It is no secret that there has been a prolonged and harsh recession in large parts of the Eurozone. But for medium-sized UK companies, this traditional market, alongside the US, has been the dominant export destination. Does it make sense for the UK’s mid-market companies to look beyond these destinations for export opportunities? If so, what obstacles might they face?
An Appetite for Change?
According to research conducted by GE Capital and Warwick Business School, around half of UK mid-market businesses have no appetite to enter into new markets. Those firms that are considering this are more cautious about expansion overseas than previously.
“Comfort and caution are acting as brakes on mid-market export expansion”, comments Jonathan Barnes, Relationship Director at Santander. ”Those companies with higher growth are more likely to have a different pattern of exports to other businesses. Over 80 per cent of higher growth companies include emerging markets in their export plans”.
“One of the fastest growing markets worldwide is China“, Jonathan points out. “Here, over 30 per cent of UK medium-sized companies already have a presence”.
The Export Opportunities of China
From a manufacturing viewpoint, China has a growing middle class with an appetite for imported luxury goods. This has to be balanced against their domestic market which is generally weaker than that of large European countries. There is, however, large Chinese involvement in IT and communications, along with professional and service sectors.
“China is an opportunity and like many opportunities it comes with certain challenges. For some mid-market companies they are put off by a lack of local knowledge or language skills”
Jonathan Barnes, Santander
Jonathan points out that these sorts of obstacles can be overcome with the right investment in research and training. “There are also potential government policy issues here”, he says, “such as bureaucratic obstacles and education and training programmes”.
Another key area for helping mid-market businesses expand their exports is in financial assistance.
“Mid-market companies need greater access to a range of financial resources, which can be applied cautiously but effectively and strategically”
Jonathan Barnes, Santander
Medium-sized companies are effective engines of the UK’s national economy. As such, many are ready for expansion into new markets, providing they get the right kind of encouragement.
M3 Media Publishing would like to thank Jonathan Barnes for his insights in to issues facing mid-market companies. To read his views on their other issues, please click on the links below: