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Overseas opportunities for energetic entrepreneurs
OCTOBER 2018 ÂŁ4.50
What happens in Vegas?
In this issue
9
772631
ISSN 2631-665X
665002
10
EverythingBranded proves NYC and Silicon Valley are no longer the only US business hotspots
Kenya leads the charge
EG Cover.indd 1
Venture east and grow in China
Britain’s exporting superpower
Mad marketing mistakes 08/10/2018 17:50
Join the thousands of UK businesses like Mo Bro’s that are successfully selling overseas. Visit great.gov.uk
2 Page Spread LHS.indd 1
09/10/2018 13:41
Mo Bro’s Leicester, UK
2 Page Spread LHS.indd 2
09/10/2018 13:41
Mayors International.indd 1
09/10/2018 13:48
Looking to expand your business abroad? Then look no further than the Mayor’s International Business Programme. Celebrating some of the fastest-growing, innovative companies in London, 2017 was a stellar year with cohort members expanding into new markets, creating jobs, closing deals and opening new offices overseas including Century Tech, Yoti Ltd, McLEAR & Takumi. Learn more about the programme and our past successes >> gotogrow.london “The community of entrepreneurs that the programme has built has been fantastic in sharing knowledge with us.� Priya Lakhani, Century Tech This exclusive programme is open to fast-growing companies in London operating in four broad sectors: technology, life sciences, creative and urban. It provides a bespoke mentoring scheme, delivered by leading entrepreneurs and business leaders; expert advice and workshops; targeted trade missions; and access to live business opportunities. Having already helped over 450 companies realise their ambitions for international growth, the programme is now searching for its next cohort of companies to take overseas #GoToGrow. If you want to follow in the footsteps of Eporta, Seenit, BookingBug and other high-growth London companies, make sure you apply to the programme via gotogrow.london
Mayors International.indd 2
09/10/2018 13:48
contents REGULARS 7
From the editor
8
World tour
20 The great debate
columns Dan Ennor
13
Siddharth Shankar
30
You may be surprised to find the EU can’t get enough of Britain’s exports
A nation’s university R&D spend is a huge indicator of a booming startup community
Kenya battled decades of political turmoil and now fintech investors can’t keep away
Emma-Jane Packe
54
Best university R&D nations
Silicon Savannah startups succeed
16
26
50
When hiring abroad you can’t just use the same British recruitment strategies
Las Vegas is a great place to set up shop as The Charles Alexander Distribution Group proves
Edge:CTP cuts legal red tape for SMEs going overseas. But the success was hard won
Sourcing talent
36 Andrew Finley 49
23
The top ten UK export hotspots
10 The lowdown
11
14
Sin it to win it
On the Edge
Eastern promises
6
China wants British businesses but there are obstacles to leap when setting up there
ELITEGLOBAL OCTOBER 2018
Contents.indd 1
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OCTOBER 2018
58
Big brand blunders
Marketing in foreign countries can translate into embarrassment
66
How does blockchain work
62
Finding foreign funding
Investments are difficult but not impossible to get when expanding abroad
It’s the buzzword many can’t get their heads around but it’s simpler than you think
OCTOBER 2018 ELITEGLOBAL
Contents.indd 2
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08/10/2018 19:30
2018_09_27_UK_Ad_IrishTimes_275x340_V2_MIST-21323_TEST.pdf
1
27/09/2018
16:37
Employee spend happens in lots of places. But you can manage it in one. SAP Concur integrates expense, travel, and invoice management. concur.co.uk
Beyond.indd 7
08/10/2018 18:26
from the editor
contributors Emma-Jane Packe
Crossing the pond is an ambition many UK businesses aim for but there are key considerations to factor in when chasing the American dream, reveals The Supper Club’s managing director.
The world, chico E
very entrepreneur in search of global expansion can probably relate to
Tony Montana’s aspirations. No, not his
Siddharth Shankar
Is it a bird? Is it a plane? No, it’s super export! At least, that’s a dream possessed by Liam Fox – but the CEO of Tails Trading assesses the politician’s new hero.
narcotics-dealing alter-ego Scarface but the outlook of someone eager to take their business international. Remember this line? “Me, I want what’s coming to me… The world, chico – and everything in it.” So it brings me great pleasure to introduce the inaugural issue of Elite
Andrew Finley
You should know your company’s strengths and weaknesses before pitching to international clients but once you nail that, you’ve got the world at your feet, according to Oxford Innovation’s relationship director.
Global, a new magazine from Channel Edge Media, which is dedicated to UK entrepreneurs on the search for overseas business opportunities. In other words, those looking for the world – and everything in it. In this issue we’ve sought out developments around the globe, such
Dan Ennor
Taking a retail business abroad isn’t as simple as building a website and having products fly off shelves, so the commercial director at Global Freight Solutions has four steps for global expansion.
