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3rd December 2021

Are UK Businesses Right to Consider International Expansion Beyond the EU?

By Atul Bhakta, CEO of One World Express Brexit upended many businesses’ operations within both the EU and the UK. Even the agreement of an eleventh-hour deal, just one week before the Brexit deadline, gave organisations too little time to develop and implement the appropriate measures to counteract potential disruption.Consequently, traders on both sides of the channel experienced issues with additional customs checks, complex administrative rules, and visa problems for members of the workforce. It comes as little wonder, therefore, that trade between UK and EU countries declined dramatically in the immediate aftermath of the UK leaving the EU.Indeed, figures from the UK’s Office of National Statistics (ONS) highlighted the extend of the issue; the UK’s exports to the EU throughout January 2021 suffered a 40.7% decline, compared to the previous year.The decline is certainly striking. After all, the EU was one of the UK’s largest trading partners, and such a significant decline inevitably dented the confidence of many EU companies. A survey conducted by One World Express in January 2021 captured this national concern, revealing that a quarter (25%) of UK businesses feared that they would not be capable of surviving until the end of the year.Of course, given the unknowns of Brexit, at least from the UK’s side, such a dip in confidence was to be expected. However, as the year progressed, organisations noticed scope for potentially lucrative opportunities further afield. Wider international demandAs stated earlier, the UK saw a significant dip in trade immediately following its exit from the EU. And whilst trade with EU countries is starting to recover, it should be noted that trade with non-EU countries has remained, for the most part, stable throughout the year.For example, the ONS’ aforementioned figures saw UK exports to non-EU countries experience a year-on-year increase of 1.7% in January 2021. Whilst a modest figure, it suggested a glimmer of hope for UK businesses that, despite the turmoil of Brexit, international trading remained a viable possibility.Consequently, in the months that followed, UK businesses became more open to exploring opportunities further afield. Indeed, One World Express’ most recent survey amongst 752 decision makers within UK businesses – 61% of which were either already operating abroad or planning to do so within the coming twelve months – revealed that more than six in ten (62%) felt Brexit had prompted them to expand their organisation beyond the EU.Evidence also suggests that plans for expansion were not just based on moderately positive trading uplifts. One World Express’ aforementioned research also found that over two thirds (68%) of exporters have experienced increased international demand for their goods or services throughout the previous year. A further 63% claim that markets outside of the EU were more willing to pay a premium for their goods.Interestingly, it seems that this growing international demand for UK products has been largely driven by branding. For the previous decade, UK products have gained a strong reputation for quality, which has in turn, driven a rapid rise in demand within lucrative markets within South Asia and India. As such, more and more UK businesses have found it easier to start out amongst potential customers. Indeed, One World Express’ survey found that a strong majority (67%) of exporters found that having a British brand, or UK-based operations had enhanced their products or services reputation and demand amongst international audiences.This is certainly positive news for UK businesses, particularly after such a massive dip in confidence at the beginning of 2021. However, companies can’t afford to base their entire international expansion strategy on “Brand UK” alone. After all, a reputation for quality does not guarantee immediate success within new markets.Indeed, UK companies must ensure they’ve considered numerous other factors, before they are even able to consider international expansion. A comprehensive planWhilst this may sound like an obvious point, it is surprising how many businesses overlook the importance of planning. For example, almost a third (32%) of exporters do not have a clear international expansion strategy in place. Failure to plan certainly increases the chances of failure within a new market, so it is vital that certain points are addressed.An important starting point for UK businesses will be research. Understanding the new market and target audiences, as well as the culture and laws within a new country will certainly contribute to a successful trading debut. Doing so will allow a business to effectively appeal to new demographics, and provide substantial building blocks for the company’s international longevity.Next, businesses should consider forging connections within their target market. This could involve various stakeholders, from mentors who can offer further valuable insight into market activities, and distributors, to eCommerce marketplaces – all of whom could give businesses a platform to getting their product or service to their new audience. Luckily, many companies appear to see the value in this; according to One World Express’ research, 72% of exporters have already done this.Finally, and perhaps most importantly, UK organisations must acknowledge the importance of a sustainable logistics strategy. For example, with their product being shipped across the world, companies must ensure that they have a transparent tracking system, efficient returns process, along with further shipping software, to facilitate a streamline shipping process. Without one, companies risk damaging “Brand UK’s” reputation for quality, as customers will be unlikely to pay a premium if they experience a poor courier service. And vitally, companies must remember that logistics consultants are on hand to help create a tailored logistics strategy, which will meet the specific needs of both the organisation and its clients.Of course, the EU will remain one of the UK’s most prominent trading partners – it is too large, and too geographically convenient to be overlooked. However, over the next few years, I anticipate more and more businesses to explore opportunities further afield. And with international demand for “Brand UK” growing stronger, there certainly appears scope to do so. And provided that UK companies conduct thorough research, I see no reason why such companies should not enjoy successful expansion.  Atul Bhakta is the CEO of One World Express, a position he has held for over 20 years. He also holds senior titles for other retail companies, underlining his vast experience and expertise in the world of eCommerce, trade and business management.

