Member Article

Britain and BRIC: prospects for growth

Gary Berlyn, managing director of The Business Channel, discusses the opportunities that BRIC growth presents for British companies.

Despite the credit crunch in the West, global output has risen by fifty per cent in the last decade. This growth has been fuelled, to a large extent, by Brazil, Russia, India and China, collectively known as the BRIC countries. These four have quadrupled their output since the early 2000s and in the next ten years are expected to double their output again.

Just four per cent of Britain’s exports currently go to the BRIC countries, signalling unrealised opportunities for British companies to take advantage of the safe haven the BRIC countries create from the volatility in Europe, changing demand patterns and that in the next five years BRIC countries’ imports are expected to exceed their exports. How British companies can benefit from the demand for the kind of expertise and creativity at which Britain excels is discussed below as well as in more detail in The Business Channel’s recent series, Britain and BRIC: Prospects for Growth.

Opportunities for British companies in BRIC countries

Health and education services

The greatest opportunities for investment in the BRIC countries exist to a large extent because of the enormous size of their markets. As the populations in the BRIC countries grow, British companies can offer a great deal of support as they are particularly strong in these two service areas.

Luxury retail and creative industries

As the BRIC countries’ markets continue to grow, more middle class people are buying things that they couldn’t afford before. This has spurred demand for fashion and film consumption, which British companies have a great deal of experience with and are well positioned to export to the BRIC countries.

Technology and advanced manufacturing

To keep up with their expanding economies, the BRIC countries need to grow and add value to their manufacturing base and to develop and expand their infrastructure. Britain is particularly good at technology transfer in the manufacturing space. British consultants, design engineers and construction equipment are all needed to support BRIC growth.

SMEs

The opportunities available are not just limited to large corporations. SMEs have also been successful when entering the BRIC markets. Niche companies are less likely to have local competitors yet many small companies still fail to recognise that their products are welcome overseas.

Ensuring investment success in the BRIC countries

Business Risks

It would be incorrect to pretend that the BRIC markets are easy to do business in. Potential pitfalls include the consistency of regulation, a slow bureaucratic process and different barriers to trade. In addition, it is important to be aware of, and sensitive to, cultural differences such as different ways of trading, different approaches to doing businesses and the different models that businesses employ.

Research

For markets as large, distant and complicated as the BRIC countries, British companies need to make sure they get their thinking right about each market before they enter. It is down to the individual businesses to make sure that they have done the necessary research to be certain they are putting the right strategies in place for their target markets. The strategies British companies choose depend on the segment of the market they are addressing. It is wise when entering one of the BRIC markets to think big but start small so that you can ensure you have gotten to grips with the new market before making all of your investment decisions. In addition, when conducting research it is important to actually travel to the countries and deal with people on the ground to gain real experience with the market. This kind of research cannot be effectively conducted from your UK office.

Help available

You do not need to do everything on your own. UKTI, for example, provides a great deal of assistance for British companies hoping to become involved in the BRIC markets. With a strong presence in all of the BRIC countries, UKTI is available to help businesses of all sizes and can provide experts in particular sectors within each market that speak the local language. The UKTI’s entry services are free and their more advanced services are heavily subsidised. Using British embassies and exhibitions in your sector can also be very valuable when first entering the new markets. It is of course also incredibly beneficial to find the right partner, whether it be a joint venture, business supplier or advisor.

Additional information about British investment opportunities in the BRIC countries is provided in the series Britain and BRIC: Prospects for Growth, which can be viewed on The Business Channel website.

This was posted in Bdaily's Members' News section by The Business Channel .