Roger Trapp
There was some surprise last year when British Prime Minister David Cameron led a UK business delegation to India.
Coming so soon after he had taken office, it was not the sort of trip usually associated with politicians seeking to establish themselves on the world stage. Yet, with Britain still struggling to emerge from a tough recession, the logic is clear.
Trade and Investment Minister Stephen Green, a former banker, said the government placed building the UK-India relationship among its top priorities, because the expected growth of the Indian economy “means lots of business opportunities for UK companies”.
With a population of 1.2 billion, more than half of whom are under 24 years old, the country is seeing its gross domestic product – put at $1.24 trillion (R8.4 trillion) in 2009 – grow at more than 7.3 percent a year, and is expected to become the world’s fourth-largest economy by 2020.
Just as many assume that exporting is the preserve of well-established large businesses, it is generally thought that expanding into such a vast and complex country as India is beyond all but the most sophisticated organisations.
Yet Green is keen that small and medium-sized enterprises (SMEs) should be among those seizing the opportunities in this rapidly developing market. UK Trade and Investment (UKTI), the government-backed body helping businesses to trade overseas, last year helped about 3 000 UK firms in India – and the vast majority of these were SMEs.
At the centre of the effort to ensure there are even more smaller businesses benefiting from this burgeoning market is the UK India Business Council, a business-led organisation that promotes trade and investment between the two countries and is backed by the government through UKTI.
Richard Heald, the chief executive of the body, said that while India might not suit all companies, the opportunities presented were too great to be ignored completely.
Some SMEs might regard India as too difficult or too risky, but he argued that “the real risk, now, is not being aware of the opportunities presented by India and indeed by Indian capital”.
The importance of the latter was illustrated by the recent announcement by the Indian electrical business Havells that it was basing its European lighting business in London.
The company, which was drawn to Britain by the innovation offered in this increasingly technical field, provides various British companies with potential routes into not just India’s rapidly expanding consumer markets, but also projects in the Middle East and other parts of the world where Havells and its Sylvania subsidiary are supplying goods.
But, as important as India and, of course, China are to potential exporters, they are not the only overseas markets opening up to British companies. UKTI, which has been rated the best trade promotion agency in the developed world, has a network covering nearly 100 overseas markets, and a presence in all the UK regions.
Last year, it helped about 25 000 businesses generate £5 billion (about R55.5bn) for the UK economy.
In the end, however, a lot comes down to how businesses seize their opportunities once such initiatives have helped put them in the position to capitalise. Bulldog’s co-founder Simon Duffy recently said companies that were going to be successful exporters could not rely on the government to do the hard work for them. “They need to get on and figure things out for themselves,” he said.
Among the things to be figured out is the form the expansion takes. And that can depend on the country or region being targeted. And on the type of business.
Boticca.com is an online marketplace aimed at selling the wares of independent jewellery designers from around the world.
Based in London, its nine employees represent seven different countries.
More importantly, it deals with nearly 180 designers from more than 30 countries and attracts buyers split evenly between the US, Europe and the rest of the world.
The business came about after co-founder Kiyan Foroughi was travelling in Morocco in 2008 and came across a jewellery designer in Marrakech who, in his words, “really stood out”.
It transpired that the designer came from the Atlas Mountains and, inspired by her success in selling to women in her village, started travelling to the city to sell to tourists.
Foroughi, who was working for a private equity firm, decided to look into the possibility of bringing designers like her to a wider market. His research showed him that not only was there apparently no business already serving this market, but that the jewellery business was both huge ($200bn worldwide) and fragmented (with the top 10 companies representing just 10 percent of the market). Perfect conditions for the budding entrepreneur.
He and fellow founder Avid Larizadeh set about building a business that would do more than trade in exotic jewellery.
“A lot of people are looking to express their own style. The last decade was fast fashion. Now, the consumer is savvy. People are looking for unique products,” Larizadeh said.
The pair realised that going online would enable them to go global quickly. But they have also sought to use the knowledge developed to ensure that they appear at the top of internet searches and improve their chances of achieving sales on behalf of the designers.
In addition, they are using technology to provide their designers with data on what sells best, so they can adapt in line with demand.
When Will Butler-Adams joined Brompton Bicycle in 2002, the maker of folding cycles was, in his words, “pretty little”. There were 24 staff and turnover was about £2m. But even then exports were substantial, with Germany, Holland and Japan the core markets.
The company has certainly benefited from a greater interest in people cycling to work and Butler-Adams feels there may even be sales to people responding to the economic downturn and rising fuel costs by swapping a car for a bike.
He says of great importance is deciding how much investment in the new market you can afford. – The Independent