as Kenya’s transition from politicallycharged environment to startup-rich country with increasing amounts of investment and knowhow. We’ve also offered a healthy portion of cultural caution as it turns out stepping
into new territories can often result in marketing mishaps for even the biggest of brands. Elsewhere, there are key measures to bear in mind when recruiting staff in different regions, so due diligence is essential. And speaking of new turf, what would spring to mind if someone mentioned opening your business in Las Vegas? Casinos and booze, probably. But it turns out there’s much more to Sin City for entrepreneurs than that, as we heard from the man who’s left Leicester behind for the US city. Zen Terrelonge - Editor zen.terrelonge@cemedia.co.uk
Elite Global Team EDITORIAL Zen Terrelonge – Editor Eric Johansson - Acting Web Editor Varsha Saraogi - Junior Feature Writer Angus Shaw – Editorial Assistant Yoana Cholteeva – Editorial Intern Anne Struijcken – Editorial Intern editorial@cemedia.co.uk
DESIGN/PRODUCTION Darren Marriott - Head Designer Dan Humphris – Designer Vrinda Sejpal – Designer Lizzie Thurgood - Junior Designer production@cemedia.co.uk Dan Lecount – Web Development Manager dan@cemedia.co.uk
SALES Lewis Horgan – Head of Sales & Marketing lewis.horgan@cemedia.co.uk Alanna Green - Marketing Assistant alanna.green@cemedia.co.uk
ACCOUNTS Sally Stoker – Finance Manager sally.stoker@cemedia.co.uk
CIRCULATION Amy Coleman - Data Compliance Assistant amy.coleman@cemedia.co.uk
DIRECTOR Scott English – Managing Director scott.english@cemedia.co.uk
Circulation/subscription
UK £18, Europe £38, Rest of World £60 Elite Global Magazine is published four times a year by Channel Edge Media, 1st Floor, Regency House, 16 Victoria Road, Chelmsford, CM1 1NZ Copyright 2018. All rights reserved No part of Elite Global may be reproduced, stored in a retrieval system or transmitted in any form or by any means, without the prior written consent of the editor. Elite Global magazine will make every effort to return picture material, but this is at the owner’s risk. Due to the nature of the printing process, images can be subject to a variation of up to 15%, therefore Channel Edge Media, cannot be held responsible for such variation.
OCTOBER 2018 ELITEGLOBAL
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08/10/2018 19:34
World tour BY Zen Terrelonge & Yoana Cholteeva
European professionals reveal how they really feel about Brexit Brexit draws closer every day and professionals outside of the UK have now waded into the political maelstrom, with “foolish” being their top description for the predicament Despite Brexit looming ahead, nobody truly knows what’s going on but the thoughts of UK entrepreneurs and politicians certainly aren’t in short supply. Crown World Mobility, the global talent consultancy, has surveyed 3,500 professionals in Germany, Ireland, the Netherlands and the UK. The results revealed that 55% of respondents believe Brexit will be bad for overseas business. The report goes on to show the gloom doesn’t stop there as 54% of those outside the UK think Brexit is bad for the EU in general, not just for Brits.
It’s perhaps unsurprising then that the most common description for Brexit was “foolish” with 18% in the UK and Germany and 17% in the Netherlands. “Deluded” was another description used by workers in all countries, while “small-minded” was also a term used by all except the Netherlands, where the move was deemed “brave.” Seemingly, in the same way business leaders expect insights from politicians, they too must provide insights to their employees.
Trade Policy Minister to strengthen international trade The UK trade policy minister George Hollingbery visits Taiwan for the annual trade talks between the two nations As the UK-Taiwan trade grew to £5.5bn in 2017, the East Asian state became the eighth biggest trading partner for Britain in the region. Following that, the trade policy minister George Hollingbery is visiting Taipei for the two countries’ 21st annual trade talks. The discussion chaired by Hollingbery will focus on building trade strength and resolving market issues along with celebrating the recent entry of British pork products in the Taiwanese market. During the visit, the minister will meet the Taiwanese president as well as UK businesses in the country such as those in offshore wind, pharmaceuticals and financial services. Hollingbery will also witness the signing of a memorandum dedicated to the partnership between the British office in Taipei and the Taiwan Financial Services Roundtable, which will highlight the fintech sector. As the UK is the most popular destination for Taiwanese investors in Europe, the relationship between the markets proves beneficial to future overseas export. 10
ELITEGLOBAL OCTOBER 2018
Upfront.indd 1
08/10/2018 19:35
BY Angus Shaw & Yoana Cholteeva
A quarter of overseas tech chiefs won’t invest in UK tech companies for a year It’s hardly a secret Brexit’s a polarising issue. But new research shows the opinion of foreign tech leaders on the EU departure couldn’t be clearer Although Britain has seen record-breaking tech investments, many international leaders wouldn’t dream of putting money into the nation’s tech community, let alone expand into it. Quizzing 260 overseas tech experts, Global Tech Advocates, the private sector network, revealed 55% wouldn’t set up shop in Britain because of Brexit, with 25% unwilling to invest in a UK tech startup for at least a year. The lack of confidence even extends to the nation’s talent, given 31% said Brexit deterred them from hiring UK citizens. Specifically, 68% see the UK leaving the EU as a top hindrance for the British tech community, with Britain’s immigration controls taking second place. But it’s not all doom and gloom, given 87% believe London remains a global tech hub open to international collaboration. Indeed, US titans like LinkedIn, Google and Bloomberg recently expanded into the Big Smoke.
Jaguar land rover introduces three-day working week After the British car giant expressed concerns about the implications of a no Brexit deal, Jaguar Land Rover is now reducing production at its West Midlands plant As the British carmaker let go of 1,000 temporary contract workers from its Solihull plant in April this year, Jaguar Land Rover has announced that 2,000 of its staff in the Castle Bromwich plant will transition into a three-day working week. The manufacturer claims the adjustments are temporary and will stay in force at least until Christmas. As to the reasons behind shrinking production, Jaguar
Land Rover pointed at the troubling conditions in the industry caused by Brexit and the declining demand in diesel-powered cars. Ahead of the cuts, the company’s chief executive, Ralf Speth, shared that a hard Brexit could cost the business £1.2bn a year. Commenting on the issue, Jaguar’s spokesperson told the Guardian: “We are, however, continuing to overproportionally invest in new products and technologies and are committed to our UK plants in which we have invested more than £4bn since 2010.” So no matter if it’s about SMEs or manufacturing giants, Brexit is clearly affecting businesses of all sizes. OCTOBER 2018 ELITEGLOBAL
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08/10/2018 19:36
The stats that matter the most to the UK’s global businesses and some that don’t
85%
of British working parents would forfeit other benefits for flexible working
281 billion emails are sent across the globe every day
$6bn
1.75 million
motor vehicles were produced in the UK in 2017
800,000
motor vehicles produced in the UK in 2017 were exported to EU countries
41%
of new US entrepreneurs are women 12
is how much Nike’s market value jumped by after Colin Kaepernick’s endorsement in the Just Do It campaign this September
30.4 % of Brits
believe appearance affects how much their bosses like them
£620bn was how much British exports grew by in 2017
160 hours
of commercials is the average amount Netflix user avoids watching during a year
10,000
is the number of UK restaurants that work with Deliveroo
Sources: American Express State of Women 2016, Blue Corona, CV-Library, CordCutting.com, Deliveroo, Department for International Trade, European Automobile Manufacturers Association, The Radicati Group, Tipalti
the LOWDOWN
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Siddharth Shankar CEO of Tails Trading
Britain’s exporting superpower –
codswallop or reality? International trade secretary Liam Fox has pledged to transform the UK into a “21st century exporting superpower.” But is this a delusion or tangible reality? Leading trade expert Siddharth Shankar assesses the situation
I
f every aspect of the government’s Exporting Strategy is calculated and executed properly, Liam Fox’s vision, in which he believes “the UK has the potential to be a 21st century exporting superpower”, could become reality. The international trade secretary is at the very least looking in the right direction. While everyone else worries about the UK’s future political structure and international relationships – especially between the UK and the EU – Fox’s plan paves a path to success for UK business as he hopes to achieve a 5% overseas shipping increase. Exporting to countries outside the EU is the most practical and profitable option for UK businesses as Brexit approaches. The buying power of pound sterling may have dipped but this means British products are more competitive than ever. As an international business partner to the UK, the EU has been become less important each year since as far back as 2008. What’s more, the 508 million population of the EU pales in comparison to the population of
trading partners outside the EU offering exciting new possibilities for UK exports such as India, China or the ASEAN region’s 635.9 million population. The market for UK goods in countries outside the EU is big and productionwise, the government estimates over 400,000 UK brands and small businesses have the potential to export decent products carrying the value and heritage of Great Britain. All these suppliers lack are the required resources to penetrate international markets, especially markets outside the US and the EU. In order to make Fox’s vision a reality, the government must work in a much more creative and supportive way to help local SMEs – rather than focusing on global brands. They must hold hands with small businesses to help their products reach the other side of the world safely and punctually, release more funds to SMEs and focus on facilitating better relationships between businesses and overseas markets. The government should also vet collaborating parties in international business to help SMEs lower the risk of exporting and improve their grasp of the overseas market to avoid cultural, legal and economic misunderstandings and potential traps. Simply put, Fox’s plan for the UK to become a 21st century exporting superpower isn’t codswallop. However, if we want to make it a reality, great effort is required and creative vision is needed to see the bigger picture of the world’s markets’ potential and challenges. OCTOBER 2018 ELITEGLOBAL
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Top Ten
The top ten UK export countries
Despite Brexit’s uncertainty, British goods are not losing their popularity in the EU, quite the opposite – they’re selling like hotcakes as export significantly increased between 2017 and 2018
By Yoana Cholteeva
The Office for National Statistics reported that UK export grew to a total £620.8bn in the year to June 2018, marking an increase of 4.4% compared to the same time last year. Although the statistics don’t indicate any disturbance related to Brexit’s possible outcomes, the data suggests that the UK relationship with European Union remains essential as eight out of the ten top export markets of the UK are EU countries.
Percentages shown are of total UK export
9.2%
Netherlands £39.0bn of
Germany
exports
£56.8bn of
6.3%
6.6%
exports
Switzerland
France
£19.0bn of
£40.4bn of
3.1%
exports
exports
5.5%
Ireland
£34.0bn of exports
18.2%
3.6%
United States
3.1%
£112.2bn of
China
£22.3bn of exports
exports
Italy
£18.9bn of
Spain
£16.1bn of exports
XX
14
2.6%
Belgium
exports
£18.7bn of exports
3.0%
ELITEGLOBAL OCTOBER 2018
ELITEGLOBAL OCTOBER 2018
Infographics p14 1
28/09/2018 12:21
ADVERTISING FEATURE
ONE UNPAID BILL, THAT’S ALL IT CAN TAKE TO KILL A BUSINESS
You grant payment terms to your customers every day, it’s a routine way of doing business. But do you think of the risk you are taking?
C
OFACE CLIENT FARETRADE specialises in the redistribution of surplus stock on behalf of major manufactures. The company operates in Western Europe territories such as Germany, Netherlands and Scandinavia and 75% of its sales are within the UK. As a trading business Faretrade Ltd can burn through working capital quite quickly because they often need to pay for goods up-front and might not receive payment for two or three weeks. As a self-funded company they knew its net worth could be depleted quickly if they were hit by bad debt, so they concluded that credit insurance was the best way to protect their cash flow.
