An extract from Pathfinder Business magazine
So you’re a senior manager in a European SME that is successful in its own country and wants to expand into new markets. Now what? If your products or services have gone down a storm in the UK, there is every chance you can achieve the same thing abroad if you can find the right market.
Up until a few years ago, most European companies that wanted to expand abroad would firstly look at other nearby European countries. But more and more UK companies are having success starting operations in developing countries such as India, China, Russia and Brazil, or oil-rich countries in the Middle East like the United Arab Emirates.
Countries like Brazil, Russia, India and China, whose economies are developing very quickly, provide real opportunities for foreign businesses.
Familiar brands can now be found across the globe — Russians eat Cadbury’s chocolate, the Chinese drive Jags and Land Rovers and BAA runs airports in the UAE. Now that the networks and structures are in place for trading in previously unreachable countries, Europe’s SMEs are following hot on the heels of their corporate counterparts.
In Russia, a burgeoning middle class has caused a consumer boom — the economy is currently growing at six per cent a year. Foreign companies have had success in real estate, telecommunications (including mobile phones) and retail, including everything from food and drink to furniture. McDonald’s, Adidas, Dixons and Benetton stores can be found even in small Russian towns.
When it comes to China, industrialisation has been unbelievably fast. Until 1978 China’s was still an agrarian economy and it had almost no private sector. Now the country manufactures 50 per cent of the world’s cameras and 90 per cent of the world’s toys. Privatisation has brought an increase in disposable income for many and a market for all the mod cons that the Chinese are keen to catch up with has opened up.
India can be an attractive place for European companies and our interest stretches back to the days of the East India Company 400 years ago.
Manoj Ladwa is a solicitor who practises in both India and the UK for the MLS Chase group. ‘India is one of the fastest growing economies in the world, growing in the region of 8 per cent pa,’ he says. ‘And,’ he adds, ‘much of the red tape of the 70s and 80s has gone.’
Another area to watch is the United Arab Emirates. The UAE’s free zones allow companies operating within them to be 100 per cent foreign-owned, as well as offering tax breaks. It’s also an ideal location for global trading due to its time zone, which bridges east and west.
Foreign markets offer similar risks and rewards to those at home, but getting the right sort of help before you start trading will give you the best possible chance of success.
Pathfinder Business magazine works to help business and investors understand new markets.