Export markets pitch for business
BRAZIL is a welcoming market with advantages for UK exporters, says Maria Luisa Cravo Wittenberg, of the Brazilian trade and investment promotion agency APEX-Brasil
This is Brazil’s decade. The eyes of the world will be on us as we host the 2014 FIFA World Cup, and then in 2016 we host the Olympic Games and Paralympics in Rio.
The Brazilian economy is the sixth largest in the world, growing at an annual average rate of around 5 per cent. We have a diverse economy, from the obvious, such as agriculture, timber and textiles, to less well-known areas, such as aircraft, medical devices, motor vehicles, and oil and gas.
Foreign investors in Brazil will find a receptive and easy-to-negotiate marketplace. Our banks are well capitalised and offer competitive financing lines. Transport links on the coast are superb, making it simple and cheap to move goods from Porto Alegre to Rio to Recife. Moving goods in-land is still a little tricky, but nonetheless improving as infrastructure has become one of the main areas of concern and improvement of the current government.
One area you may wish to get advice is on potential incentives. Brazil has an industrial policy, called Plano Brasil Maior (Plan for a bigger Brazil), which levies some federal taxes on certain priority sectors. Furthermore, some state incentives are also available, depending on the location and the type of investment that is to be made.
Brazil is a friendly location for investors. There are not many restrictions on foreigners owning businesses. Brazilian labour laws and taxes are different to the UK so, again, local legal advice is recommended.
If you are considering which country to do business with, here are a few things which give Brazil an edge. First, it is such an easy country to do business in. Corruption is less than in other comparable economies, and commercial law is clear and well implemented.
Second, the middle class is huge, booming and eager to access products and services.
Third, the structures to help you become established in Brazil are excellent. Apex-Brasil, the Brazilian trade and investment promotion agency, can help you throughout the investment process, and provides free services, which range from the provision of information to site selection and connections.
Brazil also offers the most attractive gateway to the rest of South America. Produce in Brazil and you can quickly expand the market to our Latin American neighbours. There is already an impressive history of British firms prospering in Brazil. This ought to be the year when you join them.
CHINA, the world’s second largest economy, is a market of eastern promise, says Stephen Phillips, chief executive of the China-Britain Business Council (CBBC)
With decades of double-digit growth, growing consumer wealth and a building boom, China is an important market for the UK economy. Since 2009, exports have doubled and, in the first quarter of 2013, averaged over £1 billion a month. It is now our seventh largest export market.
China’s rapid growth means the purchasing power of the Chinese middle class is now having a clearly defined effect. While the dominant UK export sectors of automotive and high-value engineered goods continue to perform well, there has also been a dramatic growth in the export of consumer-related products to China. Demand in other sectors is also expanding, with UK excellence in creative industries, financial and professional services, education, healthcare and ICT acknowledged and sought after.
There is a perception that China can be challenging, with its continental size and different business culture. However, exponential growth in air, rail and road networks means that regions and cities are increasingly accessible and connected.
As to business culture, with a network of ten offices across the UK and thirteen across China, CBBC is well placed to support companies of all sizes and at all levels of Chinese experience with advice, research and practical support. And through nearly 60 years of engagement, we have exceptional connections with government and businesses across the market.
CBBC has an extensive programme of events in both the UK and China, with senior political leaders and key senior executives from both countries, and we receive business delegations from all over China, allowing companies to establish valuable contacts right here in the UK. Such events are also an opportunity to network and learn from China-savvy companies, to understand the challenges and intricacies of doing business in China, and develop sound strategies for expanding in this fast-changing and dynamic marketplace.
Research is vital. Using CBBC, companies can commission analysis and support through UK Trade & Investment’s Overseas Market Introduction Service (OMIS) to inform them about market potential, identify prospective customers, partners or distributors, arrange meetings and provide market intelligence.
CBBC offers unrivalled access to key decision-makers and up-to-date intelligence on the very latest developments. Companies join our membership programme to network, understand the intricacies of doing business in China, develop sound strategies for expansion and contribute to policy development.
There is also a wealth of information and experience to be had from the CBBC’s 900-plus corporate members. So if we don’t know the answer, we know someone who does.
INDIA presents significant opportunities for UK businesses, goods and services, says Richard Heald, UK India Business Council (UKIBC) chief executive
Entering and expanding in an overseas market is not easy for big companies or small ones. But it is a risk that you must take in order to grow. And that’s exactly what Stuart Paver, who heads a traditional, family-owned, Yorkshire-based footwear company called Pavers England, did.
Initially, he didn’t really see India as a place for natural progression. However, after working in China, where he observed the rise of the middle class and changing consumer behaviour, especially that of working women, he changed his mind. He saw a new segment grow in China, which didn’t exist 20 years ago, and is witnessing the same thing happening now in India.
And so, four years ago, he launched Pavers in India. Today he has more than 185 outlets and also operates online.
