice to enter the international marketplace.
And that makes perfect sense. For many small firms that have made their way through the tricky early years of business and captured a slice of the local or perhaps national action, the strategy and mindset can be to sustain and recoup investment through now profitable revenues.
And with Brexit added to the mix, that might seem a wise choice.
However, leaving the European Union presents two distinct opportunities for such firms.
First, the opportunity to gain an upper hand on their competitors who may be of the mindset to sit at home and wait it out
Read more: UK SMEs planning to increase European exports despite Brexit
Second, the want to explore international markets across the globe, and not just our continental neighbours.
As Minister of State for Trade and Export Promotion, Baroness Hairhead, pointed out: “Although UK exports have grown to represent 30% of the UK’s GDP, this figure remains lower than that of other nations in Europe and close to 90% of UK businesses do not sell their products and services overseas.”
Just 10% of UK firms exporting.
Marry that with the fact that demand for ‘Made in Britain’ products and services has continued to grow, there is a huge gap and opportunity ready for those brave enough to make the first exporting step.
And when it comes to exporting advice, you’re already in the right place. See how we can open a world of opportunities here.
Liam Fox has written an article for The Sun in which he encourages Britain’s small businesses to become ‘intrepid exporters’ whilst reinforcing the view that Brexit is a pathway by which the UK can become a trading superpower.
The International Trade Secretary has been busy on the public relations front, sharing positive and motivational business call-to-arms in a bid to change the commercial mindset in the run-up to 29th March from that of retreat to a tone of conquering instead.
The main line is hard to argue with – countries and businesses around the world want to business with Britain, as Fox writes: “EVERYWHERE I go across the world, everyone I meet tells me that they believe in Britain.
“They want to buy British products, use British services, learn English. They trust our laws and our financial services, they admire our Armed Forces and they envy our universities.
“Actually, that’s not quite true: everywhere I go in the world, except right here in the UK.
“Britain can and should be confident and the world needs a confident Britain. A confident Britain can bang the drum for free trade across the world, as more and more countries look to pull up the drawbridge and turn away from the huge benefits that we have seen in poverty alleviation.”
Fox’s article prepends a week in which Theresa May has been dancing her way from one African state to another discussing future trade, whilst the rhetoric in Brussels has also changed from that of playing hardball to a little friendly, maybe even neighbourly, support, with Michel Barnier teasing that “We are prepared to offer a partnership with Britain such as has never been with any other third country.”
Read more: New government export strategy aims to make Britain ‘ 21st-century exporting superpower’
Two days later though and headlines on any Brexit-related Google search are met with the following headlines:
– Barnier ‘strongly opposed’ to May’s Brexit plan
– RBS warns of no-deal Brexit loss of customers
Still a long way to go then.
A new export strategy from the UK government aims to boost total exports to 35% as a proportion of GDP.
The new plans aim to ‘make Britain a 21st century exporting superpower’ after extensive consultation with local businesses across sectors. Plans also set out targets to increase productivity, wages and job security.
International Trade Secretary, Liam Fox announced the plans to increase exports through better use of the UK’s overseas network, new online technologies and growing an extensive B2B network.
Fox noted that: “The United Kingdom is a great exporting nation and our exporters lead the way, in creating jobs, raising wages and growing our economy.
“UK businesses are superbly placed to capitalise on the rapid changes in the global economic environment and I believe the UK has the potential to be a 21st century exporting superpower.
As an international economic department, we are determined to support, connect and grow UK companies on the world stage through our international network.
“As we leave the EU, we must set our sights high and that is just what this Export Strategy will help us achieve.”
UK exports already reached record levels last year with £620 billion of goods and services sold abroad by British firms, accounting for 30% of GDP. And whilst research indicates that businesses that do sell abroad have higher growth potential, around 400,000 local companies don’t export even though they suggest themselves that the opportunity to do so is available.
This new export strategy looks to address this, as well as boosting export opportunities for Uk forms of all sizes, by producing smarter and more bespoke support solutions. Four primary strategies include:
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- Encouraging and inspiring more companies to export, in part by promoting local success stories and facilitating peer-to-peer learning
- Providing practical advice and assistance on exporting, partly through digital enhancement of the great.gov.uk platform and potential financial incentives to further encourage export start-ups
- Connecting British businesses to international markets and buyers, as well as tariff support
- Raising awareness of the up to £50bn in export finance and insurance support available through UK Export Finance
Director general of the Institute of Directors, Stephen Martin, commented on the new export strategy: “Maximising trade opportunities across the globe will be key to the UK’s future economic success, so we welcome this new export strategy, which provides a solid foundation upon which to build.
