SA companies seeking opportunities in UK

On a more sober consideration of the trade figures, it emerges that SA enjoys a positive trade surplus with the UK. Trade has also been growing at a healthy 3% 4% over the 2007-08 period.

It is against this backdrop that the UK's trade commissioner to SA, Brian Gallagher, believes the time is right for South African and UK companies to expand not only their trade of physical products, but of services and investment.

“It would be easy for companies to be closed off to the idea of internationalising, to pull investment from foreign countries, but these views are short-sighted. Aside from spreading risk, taking one's business to other markets provides an opportunity to streamline, increase competitiveness and efficiency, and seek out new markets,” he says.

“For the world's most enterprising companies, a downturn can be the chance to leap ahead of the competition and gain market share or to find a foothold in new markets, thereby diversifying sources of revenue.”

More interest from SA

UK Trade and Investment (UKTI), headed by Gallagher in SA, says it sees an increased interest from South African companies wanting to invest in the UK and is working with about 30 South African companies that have set their radars on the UK. The companies are in sectors such as advanced engineering, chemicals, environment, automotive, IT, energy and financial services.

Last year there were six new investment projects from SA into the UK in diverse sectors such as food and drink and creative industries. UKTI spokeswoman Caroline Dean says the most successful companies in the UK tend to be those that have a strong brand, a flexible workforce and a broad geographic spread across the UK and Europe.

Asked whether size counts when investing in a developed economy, Dean says small and medium-sized business have always been integral to UKTI's work. “We encourage UK SMEs to partner with local South African companies when trading and investing in SA.”

SA not immune

The organisation has found that SA companies have used the UK as a springboard into the European market.

“SA has not been immune to the global financial climate and economic downturn,” says Gallagher. “The country's high inflation rate, escalation of utility, fuel and food prices, and uncertainty around the political situation have been the foundation for many South African companies looking abroad.”

About 600 companies from SA operate in the UK, including corporations like Old Mutual and Anglo American. Gallagher says firms from the UK and SA face the same economic challenges.

“In times of hardship it is tempting for countries to put up barriers to trade, artificially protecting domestic industry from the harshness of international competition. The challenges faced by UK companies are no different from those faced by SA companies in the market.”

“Skills shortages, crime, corruption, HIV/AIDS, power interruptions all have an impact on business, but we don't see these challenges as insurmountable,” Gallagher says.

So if you are not into potato trading with the UK — which grew a whopping 5751,2% during 2007 and 2008 — bricks and mortar may be the way to go.

Source: Business Day

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