QE3 announced as Paphitis urges Asian exports

With the announcement of an additional £50bn of quantitative easing, this morning's UKTI Export Asia event couldn't have come at a better time...

by Rebecca Burn-Callander
Last Updated: 13 Sep 2013

At 10am today, the conference hall at the Methodist Central Hall is packed. As business secretary Vince Cable notes, this is evidence of the growing export ambitions of UK firms and their desire to learn more about selling to Asian markets. 'You must all be very interested in what we are trying to do,' he says.

And it's safe to say that UKTI has pulled out all the stops to draw a crowd. Tamara Mellon, who sold her luxury fashion business Jimmy Choo for £500m, is on the panel, along with Chris Dodson, inventor and chairman of the Mortimer and Torftech groups of companies. Lord Powell, who co-chairs the Asia Task Force (a body created to help British firms to sell to Asia) is also giving a masterclass, alongside his fellow chairman, our keynote speaker, business secretary Vince Cable. To add a little celebrity stardust Dragons' Den investor and Ryman boss Theo Paphitis has been drafted in. And, never one to be left out of a business shindig, the CBI is on hand in the shape of deputy director general Neil Bentley.

It is clear that all today's speakers are inveterate Asiaphiles. 'No other part of the world is so rich in opportunities,' says Tamara Mellon. 'What's happening out there is really exciting. There are 300 million female entrepreneurs in China - almost more than the whole population of the US. So look to China, not only for busines opportunities but also for inspiration.'

But beyond the thrill of breaking new markets and tapping new revenue streams, there is also a defensive strategy behind these Asian forays. As Dodson quips: 'If I do not take the market to them, they will shortly be arriving in my market and, how does the saying go? ‘Eating my lunch'.'

Theo Paphitis' rabble-rousing speech even suggests it would be unpatriotic to fail in our exporting duty. 'Historically, British firms have always exported, ' he says. 'Most of our great British brands started out as travellers. Don't let that history go to waste.'

The sheer size of the Asian market is mind-boggling. The luxury goods sector alone will be worth £17bn by 2015, reveals Mellon. And yet UK firms are still just scratching the surface. The CBI's Neil Bentley has the figures: 'Economic growth in Asia is at around 8%, but it only accounts for 9% of our exports. In India, growth is 9% but the UK only exports 1% of its goods there.' Although, to be fair, Vince Cable points out that British exports to India were 40% up last year, while exports to Asia have doubled over the last decade.

Is that fast enough for the UK economy? Only this morning, the Bank of England revealed that it was injecting another £50bn into the UK economy in another round of quantitative easing. 'The underlying pace of recovery slowed during 2011, with activity falling slightly during the final quarter,' explains the Bank, adding: 'The pace of expansion in the United Kingdom's main export markets has slowed.'

Today's event could not have been more timely. As export opportunies dry up in the eurozone, Asia will increasingly become the focus of our international trade.

And expanding into Asia isn't a Herculean task, says Lord Powell. It just comes down to determination and ambition. 'Why do the Germans export four or five times more than we do to China?' he demands. 'Because they work harder at it. They are more export-conscious. Sure, they export machinery and parts which are very useful to Asia, but it also comes down to determination.'

So how do UK companies go about tapping into this cash-rich export market?

Theo Paphitis says, 'The most important thing is preparation. Do your homework.' Dodson echoes this advice, and recommends preparing for a long game: 'Always keep two steps of foreign competition. And be patient. You can't expect overnight success.' Mellon advises UK SMEs to capitalise on their Britishness. 'The most important thing to remember when you’re going in is education. All our brands are new to the Asian customer. They don’t understand the history of each brand that arrives – they think we are all the same. So you have to educate them about your brand. At Jimmy Choo, we were going to set up little museums that told the story of our brand from 1996 to present day. They are looking for status and quality.'

But the advice was followed by a few warnings. As Dodson says wryly: 'The further from Beijing you are, the more likely you are to be infringed. We are already being copied. But that’s good. It means we’re doing something right.'

And yet, partnering with a local business, despite the risk of losing your IP, is still one of the best ways to get a foothold in the Asian markets. 'To get started, I recommend opening a local office or a joint venture with a local partner,' says Mellon. 'Although, a lot of brands are now buying back their partnership licences,' she adds.

'I use franchising,' says Paphitis. 'it’s more expedient, quicker, and requires less cash from a small business. Saying that,you can go to a new country with an open cheque book and still fail. Local businesses will proect their own back yard. Just as if someone comes over here, we can hold our own. That's why it does really help to have a local partner. Or, you could just put something on a website and people all around the world will buy anyway...'

Sound advice. And Vince Cable is keen to stress that British companies mustn't stop with India and China and Japan. They must look to newly-emerging markets like Vietnam, Indonesia and Malaysia. 'We must export if the UK economy is to grow,' he says.

And with the eurozone crisis still casting a shadow over Blighty, and the news of yet more quantitative easing, it's clear that the consequences of ignoring his warning could be dire.

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