Read more: Over 5,000 UK firms paused export plans over Brexit, but are they being too cautious?
“The government deserves credit for investing time and effort in working with business to draw up this strategy, and we are delighted that a number of the IoD’s recommendations have been incorporated.
“Improving the UK’s export performance will depend upon many variables, but the good news is that there is plenty that can be done now to help businesses, irrespective of Brexit.
“We will be encouraging our members to engage with government to make sure this strategy really takes off and enables British firms to realise their full trading potential.”
Over 5,000 UK companies paused exporting plans in 2016 as a result of the Brexit referendum result.
That’s according to research released last month by academics at Cambridge, whose report also suggested that nearly 4,000 companies actively stopped exporting over uncertainty surrounding future trade rules and border taxes.
Academics Meredith Crowley, Oliver Exton and Lu Han predict that the resultant pause or cease of export activity from the combined 9,000 firms took 1% off Britain’s exports for the year, more concerning with the potential for those exporters to have become major international sellers as new markets and agreements were explored.
“We estimate that the decline in entry reduced the value of exports by between £226m and £1.4bn in 2016, a small total value relative to total exports to the EU in 2016 of £140bn.”
How to balance Brexit export fears with growth plans
The big question facing UK companies that are either planning to start selling abroad or already current are is, what do we do next?
With the torrid nature of current negotiations taking place in Brussels and the various levels of hard and soft Brexit’s potentially on offer, you can see where the 9,000 businesses deciding to retain what they have instead of pushing for international growth are coming from.
There are three potential trains of thought that business heads can ponder;
- Retreat and retain
- Keep calm and carry on
- Accelerate global growth plans
Retreat for the businesses noted in the Cambridge report was the clearly the winning (whilst losing) option on the table.
What business owners need to remember is that the EU want a deal, and EU businesses want to trade with UK companies. Only last month we wrote about another report highlighting how demand for British food and drinks products are surging – up 10% in just 12 months.
For those leaning towards the keeping calm and pressing on line of thinking, it’s also worth noting that total exports last year reached a record £616bn. If your competitors are losing their nerve and leaving the export market, particularly within the EU block, that’s one huge opportunity just waiting for you to sweep in and take.
And for ambitious firms looking to grow through the potential pot-holed road ahead, British exports to non-EU states are on the rise and demand is growing, with International Trade Secretary Liam Fox noting that: “British goods remain in global demand as exports to non-EU countries continue to grow.
“It shows the confidence the world has in our goods and is important as 90% of growth in global trade will come from outside the EU.”
Getting the right support
There is no doubt about it, BREXIT is going to be a challenge for all EU companies that export either from the UK or into the UK. The simplicity of the Single Market and Customs Union has been taken for granted and there is a generation of business people out there which has never experienced the headaches of customs declarations, duties, VAT payable on import, deferment numbers, apostilles, Chamber of Commerce attestations.
Go Exporting’s Brexit consultancy can help you navigate the minefield. Find out more about our Brexit consultancy.
The UK’s global exports reached a record £616bn last year with both goods and services seeing marked growth.
Exports to non-EU countries in 2017 were valued a £342bn, 55% of total export value, with £274bn in EU exports.
Good exports soared 13% to £339bn over the year, whilst services increased 7% to £277bn.
Interestingly, key growth markets for UK exporters since the turn of the decade include Macedonia, up 318% to a value of £1bn, and Kazakhstan by over 200% to £2bn. The fastest growth market was Oman where exports have increased by over 350% to £3bn since 2010.
Nearly one-fifth of all exports were sold to the US.
Data from the Office for National Statistics highlight an overall trade deficit of £25.8bn (reduced by £5bn) but an increasingly positive picture so far in 2018 with exports growth of 5% in H1 and a service-sector trade surplus of £111bn.
‘British goods remain in global demand as exports to non-EU countries continue to grow’
International Trade Secretary, Liam Fox, said that: “British goods remain in global demand as exports to non-EU countries continue to grow.
“It shows the confidence the world has in our goods and is important as 90% of growth in global trade will come from outside the EU.
Read more: Dragon’s Den host Evan Davis talks business after Brexit
“As an international economic department, we have a dynamic and experienced team who will negotiate free trade deals and make a success of Brexit.
“We’re also supporting UK businesses in exporting more and talking to international businesses on why we should be the top destination for investment.”
Nagging Brexit Uncertainty
But despite UK export performance over the last 18 months defying expectations, Fox noted Brexit and a potential no-deal scenario still looms large.