India is a large, fast-growing economy and this growth is largely driven by domestic demand, fuelled by a rapidly growing middle class. There are 572 million people under the age of 24 in India, the biggest youth population in the world. According to the Organisation for Economic Co-operation and Development (OECD), India’s middle class will expand from between 5 and 10 per cent of the population to 90 per cent in 2039.
With more than 1.2 billion people living across 28 states, there are many “Indias” within India – be aware of the cultural diversity and be cautious about generalisations. As the Cambridge economist Joan Robinson once observed: “Whatever you can rightly say about India, the opposite is also true.”
When choosing a market, it is advisable to avoid the expensive, over-crowded mega cities, and look at the emerging second and third-tier cities. The next round of economic growth will take place in emerging cities, such as Pune, Nagpur, Kochi, which offer good infrastructure and are cheaper to do business in. UK businesses should also look out for relevant sector-specific clusters, such as Bangalore for IT, biotech, aerospace; Pune for manufacturing, skills and education; and Hyderabad for IT and aerospace.
The UKIBC can help though our business centre facilities in Gurgaon and New Delhi, and services, such as the India Readiness Programme and Launchpad. Companies can tap into our network and knowledge to make their India entry a low-risk one.
There are few quick wins in India, but with the right approach, the rewards can be significant, and your business could grow as fast as India’s middle class and economy.
RUSSIA has had its fair share of bad press, but offers a rewarding commercial future, says Trevor Barton, executive director of the Russo-British Chamber of Commerce
In the past two years, annual UK exports to Russia have increased by more than £2 billion, with significant potential for more. Russia is home to a growing middle class with an appetite for international products.
For UK companies, the British brand is an incredibly valuable asset in Russia, where products stamped “Made in the UK” can expect a warm welcome. This is especially true in the wake of the London 2012 Olympics, with respect for the British ability to deliver both on quality and style at an all-time high.
There is also a role for British companies to play in Russia’s ambitious plans for infrastructure development. These plans tie in closely with the country’s current position as a global sporting centre. This summer alone, Russia hosted the World Student Games, the Rugby Sevens World Cup and the World Athletics Championships. Looking ahead, the Sochi Winter Olympics are less than six months away and the 2018 Football World Cup is on the horizon.
To support these events the Russian government has committed to a vast array of major infrastructure projects, which offer tremendous opportunities for UK companies to share their expertise and expand their business.
As the largest country in the world and the BRIC economy closest to the UK, Russia offers a unique opportunity for exporters with ambition. There is potential not only in Moscow and St Petersburg as Russia is home to 12 cities with a population of more than a million and Russia’s regions are increasingly seeking co-operation and investment from UK companies, offering access to large, underserved markets for those with the right products.
There are plenty of myths about the Russian market, the most unhelpful of which is that it is a high-risk, high-return opportunity. The only horror stories we hear are from British companies who did not invest sufficient time and resources in researching, planning and really getting to know the country.
SOUTH AFRICA is embarking on large-scale infrastructure projects, which UK firms should bid for, says Mary-Anne Anderson, chairwoman of the South African Chamber of Commerce UK
The British government considers South Africa to be a “premier league” trading partner and this positive relationship is set to grow. Trade already amounts to £9.6 billion a year, with a £20-billion target by 2015.
The key is South Africa’s huge investment in infrastructure. Over the next few years South Africa will spend £90 billion on energy, water, healthcare, transport links and environmental work. There ought to be fabulous opportunities for British firms willing to get involved.
Which sectors ought to appeal to British firms? Naturally, South Africa’s mining industry will be well known. But other sectors are growing in importance. Education is a fast-growing industry, with12 million school pupils in 25,000 schools, as well as 23 universities and 50 further education colleges. Film production is booming, and the Department for Trade and Industry offers substantial incentives for big-budget projects, as well as for smaller documentaries and films.
Cape Town’s strength in the creative industries has been rewarded with the title World Design Capital for 2014. The city will host an extraordinary array of events next year – worth visiting, even if you are not committed to becoming an exporter.
A key reason to export to South Africa is the legal framework. Intellectual property rights are respected and upheld. Property law, commercial law and human rights legislation are among the most sophisticated in the world.
The commercial opportunities in South Africa are vast. The economy is among the most diverse imaginable, ranging from cutting-edge software and financial centres in Johannesburg and Cape Town, to coastal tourism and game reserves.
You’ll find an entrepreneurial zeal across South Africa. Role models include Elon Musk, founder of PayPal and electric car brand Tesla; Mark Shuttleworth, founder of the Ubuntu Linux operating system and first African in space; mining tycoon Patrice Motsepe; retail mogul Raymond Ackerman; Avi Lasarow in healthcare; and James Durrant of Mamba Mentors. Private equity and venture capital are strong, creating a start-up culture unmatched elsewhere in Africa.
Trade “ambassadors” will be speaking at Going Global Live, London’s Olympia, November 28-29.