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Are UK Businesses Right to Consider International Expansion Beyond the EU?

By Atul Bhakta, CEO of One World Express

 

Brexit upended many businesses’ operations within both the EU and the UK. Even the agreement of an eleventh-hour deal, just one week before the Brexit deadline, gave organisations too little time to develop and implement the appropriate measures to counteract potential disruption.

Consequently, traders on both sides of the channel experienced issues with additional customs checks, complex administrative rules, and visa problems for members of the workforce. It comes as little wonder, therefore, that trade between UK and EU countries declined dramatically in the immediate aftermath of the UK leaving the EU.

Indeed, figures from the UK’s Office of National Statistics (ONS) highlighted the extend of the issue; the UK’s exports to the EU throughout January 2021 suffered a 40.7% decline, compared to the previous year.

The decline is certainly striking. After all, the EU was one of the UK’s largest trading partners, and such a significant decline inevitably dented the confidence of many EU companies. A survey conducted by One World Express in January 2021 captured this national concern, revealing that a quarter (25%) of UK businesses feared that they would not be capable of surviving until the end of the year.

Of course, given the unknowns of Brexit, at least from the UK’s side, such a dip in confidence was to be expected. However, as the year progressed, organisations noticed scope for potentially lucrative opportunities further afield.

 

Wider international demand

As stated earlier, the UK saw a significant dip in trade immediately following its exit from the EU. And whilst trade with EU countries is starting to recover, it should be noted that trade with non-EU countries has remained, for the most part, stable throughout the year.

For example, the ONS’ aforementioned figures saw UK exports to non-EU countries experience a year-on-year increase of 1.7% in January 2021. Whilst a modest figure, it suggested a glimmer of hope for UK businesses that, despite the turmoil of Brexit, international trading remained a viable possibility.

Consequently, in the months that followed, UK businesses became more open to exploring opportunities further afield. Indeed, One World Express’ most recent survey amongst 752 decision makers within UK businesses – 61% of which were either already operating abroad or planning to do so within the coming twelve months – revealed that more than six in ten (62%) felt Brexit had prompted them to expand their organisation beyond the EU.

Evidence also suggests that plans for expansion were not just based on moderately positive trading uplifts. One World Express’ aforementioned research also found that over two thirds (68%) of exporters have experienced increased international demand for their goods or services throughout the previous year. A further 63% claim that markets outside of the EU were more willing to pay a premium for their goods.

Interestingly, it seems that this growing international demand for UK products has been largely driven by branding. For the previous decade, UK products have gained a strong reputation for quality, which has in turn, driven a rapid rise in demand within lucrative markets within South Asia and India. As such, more and more UK businesses have found it easier to start out amongst potential customers. Indeed, One World Express’ survey found that a strong majority (67%) of exporters found that having a British brand, or UK-based operations had enhanced their products or services reputation and demand amongst international audiences.

This is certainly positive news for UK businesses, particularly after such a massive dip in confidence at the beginning of 2021. However, companies can’t afford to base their entire international expansion strategy on “Brand UK” alone. After all, a reputation for quality does not guarantee immediate success within new markets.

Indeed, UK companies must ensure they’ve considered numerous other factors, before they are even able to consider international expansion.

 

A comprehensive plan

Whilst this may sound like an obvious point, it is surprising how many businesses overlook the importance of planning. For example, almost a third (32%) of exporters do not have a clear international expansion strategy in place. Failure to plan certainly increases the chances of failure within a new market, so it is vital that certain points are addressed.

An important starting point for UK businesses will be research. Understanding the new market and target audiences, as well as the culture and laws within a new country will certainly contribute to a successful trading debut. Doing so will allow a business to effectively appeal to new demographics, and provide substantial building blocks for the company’s international longevity.

Next, businesses should consider forging connections within their target market. This could involve various stakeholders, from mentors who can offer further valuable insight into market activities, and distributors, to eCommerce marketplaces – all of whom could give businesses a platform to getting their product or service to their new audience. Luckily, many companies appear to see the value in this; according to One World Express’ research, 72% of exporters have already done this.

Finally, and perhaps most importantly, UK organisations must acknowledge the importance of a sustainable logistics strategy. For example, with their product being shipped across the world, companies must ensure that they have a transparent tracking system, efficient returns process, along with further shipping software, to facilitate a streamline shipping process. Without one, companies risk damaging “Brand UK’s” reputation for quality, as customers will be unlikely to pay a premium if they experience a poor courier service. And vitally, companies must remember that logistics consultants are on hand to help create a tailored logistics strategy, which will meet the specific needs of both the organisation and its clients.

Of course, the EU will remain one of the UK’s most prominent trading partners – it is too large, and too geographically convenient to be overlooked. However, over the next few years, I anticipate more and more businesses to explore opportunities further afield. And with international demand for “Brand UK” growing stronger, there certainly appears scope to do so. And provided that UK companies conduct thorough research, I see no reason why such companies should not enjoy successful expansion.

 

 

Atul Bhakta is the CEO of One World Express, a position he has held for over 20 years. He also holds senior titles for other retail companies, underlining his vast experience and expertise in the world of eCommerce, trade and business management.


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