The push for new business overseas can sometimes overlook more immediate entry points. By leveraging existing relationships, however, and reaching out into the supply chain, businesses can often fast track their international growth
In the second of HSBC’s Connecting for Growth events, some of the leading mid-market enterprises in the Midlands gathered at The Belfry in Sutton Coldfield to discuss the challenges and opportunities of ‘Growth through New Markets’.
Delegates came to share their growth plans and compare new market strategies, as well as what to do if you are already in several territories and need to expand.
Sitting on the panel to lead ‘The Growth Debate’ were local business leaders Richard Taffinder, Managing Director of Hills Numberplates; Rowan Crozier, CEO of Brandauer; Gary Burton, Regional Director for HSBC; Liz Martins, HSBC Economist; and Richard Butler, Director, West Midlands and Oxfordshire for the CBI.
“We are here to help and support the region’s businesses in their great aspirations,” said Gary Burton, opening the session. “We all know about the rewards of export but we also know it comes with quite a few challenges, which is why today is a great opportunity to capitalise on the expertise we’ve got in the room.”
The conversation quickly moved on to the Eurozone, exchange rate volatility, and other geo-political pressures that might hinder growth into new markets.
Liz Martins said that the Greek referendum on July 5th was a “game changer” while Richard Butler could only see two choices ahead: “the EU either writes off some of the debt and they stay in the union. Or they exit stage left.”
Even so, despite the uncertain environment, many at the morning session sought to temper any short-termism on the opportunity and demand in European markets such as France, Spain and Portugal.
Richard Taffinder stressed that if a business is committed to being in Europe for the long term then there are ways to diversify your exposure. “Setting up euro accounts is one way; forward-buying products is another,” he said.
What’s more, the currency risk of a ‘Grexit’ can be managed. Gary Burton spoke about the tools and mechanisms HSBC can give businesses to allow more security in getting paid and managing their risk.
After evaluating Europe’s current state of play, the conversation moved on to the relative ‘safe haven’ status of emerging markets where demand is outstripping the Eurozone. With fewer engineering and manufacturing competitors in markets like Malaysia, Singapore and Brunei, the UK’s mid-market exporters can often find greater upside.
Rowan Crozier, for example, runs a highly technical, niche engineering business, but he has to contend with 40 competitors in Germany alone. So he highlighted the importance of being agile in their approach to new markets.
“There will always be cycles of uncertainty,” he said, “but what’s important is how a business reinvents itself and spots the opportunity in everything. Doing nothing is not an option.”
While the attraction of Asian markets is real and growing, many of the delegates conceded that there are still problems to overcome, principally the skills gap in emerging territories and the challenge of codifying your culture as you expand.
How to establish your route to market was a theme often returned to throughout the morning, and specifically the way in which businesses should utilise their existing customer and supplier base for further gain.
In fact both Richard Taffinder and Rowan Crozier indicated that some of their key contracts in the last five years came via word-of-mouth. Without that “bloodline”, as Taffinder explained, you can’t leverage existing relationships in the supply chain.
Finally, the discussion concluded with some of the concerns and opportunities around talent development at SMEs and MMEs. Engineering is the lifeblood of the Midlands yet smaller companies find it difficult to compete with the attractive packages Jaguar Land Rover, and others, can offer. Yet Rowan Crozier took a different view, saying you cannot beat an SME training scheme in terms of employee empowerment.
“Technically you need to look after apprentices, but pastorally as well,” he said. “All of that can be much more personalised than it is at bigger companies.” Others agreed, with Richard Taffinder adding that engineering needs help from the government to “sex-up” the sector, advice which he passed on to Ed Miliband last year.
Delegates left the event enthused by the shared insight gained from contemporaries in the region and encouraged by the support provided by HSBC as they look to continue their individual growth stories overseas.
The ‘Growth in New Markets’ series now moves on to Leeds for the final morning session until September, when the focus will change to the key challenge of ‘Growth through People.’
Article via Global Connections, HSBC
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