roundtable: international trade
and ‘summer of success’ boosts had not been adequately considered.
“I agree that retailer orders are down, but they are simply making sure that what they stock they can sell.”
David Murray asked about the competitiveness and local importance of Solent import-export businesses.
Morrison explained that ABP’s Port of Southampton business was broadly focused on cruises, cars, and containers. With 95% of UK imported goods coming in by sea it was an important and integral part of the UK economy, a major Solent region employer.
“But, we compete on a international sector basis rather than by location. Felixstowe is a UK competitor for container business, but equally so is Rotterdam or Le Havre. People from throughout the UK and beyond access cruises embarking and disembarking from Southampton.”
Jolyon Pope’s company exports tyres to the Caribbean and Europe “We tend to concentrate on the smaller export markets – “when the currency is right” – that the big companies don’t want to go to because of low sales volumes.” He reported cost-conscious drivers resorting to part- worn tyres and cutting back on their mileage.
“We also find that people are driving less and, worryingly, taking their cars in for brake-disc changes with the discs down to their veins,” said Julian Grazebrook who’s company has brake-disc foundries in UK (Poole) and Europe, supporting major European distributors to the aftermarket. Chinese low-cost products now predominated in the Far East and the USA. Fortunately the market in the major European countries (except the UK) still tends to be brand and quality, not cost-led .
However, Grazebrook reported that labour costs were now rising rapidly in China. “Eight years ago labour costs were completely immaterial in the cost of manufacturing. The exponential increase in labour costs is severely impacting business and it will not be many years before many of the cost benefits of doing business in China are eroded.”
Murray asked if that provided opportunities for UK manufacturing.
It may, but many organisations will just move their manufacturing to other low-cost labour areas such as Vietnam, said Grazebrook.
Shaun Parsons mentioned that China was already sub-contracting work to its sub- continental neighbours such as Vietnam, a reason for the rising economies of some CIVETS.
LOCALISM, Part 1: Chinese aspirations and home markets
Squibb remarked that Chinese consumer demand has grown rapidly as seen by premium brands such as Bentley who confirmed earlier this year that China is their number one overseas market, ahead of the US.
Pope claimed the Chinese do not like their own brands. “They aspire to buy western brands, and that’s why western manufacturers are putting up factories in China to make their brands for the home market.”
Grazebrook: “A lot of the Chinese market is now focused on China and its adjoining nations because the demand is huge, but I think there will be a great deal of social unrest in the next five years because of the massive influx into cities where there isn’t the work.”
Gary Whittle said a move to localism would not be difficult in China. “A few years ago China did nothing but sell locally, so switching back will be very easy. They are used to doing it.”
Parsons confirmed the localism. “The Chinese have taken on the Indian economic model, concentrating on its vast home market and only exporting about 10% of what it manufactures. They have seen a downturn in European business and so they are now selling to themselves, sustaining their own growth, which is perhaps something we need to do in the UK.”
Global logistics operator Whittle commented: “Imports are down almost everywhere. People are consolidating what they manufacture, selling locally and buying locally, and I think that will be the case for the next 18-24 months.”
LOCALISM, Part 2: Support for British businesses
Pereira highlighted public sector cutbacks in business support and the need for Local Enterprise Partnerships to be helped to grow into effective and supportive bodies for British businesses seeking international trade. “The UKTI is currently trying to find ways to work with fledgling LEPs, mobilise that local support and link it to central government to maximise the opportunities out there.”
As the chair of the Solent LEP, Morrison stressed that many LEPs were barely a year old and their partnerships between local business leaders, authorities, education and community interests were still bedding in. “The Regional Development Agencies were definitely over- bloated, and the Government recognised that so initially set up LEPs as exactly the opposite, with no support whatsoever – although that has begun to change more recently. We are
THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – NOVEMBER 2012 Shaun Parsons
now starting to make a difference, with the right local LEP Board to support local businesses.”
Murray asked if the Solent LEP would also be supporting inward investment.
Morrison said one problem was that LEPs had to bid for additional government funding for projects. “Let’s not kid ourselves. The vast majority of government investment will likely go north rather than south, because problems up north are perceived as more acute than here.
Pereira: “We are trying to work through all sorts of local partners we have never spoken to before, because there is no other mechanism to get to companies who don’t know about UKTI and haven’t really thought about their export potential.
“We have a huge and experienced international network at the disposal of British businesses.”
Among the many UKTI services to help existing exporters or complete novices, he exampled, a £99 scheme that takes export novices to selected overseas destinations, “meeting successful British exporters, British Chamber of Commerce members and local companies, and seeing how they, even as novices, might become part of our international exporting network.”
Are there still export novices and businesses unaware of UKTI’s help? asked Murray.
Squibb: “Not perhaps among the mid-market Continued overleaf ...
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Steve Clarke
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