So why did Faretrade choose Coface? FareTrade selected a Coface credit insurance policy which covered their domestic and export trade from customer insolvency and payment default. However, there were several other reasons for choosing Coface. Commenting on the decision, Christian Bray, director at Coface, explains: “Issues such as the wording of an ‘all monies retention of title’ clause in our contracts have caused us some sleepless nights in the past but with Coface, we don’t feel we need to jump through hoops for a claim to be accepted. “As exporters to the EU, the fact that Coface has local underwriters in countries such as the Netherlands gives us added confidence. “Coface’s online service enables us to obtain instant pre-approved credit
limits. In the past, applying for credit limits on new customers has felt like a guessing game and we never knew whether the amount we requested was realistic. Now, all we usually need to do is enter a customer name and we can automatically obtain a credit limit which gives us an idea of a company’s credit worthiness and a sense of the scale of their business.” Could Coface protect your business? With less than six months to go until Brexit there is still no deal on the table. This is leading to greater business uncertainty, and at Coface we know that the more volatile the business environment the more volatile a company’s payment behaviour can be. If you want to discuss how you can reduce your exposure to non-payment or insolvency then talk to Coface on 0800 085 6848 or visit us at www.cofaceitfirst.com
OCTOBER 2018 ELITEGLOBAL
15
International Recruitment
Matchmaking in
new markets BY eric johansson
Business success abroad relies on your ability to source the right candidates. So how can you ensure you won’t end up with the cream of the crap?
E
very entrepreneur envisions a future where their company reaches an international clientele. In today’s globalised world, that dream may seem closer than ever. But to successfully acquire their spot among the top international superstars they must find the right staff and sourcing talent in a new country isn’t for the faint of heart. “Setting up a team abroad is certainly not without its challenges,” says Luke Smith, CEO and co-founder of Croud, the digital marketing agency. He knows what he’s talking about. Even though his business only launched back in 2011, the enterprise has become one of Europe’s fastest growing scaleups and today has offices across three continents. And for the 27% of UK SMEs doing some kind of exporting, according to figures from the Institute of Export and International Trade, Smith offers this advice: “No two 16
markets are the same – you need to do your due diligence before launching into a new market and the same goes for starting off any form of recruitment.” In other words, before you even start looking for the right candidate, you must research any cultural dissimilarities in the new market that risk derailing your recruitment efforts. “We always research the different cultures,” says Katrina Ritchie, head of people and culture at Gripple, the global wire-joining solutions company. For instance, the company recently recruited staff for Gripple’s expansion into Japan and noticed a key difference in the corporate culture across the land of the rising sun – the interviews were more professional and stricter than the kind of informal interviews British executives were accustomed to. Recognising candidates may have reacted negatively towards the company’s regular talent-
ELITEGLOBAL OCTOBER 2018
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international recruitment
sourcing methods, Gripple adapted its recruitment to the new market. “We respect the culture and that’s one thing that we always bear in mind,” she says. So change your recruitment process accordingly to what candidates expect from you. Another cultural consideration is the language barrier. “The majority of candidates will be interviewing with you in their second language and in many cases you have to forfeit the interview dynamic you’ve become accustomed to in your home market and be mindful of local nuances,” says Adam Ludwin, co-founder and chief visionary officer at Captify, the adtech scaleup. Indeed, when the jobs portal Jobs.ac.uk surveyed academic and science recruiters, it discovered that 30.8% found the language barrier to be the hardest one to
overcome when recruiting international staff. But it’s not an insurmountable challenge with the right help. “We often ask experts or advisors who have experience in that market of their opinions and to even be part of the interview process,” explains Ludwin. But cultural considerations aren’t the only obstacles that could keep you from finding the right people for your overseas venture. You must also consider the legal regulations in the new market. “[Employment] practices and customs may be completely different and somewhat alien to you and [you’ll] have to adapt your policies and processes accordingly,” advises Smith. “For instance, ensure you’re aware of the key legal points surrounding what information you’re able to ask for and retain during the
No two markets are the same – you need to do your due diligence before launching into a new market and the same goes for starting off any form of recruitment - Luke Smith, Croud
recruitment process.” Again, this challenge may be too big to take on yourself so it’s always a good idea to reach out to local experts for aid. “Get a good specialist recruitment partner as well as ideally local or international legal support so you know the framework that you’re able to operate to,” he says. “This applies to all areas of the business, it’s invaluable that you have those specialists to guide you.” However, once you’ve adapted to the culture and the local laws, you still have to source the right talent for your business. And just like in the UK, that means you have to boost your online presence. “Candidates are well equipped to research your company,” Ludwin says. “Invest early in PR and [ensure] platforms like Glassdoor and social [media] give a clear window into what life is like in your business so that when candidates seek information, they understand your culture and values.” Although, be prepared that your business may be perceived differently by candidates in a new market. “For example, despite being a large EU [company], when we first started our business in the US we were seen as a startup all over again, which made our recruitment process change from country to country,” he says. OCTOBER 2018 ELITEGLOBAL
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28/09/2018 11:14
International Recruitment
Having the right people on the ground is vital, so invest time and money upfront to set your international business up for success - Luke Smith, Croud
Nevertheless, once you’ve figured out how to attract people, the basics of what you should look for don’t change. “The general principles remain the same regardless of market, such as assessing based on skills, experience and fit,” advises Smith. But just because you know what to look for, it’s important to avoid rushing into any snap decisions and ensure you’ve got the right person for the job. “[Take] your time to find the right person, who you feel you can trust and work well with as you won’t always be around on the ground,” Smith says. While few would scoff at the idea of going abroad for a day or two, doing so just for a few initial interviews could become
a pricey and time-consuming endeavour. Fortunately, there are ways to get around that. “Get ready to interview in the virtual world,” Ludwin says. Even though this is a great way to gauge candidates’ suitability, talking with people over the web comes with a few drawbacks. “Skype interviews mean you don’t have a human connection therefore you’ll have to work harder to find common ground,” he warns. To ensure you’ve got the right people, you have to be particularly thorough when sourcing talent. “References are always crucial but even more so in new markets,” says Ludwin. “Don’t be afraid to quiz them thoroughly.” Again, if you’re already an accomplished recruiter in your native market, there’s no point in reinventing the wheel. That means ensuring you’ve got a holistic view of their thinking and if they’d make a great cultural fit. And when you find the perfect worker for your overseas expansion you’ve got to strike while the iron is hot. “When you find good people make a move fast and don’t let them get away,” Ludwin advises. “For key hires I’m sure are the right fit for the business, I have often personally called them directly to get over any stumbling blocks.” All these considerations may seem like a whole lot of work and they are. However, all businesses are people businesses and that means the more you prepare the recruitment process the more successful your company will be. “Invest in building the right team abroad,” concludes Smith. “Having the right people on the ground is vital, so invest time and money upfront to set your international business up for success.”
