For SMEs and entrepreneurs there are massive export opportunities to be had in the markets beyond Europe and the USA, traditionally our biggest trading partners.
A recent report1 revealed British-branded products are growing in popularity in China, India and the United Arab Emirates (UAE), who are buying between 48% and 58% more UK goods than five years ago.
China is the UK’s sixth largest market, importing £22.3bn worth of goods and services in 20172 and, according to export expert Siddharth Shankar, annual UK exports to Asia are worth £98.6bn or 18% of the UK export market.
The Indian entrepreneur and his Chinese partner Marcus Ma founded Tails Trading in 2017 to bring high-end, luxury ‘tangible’ British-branded goods to their home markets, elsewhere in Asia, and the UAE.
“There’s massive potential for luxury and British-branded goods to become major global brands. In the mindset of Asia’s rapidly-expanding middle classes, British goods are associated with quality and exclusivity and are ‘hand-made’ by companies with long histories.
“However, we found small UK companies tend to avoid selling to emerging markets, seeing them as unfamiliar, risky and potentially expensive if production is stepped up to meet demand.”
Tails Trading links up with UK SMEs making goods it can market and sell in Asia, develops the export strategy and pays them up front for the goods being shipped. This removes risk for SMEs and enables them to meet increased demand. Its first seven UK brands went to market with orders worth £71m.
So, which British luxury goods are most popular? It’s fashion, alcohol, food and high-end pampering products and cosmetics – essentially items that reflect a ‘boutique lifestyle’.
Speciality gins and rums are really popular as are new fashion brands, footwear and footwear accessories, high-class tailoring and Scottish Tweed. Dairy-based food items, such as Ice cream, are in demand as is gluten-free food.”
Siddharth explains: “The point is, every successful product needs a good back story we can sell, whether it’s about being hand-made, the maker’s long-standing heritage or its exclusivity.”
“In addition, it’s important to ensure an SME’s production can meet demand in a sustainable way. We’re working with one Scottish company making desirable, solid-silver golf clubs for £60,000 each. I could sell 1,850 today – but they make 40 a year, so we’re upscaling production.”
In comparison, tech goods have to compete on price with locally-made Asian products and need a ‘wow factor’ to attract interest. Like the British wireless charger that can recharge a mobile from up to seven metres away, and the wirelessly charged electric bike Sidharth is planning to launch in China and East Asia.
Alex Gover, Senior Vice President of Intralink, a consultancy which helps SME’s to enter and expand in emerging Asian markets, has a slightly different take on exporting British tech.
“In our experience China and India but also Japan and South Korea are very interested in buying British – not just finished products from the likes of Dyson or Aston Martin – but tech they can use inside their own products and also good design,” he says.
“Take the Cambridge tech start-up UltraSoC, which recently struck a very large deal with Chinese giant Huawei – the second largest mobile maker in the world – to supply software enabling microchip designers to identify and fix problems.”
Hot sectors include artificial intelligence (AI), energy, medical products and automotive tech, especially for electric and driverless cars, which attracts huge amounts of investment in China.
Alex adds: “Japanese corporations have a voracious appetite for ‘open innovation’ – teaming up, forming partnerships with innovative UK start-ups whose technology and ideas they can license or co-develop. This can be a game-changer for a UK firm looking to export.
“Without doubt there will be interest in British tech and design for the foreseeable future, so if you’re UK based and looking to become global you cannot afford to ignore Asia.”
This article is written for the St James’ Place Entrepreneurs Club newsletter. The opinions expressed by third parties are their own are not necessarily shared by St. James’s Place Wealth Management.
1 Barclays, Brand Britain Report, February 2018 www.barclayscorporate.com/insights/trade/brand-britain/
2 House of Commons Library Briefing Paper, 8 Feb 2019