Matthew Grandage of Chamber International
Chinese trade specialist Matthew Grandage, the China affairs associate at Chamber International, explains why businesses in the North of England should look east…
What with Brexit at home, unrest in the EU and a new President tearing up international agreements in the USA, East Asia is starting to feel like a region of relative certainty - a welcome break from political turmoil elsewhere. What better time for British businesses to explore opportunities in the Far East?
I'm a bit biased, having spent a large part of my life "out there" (in China, predominantly) – so it feels more inviting and less alien to me as a result, no doubt. But in terms of business opportunity, there are good reasons to suggest that British design, manufacturing and some service industries meet their perfect match in East Asia's dynamic consumer powerhouses – its cities. It's these cities, with their rapidly growing populations and changing appetites, which could lift the proportion of UK exports going to the Far east from its current 9% to a much higher figure in the next five years.
From Seoul to Singapore and from Chengdu to Tokyo, East Asia's rapid urbanization is driving the world's economy, and constantly raising the bar in terms of infrastructure, accessibility and connectedness (the very definition of "smart cities"). In terms of customer requirements too, whether B2C or B2B, urban-industrial East Asia's expectations for quality, design, service and delivery are getting higher and higher. A director from UK skincare brand Base Formula illustrated the challenge when she recounted to me her visit to a relatively small, inland Chinese city: "There were fruit and veg stalls on the street, little shops everywhere – but everyone has a smart phone and access to 4G. So a woman there might be out with friends or in a taxi, she goes on TMall with her phone and places an order, and she expects it to be delivered within two days!" [And, I might add, expects full tracking and a free returns policy, even for opened goods.]
Exporting brings numerous benefits to businesses – it increases turnover, profits and profitability, it can extend the life of a product, spread risk and even-out seasonal variations in demand. But East Asia's cities are also particularly good at delivering two more "bonuses" to Western businesses: brand value and innovation culture.
Not so long ago, claims of overseas success were sometimes mocked with the phrase "they're big in Japan" – meaning it was a meaningless, unverifiable boast. But now, the internet makes even the smallest overseas success verifiable by potential customers at home, and smart companies use examples of overseas sales in the online PR. In fact, with East Asia influencing our lives more and more, through cutting-edge brands like Samsung, Tencent and Huawei, as well as through creative industries including gaming, graphic arts, video, fashion and K-Pop, having customers in Beijing or Bangkok is not just something to be proud of, it verges on being a bit "cool" and. So a bit of well-designed East Asia PR can enhance brand value at home.
Innovation is an even bigger bonus though – because when a western business offers their products into East Asian markets, it is entering the most demanding market on earth, arguably. Your product, strategy and marketing will all need to be reconsidered in this new environment. Though local official standards may be unclear or even non-existent, customer demands take many western companies to a level they had never previously imagined. East Asian expectations regarding pre-order information, delivery, payment methods and returns policy come as challenges western business. And, when dealing with high value transactions and long-term partnerships, so do their expectations of commitment, friendship and loyalty. All of these challenges mean that a western company has to learn to adapt constantly, and improve both product and service at high speed if it is be successful in East Asia. Only the best will survive, so you need to become the best.
Silsden firm Advanced Actuators have risen to this challenge, and now sell more and more of their high-spec engineering products to the Far East, where they are needed for safety-critical applications in power stations, water-treatment plant and other process industries. Managing Director Chris Woodhead explained, "We've got to go to places like China, because that's where the growth is. And customers there have this mind-set - that they can trust British and European companies to make products that will not let them down". Chamber International is proud to work with export champions like Advanced Actuators, helping them meet the tough demands of new overseas markets.
If I were to use one word to sum up what East Asia wants from the UK it would be this – provenance. It's a guarantee that the product (no matter whether it's textiles, industrial equipment, education/training, financial services, food, fashion or chemicals) was designed and produced by people of integrity and skill. That's why companies who understand specifically why British (or European) provenance is desirable to their customers in East Asia, and know how respond to that need, will consistently do well there.