“I think the intransigence of the commission is pushing us towards no deal.
“We have set out the basis in which a deal can happen but if the EU decides that the theological obsession of the unelected is to take priority over the economic well-being of the people of Europe then it’s a bureaucrats’ Brexit – not a people’s Brexit – then there is only going to be one outcome.
“It’s up to the EU27 to determine whether they want the EU Commission’s ideological purity to be maintained at the expense of their real economies.”
Dragons’ Den presenter and economist Evan Davis says nobody really knows what direction business after Brexit will go and many are still waiting to see what Brexit actually means.
In a radio interview with New Zealand-based NewstalkZB, Davis spoke extensively on Britain’s business uncertainty post-Brexit.
The famed presenter and host of predominantly startup and SME business investment programme Dragons’ Den, the first question put to Davis was; ‘Is Britain an entrepreneurial country’?
“Probably not enough. Where we don’t seem to do so well is building those businesses up to £100 billion values. We create great businesses and then they get sold off.
“There seems to be some gap where we struggle to build up the giant.
“But I will say this. London now is seen as a hub of a lot of entrepreneurial activity, particularly around FinTech because we have the finance. It’s a great place to do business.
Business after Brexit
“Nobody knows how far or in what direction it (business) will change.
“The good news for entrepreneurs with Brexit is that Britain can become more nimble. We can change our rules on driverless car testing and all sorts of things.
“The bad news would be on migration. The degree to which Brexit represented a vote against easy come and go policies. If businesses are trying to get together a group of international staff, that might be a problem.
Read more: UK SMEs planning to increase European exports despite Brexit
“And then, of course, we all know in business psychology is important. There’s a feeling among some Europeans that ‘we’re not welcome’. It’s a sort of visceral thing ahead of a rational thing.
“But we’re all agog to see what Brexit actually means!
“What has happened is we’ve encountered quite a lot of difficult problems, including the Irish border problem.
“Britain voted to be more of a nation and set its own rights to set its own product regulations and tariffs and taxes and no border, but then at the same time, we’ve decided we absolutely don’t want a border (in Ireland).
“We’re not much closer to solving the conundrum.
“The British government view and Brexiteer argument was let’s do it (go out and secure trade deals).“
Davis then concluded by noting that, no matter how much lamb and vino could be traded between New Zealand and the UK, it wouldn’t account for the potential lost trade with the EU.
“For some reason, you seem to do a lot more trade with those close to you…”
Listen to the full interview below.
The EU and Japan have signed a mammoth free trade deal, creating the world’s biggest economic area, and the biggest trade agreement either has ever committed to.
The deal covers a 3rd of the world’s GDP and will act as a timely counterweight to Trump’s tariffs on trade into the US which included 25% tariffs on Chinese goods worth over $34 billion.
The early winners of the trade deal are the Japanese car market with the new Japan-EU trade deal eliminating 10% car tariffs and 3% tariffs on car parts, whilst 30% duty on cheese and 15% on wine have also been cut. EU exporters will also be keen to exploit new markets within Japan too, with strong demand for high-quality cheese, chocolate, pasta and meats.
Of the deal, Japan prime minister Shinzo Abe noted that: “There are rising concerns about protectionism, but I want Japan and the EU to lead the world by bearing the flag of free trade.”
“We are sending a clear message that we stand against protectionism. The EU and Japan remain open for cooperation,” added Donald Tusk.
New research has suggested that British businesses are more optimistic about trading with the EU than last year, despite recent stumbling blocks surrounding Brexit.
The survey, conducted annually by OFX, found that 62% of 500 business owners felt confident about doing business outside of the UK, with 46% of SMEs saying Brexit had no effect on their desire to grow through exports in the future.
Just 15% said they were more cautious about international trade.
And it’s not just a thought or feeling, the real-life figures support what SMEs are saying:
47% increase in overseas sales since last year
Average international revenues for businesses top £50,000
21% increase in foreign cash transfers in last year from British SMEs
Eurozone still more popular than commonwealth for exporters
Perhaps the most surprising stats from the research was that the Eurozone is still the preferred trading block for local businesses, despite the slow progress and uncertainty over Brexit negotiations.
45% of those polled said Western Europe is their favoured market, boosted on last year by the securing of a Brexit transition deal to help firms plan ahead in the short to medium term.
And what about US trade after the introduction of Trump’s tariffs? Interest in exporting into our American friends has plummeted, down 26% compared to last year to 36%.
Opinion was split on the value of and optimism towards Commonwealth trade in the future.