XXELITEGLOBAL 18 ELITEGLOBALOCTOBER OCTOBER2018 2018
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08/10/2018 18:30
Change pl aces
T h e g r e at d e bat e : YES O
Carl Reader is a business coach, director at accountancy firm d&t and author of The Startup Coach
ne of the unfortunate things about global expansion is the need to change. Any business looking to cross the channel or develop further afield will need to take into account the differences of their target nation when setting up. Whilst Google has caused some level of controversy in its reported move to China – and for understandable reasons – it’s perhaps highlighted one of the bigger internationalisation issues businesses face. Most businesses will need to adapt in some way to take local legislation into account. It might be their commercial contracts have to be re-drafted under the jurisdiction of a foreign court or indeed that their overseas employees have different rights under the local employment law. They might be required to register for certain business activities and there might even be laws enforcing a certain percentage of local ownership. Very few businesses have the power to lobby for changes of these laws, so they must be embraced as part of the growth. I’ve also come across some practical issues when advising clients on international growth, whether in relation to brands being imported to the UK or exported to other nations. Language is obviously a challenge for nonEnglish speaking nations, however, even brands 20
ELITEGLOBAL
Great Debate.indd 1
crossing from the UK to the US and vice versa have to understand the difference in the style and tone of communication. Taking a step back from the differences in words, businesses also need to consider the differences in demographics and customer tastes. I had advised a German bakery brand not only to adapt its marketing material and operations manuals into English but also take into account the difference in consumer tastes and the different culture around buying bread fresh from a bakery. This is before differences in the costs of premises, employment law for transient staff, funding of new locations and planning permission. Whilst they had a very strong business in their home nation, they were forced to question every assumption they make every day about how business is done, including a change to their brand and logo. I can see exactly why Google’s China case caused such dispute. However, I’d also comment that many of the challenges faced by brands exporting can be overcome by the largest of brands. For example, a brand like McDonald’s could have a very strong lobbying team and would prove attractive to any nation it goes to. I can only hope that Google helps cause some change for good through its growth.
OCTOBER 2018
09/10/2018 13:41
Change Pl aces
Google by its very design revolves around freedom of information, knowledge and discovery. However, the company is reportedly “working on a censored search engine” in order to re-enter China. This is said to have prompted 1,400 Google employees to sign a petition for an ethics review structure. With that in mind, should a business change its messaging when entering a new market? Richard Skellett is the owner of global technology solutions for business company Allied Worldwide and social enterprise Digital Anthropology
S
hould a business change its messaging to enter a new market? The answer to this question is absolutely not. If a company is prepared to change its culture, thereby forfeiting trust to enter a market in the pursuit of delivering earnings per share, you cannot therefore trust its behaviours in the existing markets it operates in. If a company culture is so disposable, sacrificing its vision and values so easily all in the pursuit of delivering profit to shareholders at any cost, where does such a company draw the line? Culture is built on shared vision and values which should operate across borders to ensure behaviours are consistent. The number one value for any business is trust – if this is eroded, how does the culture therefore prevent poor behaviours? Does Google really need to operate on a censorship model? Does it need to compromise its values by adopting behaviours that make people casualties of greed? When you look at the internet of things (IoT), it’s there for the people and provides value to them.
NO
Google should be ensuring its service is built around trust without compromising or being a slave to earnings per share. You could argue that the IoT is now so embedded that our level of dependency on it for our daily lives means we can no longer survive without it. Does it therefore mean the tech titans controlling this space fall into the same bracket as the other essentials we need as human beings to survive such as water, electricity and so on? My belief is businesses that exist to provide services which are fundamental to human needs and survival shouldn’t operate on an earnings per share model but instead as social enterprises. There should be no conflict between the culture, vision, values and behaviours with decisions that affect or compromise trust because of greed. Even if Google makes a decision not to go ahead in China, considering whether to or not says a lot about its culture. How do we know what it’s doing in the UK and US if it’s prepared to accept censorship in China? How can its behaviours be trusted elsewhere? OCTOBER 2018
Great Debate.indd 2
ELITEGLOBAL
21
09/10/2018 13:41
Create Free B2B contact lists at the City Business Library
Free membership at City Business Library offers you access to a wide collection of specialist UK and international business information including company data and market research. Free membership also gives you remote access to some data. The Library’s data allows you to create free B2B lists from over 180 million companies worldwide; access in-depth global market research reports, country profiles and statistics and browse import and export statistics from over 95 countries. You can use global forecasting tools for hard and soft commodities worldwide and analyse forecasts for consumer markets, industry sector reports, global demographic and economic data. The Library also offers flexible workspace, events and seminars, business start-up advice and room hire.
