Home Brexit Geopolitics & Brexit creating international trade opportunities

Geopolitics & Brexit creating international trade opportunities

by LLB Reporter
18th Jul 19 8:01 am

New research from Grant Thornton UK LLP reveals that while Brexit and global geopolitics has challenged some mid-market UK businesses, it has also presented new trade opportunities.

Grant Thornton conducted a study of 300 leaders from UK mid-market businesses that are trading internationally to understand how they are responding to the global political climate. The study coincides with the launch of Grant Thornton’s Growth 365 International service. The service, which is supported by the Department for International Trade (DIT), draws on Grant Thornton’s global network and immensely experienced growth advisors to help businesses leaders research, plan and execute entry into new markets or get more value from their existing operations

Brexit & brand Britain

The study found that Brexit has hampered UK businesses significantly:

  • 68% of businesses are more cautious about international growth after Brexit;
  • 60% agree Brexit has impacted international business growth;
  • Seven in 10 agree that political volatility has created a less predictable business environment in Europe than five years ago.

The study also highlights that many businesses (64%) believe ‘Brand Britain’ has been weakened and foreign perceptions of Britain have changed as a result of Brexit. Half agree USA businesses are less likely to partner with their businesses due to the uncertainty of Brexit.

Yet, in spite of this, Brexit has also encouraged UK businesses to step up and step out into new markets, with 67% saying Brexit has prompted them to look for business opportunities beyond Europe and 56% saying Brexit has prompted them to develop new products and services, presenting new offerings and benefits to the global market. Almost three quarters (73%) also believe that the UK is more concerned about the impact of Brexit than the rest of the world.

Trump & tariffs

In spite of Brexit, Europe is still the top market when it comes to current (95%) and future (45%) trade opportunities. But the current political climate has encouraged UK businesses to make trade opportunities with Asia (41%) and North America (32%) their next priorities:

  • 57% of those surveyed believe China’s ‘Belt and Road’ investment creates opportunities for their businesses
  • 64% say the USA is a key market for international expansion.
  • 69% believe India is more open to international trade now than five years ago

The US remains attractive thanks to its supply of talent, legal framework and economy, yet its political situation presents some uncertainties. More than half (54%) say the Trump administration has discouraged investment in the USA, with a similar number (55%) believing President Trump’s tax and tariff policies are reducing their competitiveness in the US market.

Simon Littlewood, Partner and Head of Growth Services at Grant Thornton UK LLP said, “The findings that Brexit has significantly impacted trading plans for mid-market businesses certainly echoes the conversations we’ve had with our clients – people are bored of Brexit speculation. It’s encouraging that so many see Brexit related change as a proactive opportunity and are acting on what they know now and are doing so with confidence in contingency plans ready for various alternate outcomes. It’s the perfect time for businesses to take advantage of the changing political climate by taking a step back and re-evaluating their game plan.

“The US and Asia can present huge opportunities for businesses looking to grow globally and we’ve seen many challenges around cultural understanding and market differences. Some businesses feel that America is culturally similar to the UK, but some buyer behaviour and market strategy is quite different. Many businesses also see the Chinese market as a united entity but it’s actually quite fragmented. That’s why getting the right advice in advance is key.”

“We know that overseas expansion is a top priority for growth, but also a key challenge facing the mid-market. Benefitting from the experience of experts who have grown global businesses and have specialist knowledge of international markets can make a real difference to success.   Growth 365 International has been developed in partnership with DIT to support businesses in this journey by offering them access to experts who understand their challenges and can help develop long term, sustainable strategies because they’ve done it themselves many times before.”

Case study

Founded in 2014 and employing over 150 people, North London-based business Cuts Ice is one of Europe’s leading e-liquid producers. It manufactures both its own-brand products and OEM e-liquid for major vaping brands. With 80% of its own-brand sales coming from European markets, trading post-Brexit is critical to the business and its growth.

Nigel Quine, Cuts Ice’s CEO said, “When it comes to Brexit, there’s an interesting duality – we need to mitigate the risks,  but it’s also presenting us with some unique opportunities. Our strong ties to Europe are integral to what we’re doing as a business. But at the same time the regulation at an EU level outlines specific requirements which are not fit for purpose and potentially harm smoker’s ability to switch to vaping products, and therefore the long-term success of the vaping opportunity.”

Cuts Ice has been working with Grant Thornton to support their Brexit planning and risk mitigation. “We would have had to spend a lot of time and resource to prepare for Brexit if we hadn’t had support from Grant Thornton.

“It has allowed us to move forward without having to use vital internal resource, which has definitely given us the edge over our competitors and allowed us to carry on with the business as usual. We are now prepared for all eventualities, which includes a ‘no-deal’ Brexit with all of the associated supply chain complexities and taxation.”

Leave a Commment

You may also like

CLOSE AD

Sign up to our daily news alerts

[ms-form id=1]