Iceland beats England

A lesson for British Business

To add to all the disruption and apparent chaos that the country has descended into over the last few days, soccer fans are shocked – or at least disgruntled – by tiny Iceland’s defeat of mighty England in the European football cup yesterday.

What happened there?  Pundits were united in saying that the key factors were the commitment and enthusiasm of the Icelandic team. It proves that with determination and a good plan, even the unlikeliest of the teams can succeed.

There’s a lesson for British Business here. A disappointingly large number of companies in the UK do not expand abroad, limiting their international activities to exporting via third party distributors or perhaps outsourcing some labour-intensive activities such as accounting or call centres. Quite apart from reluctance to invest and fear of the unknown, I still meet many business people who believe that “we do it better here at home”.

Just as with football, overseas business subsidiary teams, especially those based in developing countries, often overtake their British HQ staff in terms of enthusiasm and commitment. This is particularly true where the company has had the foresight (and some would say bravery) to hire highly skilled individuals to perform strategic roles in the globalised company.

All over the world you can find skilled, qualified professionals determined to prove their worth. Put them into a new international subsidiary operation, and your demonstration of commitment to their country will be repaid many times over with their contributions to your business. Expansion is Great!

by Oliver Dowson, CEO at ICC – International Corporate Creations

And now what?

Companies across the world are locked down in emergency meetings as we all face the reality of Brexit. While there may be panic in financial markets, other businesses need now to look further ahead and quickly put in place contingency plans to protect their companies.

No one knows what will happen with the intricate arrangements and rules that tie the UK to the EU but it’s probable that the UK will stay in an EFTA/EEA arrangement. Considering this scenario, businesses that trade in EU countries from branches will need to make some changes, and all will continue to be affected by currency fluctuations.

Companies that only have domestic business – especially SMEs – need to consider the effect of more volatility in currency, commodity and stock markets. Imports and raw materials are likely to cost more. However, exchange rates staying low will hopefully incentivise those that do not currently export or sell services abroad to look again at their business and seek new opportunities.

The picture is arguably more complicated for overseas companies that invested in setting up subsidiaries in the UK on the strength of using it as a base to trade with Europe. Those with little reliance on manufacturing or services delivered from the UK will no doubt be considering partial or total relocation.

At ICC – International Corporate Creations, we didn’t want Brexit, but we’re grasping reality. We can help your company plan and decide your next steps. Whatever your business or location, talk to us for constructive and clear insights on UK and overseas business growth and prosperity.

 

by ICC team, ICC – International Corporate Creations

Remain or leave the EU

Trade deals work both ways

“If the UK leaves the EU, it will be free to strike its own trade deals”.  So say the Leave campaign – but it makes little sense to me.  Whilst I suppose it’s a true statement, is this really something that the UK really wants or needs?

I won’t provide any facts and figures, because in the current nasty campaign there’s a danger of this article getting tagged as scaremongering or just plain lies.   So let’s just think about it in general.

Britain already has pretty good trade deals with most countries through the EU, and has always been one of the major trading nations of the world.  The Leave campaign cites USA, India and China as countries that the EU doesn’t have free trade deals with, and says that the UK needs them.

The USA is already – by a long way – the biggest export market for the UK.  The EU has been trying to negotiate a trade deal for many years – and it’s still negotiating.  Nothing has been agreed because some American demands are unacceptable to Europe.  Yes, trade deals work two ways – a free trade deal doesn’t only open markets for us, it opens up our market to them!

Among the things that America insists on but Europe won’t accept are reductions in data protection and import of genetically-modified food and beef fed with hormones.  Are these things that the UK on its own should accept?   Britain led the way in consumer rights since the 1960’s, and most EU legislation is derived from that – and now we walk away?  I don’t think most voters would agree.

Removal of trade barriers opens up markets to us – but brings with it a clear danger that we will end up importing more than we do now, and tip the trade balance further against us.  We can only benefit when the overseas market is eager to buy UK products and services and we have exporters ready to take advantage – and, sadly, there’s little indication that is the case.

India is a good example.  It’s another of the countries that Leave cite as needing a free trade agreement – but existing barriers are low, and UK trade under the current regime has actually been declining year on year.  Despite special trade missions to India, lots of government-funded activity to encourage exports, and long-standing ties between the countries, recent years have simply seen a growth in imports whilst India’s interest in buying British – and hence exports – has reduced.

And China?  That’s the most difficult market of all to read.  One certainty is that one reason for the “steel dumping” that has led to the virtual obliteration of the UK industry is that, for other political reasons, our own government vetoed the EU imposing tariffs on Chinese steel.   There seems no doubt that China would only agree to a free trade deal if they thought that would increase their own exports more than the new imports they would be letting in.

Conclusion?  Free trade is great, but removal of barriers on their own can create new problems.  The UK has been well served by the EU trade agreements.   Apart from the strength of a much larger negotiating bloc, I’d argue that the EU has added the social responsibility that we lack on our own.  It would be madness to throw it all away and leave.  Let’s Remain.

 

by Oliver Dowson, CEO at ICC – International Corporate Creations