www.cityoflondon.gov.uk/cbl email: cbl@cityoflondon.gov.uk Tel: 0207 332 1812 Guildhall, Aldermanbury, London EC2V 7HH Beyond.indd 7
08/10/2018 19:15
Research and development
The top ten
countries for university R&D BY angus shaw
rom Facebook and Google to Time magazine and WordPress, well-funded universities can foster the best conditions for entrepreneurs to chalk up groundbreaking ideas in their dormitories. In fact, 2015/16 spawned 3,890 graduate startups across the UK according to HESA, the education statistics agency. However, Britain is only the 18th best country when it comes to funding research and development (R&D) for higher education. Blighty only spends 0.42% of its GDP on university R&D compared to Switzerland’s 0.9%. And with British universities only receiving £3,587 per student, it seems the UK has a long way to go before it even makes the top ten.
F
austria £4,963 per student JApan £5,362 per student
luxembourg £4,630 per student Switzerland £31,192 per student
iceland £5,401 per student Norway £6,343 per student France £6,504 per student sweden £6,666 per student
singapore £13,403 per student
Denmark £7,339 per student OCTOBER 2018 ELITEGLOBAL
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ou’re probably ready to reap the benefits of international trade but wondering just how easy it is. You’d be right to wonder as it’s not a case of jumping head-first into international markets and hoping for the best. After all, it’s one thing having a product or service suitable for global markets but it’s another thing selling them to international consumers. The first stage is to develop a solid marketing strategy. Traditional outbound marketing methods such as trade shows and cold calling are costly enough in domestic markets and even more expensive when going global. Instead, creating inbound marketing content provides a high-quality, cost-effective and long-term solution. Put simply, if you create great content that generates internet traffic that ultimately converts into leads – international leads in your case. You can effectively implement inbound marketing in English via blogs and articles, landing pages and search engine optimisation (SEO). While these are all effective techniques for promoting your brand at home and driving domestic traffic towards your website, they won’t hold up in international markets. That’s because 75% of consumers purchase products in their native language and 72% use their mother tongue to browse the internet. It’s essential, then, that you communicate in other languages effectively. If you don’t, then sadly there’s little chance of the global consumer market finding you. The next step is to make your content understandable and appear online within foreign market search engines like Baidu in China or Yandex in Russia. To do so, you need to implement the following: good quality translation, international SEO (iSEO) and localisation. Good quality translation High-quality translation is your best starting point. Machine translation tools, such as free online services, are obviously a low cost route but lack in quality. Human translators are high-quality but are hugely expensive. Luckily, there is an alternative. Hybrid translation platforms like Export Worldwide use a mix of machine neural translation and human specialists to produce highly accurate translations cost-effectively. Additionally, the platform provides several translation tools to ensure quality, such as multi-loop translation, whereby 24
translated content is converted back into English to confirm accuracy. Plus there’s the Translation Checker, which highlights areas of commonly mistranslated text. Alongside these tools, human specialists will provide guidance on how to adjust your existing content if needed into plain translatable English to ensure an efficient translation. iSEO You’ve undergone keyword research for your domestic market. The keywords you’ve chosen are ranking and generate a healthy amount of traffic. But is it enough to just directly translate the keywords you’re targeting? The answer: Yes. Using neural translation across your existing keywords, you benefit from a process of automated translation that systematically analyses rare words, phrases and bilingual text to continuously learn the most accurate way to translate. Giving your keywords an accurate and contextual translation, which generates traffic and awareness for your brand. Localisation Like international SEO, localisation is an essential international marketing strategy that ensures foreign consumers can relate to your content. It’s about taking culture and context into account when translating, which can be the difference between a powerful piece of content and a weak one. Localise your content to increase the chances of international markets understanding it, benefitting from it and becoming legitimate prospects. The benefits of international trade through usage of lead generation platforms By combining each of these steps, you can market your company internationally for a fraction of the time and financial cost of doing them individually, using Export Worldwide. And as a UK company, you’re in a prime position to get started quickly with the platform, because you already have the content and the keywords. It’s simply a case of optimising your content to translate accurately before publishing it into 20 languages fast and efficiently. Export Worldwide is a multilingual inbound iSEO marketing platform that promotes your products and services in over 20 languages to new international markets, using localised SEO and hybrid neural translation.
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0121 608 7255
www.exportworldwide.com 08/10/2018 18:35
VIVA L as Vegas
Sin it to
BY ZEN TERRELONGE
win it...
