The Highlands and islands are better connected to the rest of the world than ever before, and that’s a business opportunity too good to overlook.
Getting more businesses to do more international trade is at the heart of the Scottish Government’s international strategy. Martin Johnson is the regional head of international trade and inward investment for Highlands & Islands Enterprise, and he feels that for Scotland to continue to be a successful economy, even more businesses need to seize the opportunities offered by international trade.
“Our economy benefits hugely from world class players across a really broad range of growth sectors, from energy and life sciences to creative industries, tourism and food and drink. Targeting the right international markets is a fantastic tool to accelerate business growth.
“For instance, we have some fantastic seafood, from varieties of fish through to shellfish; some of the finest natural resources in the world which are being sustainably harvested. When those products are landed in the Highlands and islands, there are businesses who can buy those, add value to them, and sell them to markets all around the world.
“Aquaculture is a huge part of our economy. All of Scotland’s salmon is farmed off the Highlands and islands,” he says, explaining that all of the topography, the sheltered water needed for this industry falls into this area.
It’s a huge success story over the last 30 years; salmon, behind whisky, is Scotland’s second most popular export. Quarter one salmon sales were valued at £483m, a 56% increase in export value on the same period in 2016.
Food and drink is a very strong sector, Johnson says, “because of the quality of the natural ingredients and the quality of the land, factors which also contribute significantly towards tourism being another major source of international trade activity for the area.
“We have beautiful countryside, we have the most amazing wildlife, and we have a good dash of history in terms of ancestry – we have an excellent product for tourists to come and enjoy and experience. And we have some great businesses packaging that up and promoting it proactively, not just to the consumer but also to other businesses, so that you have overseas tour operators promoting Scotland to their clients.
“In both areas, more businesses could trade internationally, and those who already do could do more.”
Those well-established areas of international trade expertise are invaluable to the Highlands and islands. The growth that’s happened can be credited to the two main forms of connectivity bolstering international trade all over the world: highways, and the information superhighway.
“A big change over the past 20 years or so has been the development of the physical supply chains, so you can get seafood to any part of the world within 48 hours, and you can bring customers in from anywhere. Our region is better connected than it’s ever been; Inverness airport is almost at a million passengers a year with connections to London Gatwick and Heathrow as well as Schiphol – three of the largest cargo and passenger hubs in Europe.
“The ongoing investment in information and communication technology (ICT) and access to superfast broadband moves us away from just the movement of goods and people, and into the movement of knowledge. There are examples of knowledge-based businesses that are using the internet to find customers, promote themselves, win and deliver business over the internet.
“This part of Scotland is as connected now as New York or London in terms of the digital world.”
So, where does this open up the most significant opportunities for the businesses of the Highlands and islands, for whom exporting is not currently such a prominent part of their business?
“We have a number of manufacturing and engineering businesses, which service the global supply chain from our region. When you think of Scotland and oil and gas, Aberdeen is a centre of excellence, but the second cluster is in and around the Cromarty Firth near Inverness – you could argue this is the best natural harbour in the UK.
“In time, the know-how and business base we’re building around marine renewables will allow us to pursue market opportunities all around the world.
“The life sciences sector is dominated by Johnson & Johnson’s LifeScan, which manufactures diabetes test strips – very complicated devices made of plastics and metals – and it manufactures billions of them in Inverness, which are exported all around the world.
“The creative industries: in textiles, this part of the world is well thought of in terms of Shetland knitwear and Harris tweed from the Western Isles, and knitwear in general. The textiles sector has always been outward looking about international trade and we’ve seen a resurgence of that sector focussed on selling to Europe, to Asia – Japan in particular – and North America.
There’s a design-based, customer-savvy mix of traditional materials and design and modern manufacturing, as well as hand-crafted goods.
“Another strand to creative industries is music and media; again, this region is fairly famous for its traditional music alongside its modern musicians.
“The main export markets for the Highlands and islands are currently Europe, the United States, and Japan. North America remains important for obvious reasons; including its sheer scale,” Johnson says. “Europe is on our doorstep, and whilst language is different, people have become very familiar with the geography – and proximity is an important part of that.”
Emerging markets, looking ahead, would include China, a huge market that can feel a little too big for businesses, especially novice exporters. It’s made out of many regions and each of those is vast. But support is available to help businesses break those down and identify the best places to invest time and energy.
And the potential for growth in Africa is also sizeable: “The education of a large, young, growing population on top of some vast natural resources from oil and gas, through commodities to agriculture, will make this an emerging market in the decades to come. We’re starting to see Africa as a continent, despite all its challenges, move forward.”
There’s a huge array of support available to businesses looking to move into these areas. As Johnson concludes, it’s about growing your business and becoming more profitable. “It’s about spreading risk – if you’re in five markets and one goes bad, the other four can be good.
“And it can be tremendously exciting too – going out, meeting new people, getting new ideas, new perspectives on your business and creating new market opportunities.”