FX research director at OFX, Jake Trask said that: “More than a year after Article 50 was triggered, small businesses have learnt to live with Brexit uncertainty, and refuse to let it limit their European ambitions.
Read more: Export partnerships growing fastest with China & Switzerland for UK firms
“Despite the slow progress of Brexit negotiations, businesses are increasingly optimistic about trade with Western Europe – suggesting a desire to keep calm and carry on with international business, along with a quiet optimism that all will be well.”
SMEs around Britain require more support
What businesses outside of the capital say they need most is international trade consultancy. 50% of companies in Wales said there wasn’t enough export support, whilst only 40% of businesses in Scotland said they felt confident about selling overseas.
But with demand for the British brand so high on the continent, and across the world, small businesses around the UK have so much growth potential if they can bridge the gap between UK-base and international customer.
One growing area in which SMEs are succeeding in this area is e-commerce, with many local firms selling fashion, homewares and software across the world.
One such small firm, menswear brand Tails, does just that. Co-director Joshua Williams noted that: “Today, we make almost all our sales online, with more than half our customers based outside the UK. Local heritage and family history are both central to our brand, and we’re lucky that the internet has made it possible to grow our business abroad without losing our Welsh roots.
Read more: Businesses react to the week in Brexit
“We have sometimes had to travel for specialist guidance, but it’s a minor inconvenience when compared to the huge advantages and quality of life we gain by running our business in Penarth.”
British businesses should leverage their unique heritage and get out there into the world to seek growth opportunities. 53% of local exporting firms say that their ‘Britishness’ is a valuable selling point on the international stage, especially within US, New Zealand, Australian and Russian markets.
If export advice is needed, companies like us at Go Exporting are on-hand to support exporting plans from planning and research to execution.
Find out more about how Go Exporting can help your business here.
They say there’s never a dull week in politics, but it’ll take one heck of a week to top the one we’ve had so far.
Within the last seven days, we’ve had the Chequers agreement, an agreed-upon way forward within the Cabinet. But just days later and we’re listening to a new Brexit secretary and foreign secretary too.
Dominic Raab’s views on human rights and workers rights are well documented, indeed in his own book, but early signs are that business groups are impressed following early meetings with the new man at the spearhead of negotiating the UK’s exit from the EU.
The British Chambers of Commerce, Institute of Directors, Confederation of British Industry and EEF had all woken up the day previous preparing for a meeting with David Davis. But just 24-hours later and it was the new Brexit secretary in front of them discussing the future of the country.
Stephen Martin, director general of the Institute of Directors, said: “It was encouraging to meet the new secretary of state within hours of his appointment, it demonstrates a commitment to engaging with the business community as we approach crunch time in these negotiations.
“The meeting was constructive and we are pleased he is keen to pursue a Brexit that is receptive to the needs of business.
“We are now keen to see the imminent white paper build on the Chequers statement, and look forward to working with the Brexit secretary as negotiations proceed with renewed impetus.”
Another present at the meeting said that: “It was really positive that a new Cabinet secretary kept his commitment with business leaders on his first full day in the role. That is an important statement of intent, in terms of willingness to meet with business and getting the right Brexit deal.”
“The sense was very much one of pragmatism and being signed up to the Chequers approach.”
London more confident in Brexit
New figures published today (Tuesday 10th) also highlight the growing confidence in Brexit from the business community, despite the very recent upheaval in government.
The figures are, for the first time since the referendum result, neutral. The balance of companies in London stating they are optimistic rose 10 points to zero, according to the London Chamber of Commerce and Industry.
Read more: End date published for ‘backstop’ EU trade plan post-Brexit
Bigger businesses were more confident though, with SMEs still more concerned than not.
And it’s not just businesses which have reported positive outlooks of late. Only last week, BoE governor Mark Carney stated his ‘greater confidence’ that the UK economy will bounce back from a sluggish first quarter, signalling a likely rate rise in the not-so-distant future, but also stimulating a jump in sterling’s value as a result of his speech.
“The incoming data have given me greater confidence that the softness of UK activity in the first quarter was largely due to the weather, not the economic climate,” Carney said, before firing a warning to Trump over trade tariffs.
So, it’s been even by the UK’s political and Brexit standards a crazy week so far, but that doesn’t necessarily mean it’s been a bad one from a business standpoint. Brexit should get moving now the cabinet has a plan in principle, and a warning that deviating from the plan will no longer be tolerated. Perhaps Raab will spend more than the four hours Davis spent directly negotiating with Michel Barnier in the coming weeks alone.
And here’s hoping the new foreign secretary doesn’t have the same ‘f–k business’ attitude as the last one.
