With continuing instability in the Eurozone and uncertainty surrounding Britain's own economic situation, it has been tough for British businesses to navigate the changing global trading landscape with confidence. In light of the serious Eurozone problems, now is the time for UK businesses to be looking further afield. This is reflected in the results of DHL/BCC's Q1 2013 Trade Confidence Index, which points to a slight diminishing in exporter confidence with 21% of businesses believing that turnover will worsen over the coming year.
However, the Trade Confidence Index, which measures UK exporting activity (Export Index) and business confidence (Confidence Index) shows that there has been a marginal increase in exports, and despite diminished confidence, this Index remains at historically high standards; a fundamentally positive indicator.
Beyond the Eurozone
There is something of an export revolution taking place at the moment, which UK businesses should maximise to their advantage. For the first time since the 1970s, Britain sells more goods to countries outside the EU than those inside. This reflects a major shift in global economic power away from the G7 economies towards emerging markets. If British businesses can harness some of the forward momentum of these fast-growing economies, they may be able to generate an enduring revival in the UK economy.
Asia is a key part of this development story. The EEF (the manufacturers' organisation for UK manufacturing companies) notes that China, Russia, Thailand, India, Australia, Singapore and Malaysia are among the ten countries that have seen the fastest growth in Britain's exports over the past six years.
Asian markets present an exciting opportunity for many UK exporters, as the huge 1.14bn population of potential consumers and impressive pace of development continues to dwarf that in other parts of the world. Emerging Asian economies are developing increasingly sophisticated transport and infrastructure, facilitating easier and more profitable trade for UK businesses.
China remains the clear front-runner in the Asian market. The Chinese economy grew 9.2% in 2011 and its government is committed to maintaining this level of growth. Seven of the top twenty worldwide ports are in China, and in the past, British businesses have unsurprisingly concentrated their investments in these coastal hubs like Beijing, Guangzhou, Shanghai and Shenzhen. However, things are changing as costs rise and Chinese government policies attempt to stimulate growth in the less developed provinces. For an overview of regional variations, and the opportunities they present for different businesses, the UKTI's 2011 report Opportunities For UK Businesses In China's Regional Cities is a must-read.
The second fastest-growing Asian economy is of course India, home to one sixth of the world's population and with a relatively affluent middle class that is projected to grow tenfold by 2025. Opportunities for British businesses now exist in emerging cities like Nagpur, Ahmedabad, Chandigarh, Pune and Jaipur as well as traditional Mumbai, Delhi and Bangalore.
However, British businesses should not limit their sights to these two giants of the Asian economy, as a wealth of opportunities also lies elsewhere. Singapore might present an attractive prospect, since it is ranked 1st globally by the World Bank in terms of the 'Ease of Doing Business'. Incidentally, there are more DHL flights to Singapore than any other Asian country!
South East Asia is another strong option, as Foreign Office Minister Jeremy Browne recently called it the "engine for economic growth in the world". DHL oversees 1,000 flights to Thailand each week - the second highest in Asia after Singapore - and this country acts as a gateway to the whole region. Malaysia's strong economy, stable political environment and widespread use of English also make it a popular choice with investors, and it is the UK's second largest export destination in south east Asia. UK trade with Vietnam is also on the increase, and these markets all provide considerable opportunities for UK businesses willing to take the leap.
Business benefits and challenges
Businesses are recognising more that there are advantages besides a potential sales increase to be gained by trading with emerging Asian economies. Fringe benefits can include improved cost-efficiency by subcontracting abroad; developing know-how and technology competencies via technical cooperation; and extending product ranges through commercial partnerships.
However, businesses should be aware that with the rich pickings afforded by these Asian markets come many new challenges to stay competitive in an international marketplace. Our DHL Guide offers more information and advice about trading with these countries, including information on the different business practices, cultures, customs and currencies.
Now is the time for UK businesses to expand into international markets. With our collective support we can help British exporters exploit the global opportunities open to them, and in turn boost Britain's trading potential.