New York and Silicon Valley often grab the headlines for US business developments but British entrepreneur Paul Rowlett was drawn towards the bright lights of Las Vegas when expanding from the UK
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aul Rowlett is remarkably chipper for a man who’s had under four hours of sleep. “I’m just getting out of bed to be honest,” he admits as the clock turns 8am in Las Vegas, the city he’s set up shop in. As founder of The Charles Alexander Distribution Group, the print and promotional products firm in Leicester, he’s used to burning the candle at both ends with his US foray. “It’s a horrible time difference that just ruins you,” he laughs. “When you’ve got a UK business and a US one, you’ll wake up, check the phone, send an email and go to bed at silly o’clock.” However, Rowlett became accustomed to little sleep during his time in the Royal Navy, long before he entered Sin City with EverythingBranded, the promotional merchandise business and flagship Charles Alexander brand. “I joined when I was 18,” he recalls, adding the navy taught him not to clockwatch as he adapted from school-leaver lay-ins. “Suddenly you’re on a warship doing six hours on and six hours off – you know what hard work is.” Before enlisting he’d been entrepreneurial from a young age. “I had little sideline businesses, including a tuck shop as a kid,” he details. After leaving the navy, he used his rigging and hoisting skills to build cinema screens but redundancy saw him enter sales. “It was direct sales and from that I went into B2B sales and learnt a lot about the internet as I was selling Google Marketing,” he says. It was soon time to move on though. “I was actually sacked. Me and the manager didn’t really get on.” 26
Being fired may have seemed like a negative but it led him into the promotional printing industry, where Rowlett realised he could leverage his internet knowledge to surpass his then-employer. “They didn’t pay me right [and] misled me on a few sales,” he declares. “It kind of annoyed me and made me think, ‘you know what, let’s look at the market.’” That fire in his belly made him realise there was merely a handful of rivals on the scene and that was enough to go solo. “I thought ‘I’ll leave the company and start my own.’” The vision for Charles Alexander Distribution when it launched in 2010 was to build an umbrella group. “We thought ‘if we call it distribution we can probably get credit and trade accounts with different industries for complete distribution,’ so it made my net wider to walk down different avenues,” Rowlett says. EverythingBranded, the first of the group’s businesses, led the charge as he sought to supersede his previous employer. Despite “a struggle in the beginning to get trust from suppliers,” like a baby taking its first
There are definitely areas of the US that are less welcoming to outside visitors because it’s about keeping it to America
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steps the company soon found its feet. “I saw that in any business sustainability was key,” he says. The chance to cross the pond arrived in 2015 after the business won Distributor of the Year at the Sourcing City Awards, which led to an invitation to a trade show in Chicago. On why the US captivated EverythingBranded, Rowlett says the potential for the promotional goods sector in the country is huge. “It’s a $23bn market, [compared to the UK’s] £953m,” he reveals. “That’s 23 times the size and the same business model, so it’s not rocket science.” Despite the lure of plump, succulent numbers, Rowlett didn’t rush in all guns blazing. “I didn’t take it lightly,” he says. “You’ve got to look at sales, US tax laws and where you base your business because of state laws.” Many business headlines surrounding the States may be geared towards the Big Apple or Silicon Valley but Rowlett wasn’t content with being just another Englishman in New York - or San Francisco. “We looked around at an office in Delaware, then New York,” he explains. “Originally we had this big dream and looked at California but the bottom line is, with the tax laws and property prices, it’s just out of our reach and wouldn’t make financial sense.” It was a holiday to Richard Branson’s Necker Island three years ago that helped Rowlett decide on Las Vegas, having become good friends with an entrepreneur who lives in the Nevada city’s Seven Hills area. “He kept telling me ‘you need to open in Vegas,‘” recalls Rowlett, who had already visited some 15 times – primarily for pleasure rather than business. “Obviously as a tourist you think ‘nah, that’s the wrong place.’” He soon realised it was the right spot though. “The reason for that was there’s no income tax and property values are cheap.” Indeed, the 18,000 OCTOBER 2018 ELITEGLOBAL
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square foot office in Vegas is costing the same as a 10,000 square foot office the UK, making the value for money crystal clear. With the UK covering the fixed costs in the business, such as staff fees, admin and marketing, it put the American arm in a strong profit position. “What’s your main outlay in a business?” Rowlett opines. “Your staff is probably number one, then building costs, then marketing. I could employ an American member of staff for $23,000 a year [in Las Vegas] – in California you’re paying $36,000 because of the income tax. So I’m getting the same ability for lower cost. There’s actually three people for every job, which is a bit of a worry but at the same time not everyone wants to work in casinos.” As such, opening up as a nine-to-five business in the adults’ playground suddenly made EverythingBranded stand out as a desirable employer. Given the Las Vegas strip is the holy ground for gambling, EverythingBranded’s site is in Summerlin, a suburb a short drive from the hustle and bustle. “Being in suburbia and going to these nice business villages, the vibe is totally different,” says Rowlett. “The weather is perfect and you can do outdoor events, you’ve got longer working hours, you’ve got conventions on all the time.” He adds that it’s important to leave the party town mindset to one side though, noting the city is thriving for business. In the same way launching in the UK was tough, entering the US “was hard,” says
Rowlett. One of the key challenges was the fact some companies had cancelled orders purely because EverythingBranded is an English business. “There are definitely areas of the US that are less welcoming to outside visitors because it’s about keeping it to America,” Rowlett says. “The frustrating thing for us is we’re using American suppliers and generating 100 jobs in America.” While there’s competition in the UK and opportunity in the US, there’s apparently little danger of Brits following EverythingBranded across the pond. “A lot of the guys in the UK won’t enter the US because they’re a bit scared of it,” Rowlett claims. “I was living and breathing the US market for six months every night, talking to suppliers until 2am in the morning because of the West Coast time difference, so you’ve got to have the drive to do it.” And the late nights have paid off big time. “We’ve already had 11,000 businesses order in less than 14 months, which is really good going.” While Rowlett sings the praises of Las Vegas, he also offered caution to Brits entertaining the market. “If you’re renovating a property or get an office here, always add six weeks onto your lead time,” he says. “For internal renovations you need permits, which we never realised.” Additionally, getting gas and electric providers sorted can be tricky because they’re not necessarily “internationally-minded.” Aside from those words of wisdom, there is one downside that sprung to Rowlett’s mind. “The only negative is the food,” he laughs. “There’s a lot of sugar and it’s not helping my diet.”
