By Marcus Leach
Too many UK small and medium sized enterprises (SMEs) are giving international trade the cold shoulder despite compelling evidence that firms of all sizes operating overseas are weathering the economic crisis better than those solely focused on the home market.
And with non-EU exports coming under the spotlight, the research pinpoints a rising challenge for SMEs: managers’ lack of foreign language skills, or in the words of Education Secretary Michael Gove, the nation’s “perverse pride” in monolingualism. These are the findings of a new study from global workplace provider Regus.
Only a fifth (21%) of the UK’s SMEs plan to dip their toes into overseas markets in the next two years compared to 38% in France and 24% in Germany. Reliance on the UK’s strong domestic market may have sufficed in the past but exports play an increasingly important role in today’s economy; the CBI recently reported that by building up an export presence outside Europe, the UK economy could grow by £20 billion.
Over two-fifths of SMEs (43%) do not believe local language fluency to be critical to overseas business success. Over a third (37%) would not require an expat manager appointed to run their overseas operations to speak the local language - presumably due to the dearth of multilingual candidates.
Although it is true that UK firms can often rely on English as the ‘lingua franca’ of business, fluency in the customers’ language brings a wealth of commercial and cultural advantages — and when trading with the BRIC countries and South America, language skills are frequently elevated from advantage to necessity.
Over half (56%) of SMEs choose to staff foreign operations with local managers, a decision which may again be influenced by the lack of foreign language-speaking ‘home-grown’ talent.
“The evidence outlined in this report corroborates UK Trade & Investment data that show that companies who export to any country, in any financial climate in the long term, perform better and are more profitable than those who do not," Nick Baird, CEO of UK Trade & Investment, commented.
"The report will reinforce the importance of exports in SMEs’ consciousness. Nationally, exports contribute 60 per cent of UK productivity growth and play a vital part of our prosperity and economic stability.
“In the current economic climate, no business can afford to sit still. The good news is that more and more SMEs are becoming export aware. But they can and must do better to seize opportunities in high growth markets.
"For example, the Thai Government plans to spend around £27bn on projects in transport, public health, water supply development, education and training and housing so there are a host of opportunities for UK firms. UK Trade & Investment supports British companies’ efforts to take advantage of these and other opportunities."
Stephan Chambers, MBA Programme Director, Saïd Business School, University of Oxford comments: “Despite the near ubiquity of English in world business, it’s clear that there will be an increasing premium on managers who speak Mandarin, Spanish, Portuguese, Arabic or Russian as the centres of business power move inexorably towards the new economic powerhouses of China and elsewhere. Fluency in languages other than our own must help insight and understanding and, in turn, our national competitiveness.”
Celia Donne, Regional Director at Regus adds: “In our research, ‘property’ and ‘people’ are perceived as the key challenges, but the wide availability of flexible workspace options around the globe make the ‘property’ element more perception than reality. For instance, firms of all sizes use the Regus global network to enter new markets. Google is a prime example: we’ve helped them expand their reach across the globe, especially in emerging markets, providing low-risk, hassle-free workspace so they can channel all time and resources into making the local operation a success. We are seeing more SMEs replicate this expansion strategy.”
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