In light of changing trading patterns across the globe, British businesses could profit from new markets and sectors over the next few decades – if they get their export strategy right.
In an exclusive interview with GTR, the UK’s secretary of state for international trade Liam Fox shares his views on global trading trends and which markets UK exporters should be keeping an eye on.
The UK’s department for international trade (DIT), with Fox at the helm, is committed to “helping British businesses succeed abroad in ways that never happened before”, he says.
Fox explains that this support is especially necessary given that global headwinds are strengthening and the world faces an economic slowdown, with US-China trade tensions dominating the headlines.
As such, the DIT continues to analyse future trading patterns, and how these will likely change over the next few decades.
The interview comes a month after Fox unveiled a new financial package for UK SME exporters at the annual UK Trade and Export Finance Forum. The small deals initiative is a buyer finance offering, launched by UK Export Finance, the country’s export credit agency, to support export contracts of smaller values. In his speech at the event, Fox also made mention of UKEF’s new general export facility, launched in March, calling the announcements “potential gamechangers” for the country’s export industry.
GTR: How are global trading patterns set to change in the future?
Fox: During these uncertain times, it is important we look ahead at changing global patterns and prepare for a shift in global economic powers.
IMF research shows that by 2050, emerging markets will likely dominate the majority of the world’s top 10 economies: China, India, Indonesia, Brazil and Mexico look set to rank alongside the UK and US. Economic power will continue shifting towards emerging economies and businesses getting their global exporting strategy right will be sure to profit.
Emerging markets, such as Vietnam, Nigeria and the Philippines are particularly worth keeping an eye on. These economies are currently growing faster than most others and look set to become major players in the second half of the century.
Businesses will want to look at exploring the markets that will be dominating the global economy 30 years from now.
GTR: What opportunities in terms of sectors and markets are there for UK businesses in emerging markets?
Fox: British business could benefit from opportunities to invest in Vietnam, Nigeria and the Philippines. Examples of such could be investing in infrastructure to support education services, mobile technologies and digital health.
To help create greater opportunities, the government is working to identify potential trade barriers in emerging markets globally, including by appointing nine regional HM trade commissioners to build our knowledge on the ground.
The Asia Pacific region, for example, will be crucial to our trading future, and joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership would lower trade barriers with 11 countries, as well as helping British business to build on their existing presence in the region.
On the other side of the Pacific, we’re also increasingly looking at Latin America – a strong region with growing economic power.
There is an opportunity to position the UK as a key partner to grow digital and tech business in Latin America and the Caribbean (LatAC), with steady growth in the region predicted over the next decade. By 2022 its mobile economy will generate US$330bn for the economy, over 5% of Latin America’s GDP, and the number of internet of things connections in LatAC will triple by 2025, according to GSMA.
The global digital health market is also a huge opportunity where the UK can play a major role. Projects that implement innovative tech solutions, particularly in artificial intelligence, which the UK is well positioned to provide, may offer endless opportunities for UK businesses and investors.
GTR: How is DIT engaging with key growth regions and markets?
Fox: My department is committed to ensuring British businesses, exporters and consumers have access to the world’s largest and fastest growing markets globally, at a time when demand for British goods continues to grow.
We’re continuing to speak directly to countries in the region through forums like the UK-Vietnam Joint Economic and Trade Committee, where we see great opportunities for the UK service sector in particular.
In the 10th meeting of the forum last June, we committed to further collaboration on tourism and culture, food safety standards, livestock disease prevention and mutual recognition between UK and Vietnamese universities.
With respect to China, our bilateral engagement is bearing fruit. Chinese FDI restrictions have recently been relaxed and market access barriers continue to be lifted. For example, the UK is now one of only two countries allowed to export live langoustines to China, with exports of the shellfish expected to be worth up to £26.5mn in the next five years.
A truly global outlook provides a picture of optimism and a surplus of opportunities for British businesses to capitalise on. I would encourage British businesses to embrace this change and take advantage of the support and advice available through expert DIT trade advisors.
This is only just the beginning and if we are to remain one of the world’s greatest trading nations, now is the time to advance our focus on the world’s emerging markets. There is great demand for British products and expertise around the world and purchasing power in these markets will only continue to grow.