Obviously as a tourist you think ‘nah, that’s the wrong place’
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Dan Ennor commercial director, Global Freight Solutions
Four steps for retailers to expand globally Going abroad isn’t easy. But knowing how to start goes a long way
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lobalisation has pushed the world of e-commerce away from the western world, with 84% of online sales now coming from outside the US and Europe. The tariffs, borders and duties that Brexit will enforce across the EU will make trading more challenging and less profitable for UK-based retailers, which is why it’s important businesses differentiate their revenue streams and start to build an action plan to expand into booming, emerging marketplaces. Fortunately for retailers, there’s a practical way to mitigate the risk of Brexit and accelerate international e-commerce growth. Firstly, deploy technology enabling seamless multi-channel dispatch. It’s no coincidence the fastest growing e-commerce businesses are those with a clearly defined multi-channel approach that’s fit for purpose. However, if SMEs are unable to bring all of this into one system they’ll suffer a lot of extra time, cost and complexity for their operations shipping and dispatching across multiple channels. There are several factors that need to be streamlined – labelling and dispatching across multiple marketplaces and carriers. This is where the importance of technology comes into play, as it enables organisations to expand their services efficiently, rather than being inhibitive. If the technology is deployed properly, it should integrate with existing systems and offer flexible delivery options. Secondly, give customers lots of delivery options for maximum choice and convenience. People know what good customer experience looks
like and when it comes to making an online purchase they expect and demand maximum convenience and choice. If the reality doesn’t meet their expectations, they can easily take their custom elsewhere. It’s no surprise this expectation applies equally to not only how they want to purchase but also how they want their parcels delivered. Research from Statista, the online statistics portal, shows 16% of cart abandonment takes place because the delivery options are unsuitable. And with cart abandonment rates estimated to be costing UK retailers close to £18bn per annum, it’s clear that giving customers the widest possible choice of delivery options at the point of online checkout can have a major impact on a company’s bottom line. Delivery options must also be backed up with ongoing communication so the customer knows exactly where their parcel is at any given time. Thirdly, adopt an enterprisewide carrier management approach. Delivery is such a vital component of how a retailer operates because it touches on multiple areas across a business – finance, IT, warehouse and customer care are but a few. Having an integrated set of enterprise carrier management tools in place across those areas will give greater control and efficiency across
delivery operations. This means retailers can more easily and efficiently scale their business across different channels and continents. Finally, choose the right delivery partner to exploit global growth. Most retailers don’t require convincing to enter new markets but they’ll need expert help to guide them through the duties, customs issues, taxes and most importantly selecting the array of delivery options that are culturally and practically right for that market. By outsourcing to a global carrier expert, not only do companies benefit from their advice and expertise but it takes the burden of managing delivery away and puts it on someone else, allowing companies to concentrate on selling into more channels and markets. This enables retailers to be single-minded in their pursuit of profit.
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KENYA
s i l i c o n Political problems once plagued Kenya. But the launch of several fintech startups has transformed the country into one of Africa’s most promising entrepreneurial hotbeds. What’s next for the nation?
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savann ah BY angus shaw
E
ven though it’s the home of some truly renowned coffee, few would believe Kenya commands the clout to be an attractive startup nation. However, they may have reason to change their minds. The country attracted VC investments worth $82.86m in the first six months of 2018 – almost half of the $168.6m total injected in the continent over the same time – according to Weetracker, the technology media platform. Clearly something big has earned the nation the soubriquet Silicon Savannah. This is especially impressive given the country’s long history of political turmoil harming its economy. While Kenya’s finances had been shaky at best since the republic claimed its independence from the Brits in 1963, things went from bad to worse after the nation’s tumultuous 1992 election was marred with corruption allegations and claims of widespread racially-targeted violence. The chaos combined with poor harvests and international donors withholding funds resulted in record-high inflation levels of 46% in 1993. But the economy improved slightly after the country liberalised market regulations and with things like securing a $150m Poverty Reduction and Growth Facility loan from the International Monetary Fund in 2000, the nation was quickly moving towards becoming a friendlier place for entrepreneurs. “Irrespective of Kenya’s political history, today
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Many people in Kenya can’t imagine a world without mobile money – it’s God’s gift to us Brian Mwiti Mwenda, Hope Tech Plus
it has a very strong entrepreneurial spirit and many startups have adopted a modern and western outlook on business,” says Paul Randall, executive director of Coremetrix, the risk management company. Indeed, one of the initial signs something big was about to happen in Kenya dates back to 2006 when the government introduced the nation’s first undersea fibre optic cable – The East African Marine System – and made digital transfers possible. “Mobile money revolutionised how people move money, save, get loans and even make payments,” says Brian Mwiti Mwenda, CEO of Hope Tech Plus, the healthtech startup. “This gave rise to so many opportunities around fintech, most of them powered by mobile money.” In the years since, Kenya has solidified a reputation of being a pioneer in offering people equal opportunities – getting a loan is just minutes away for most Kenyans. “Many people in Kenya can’t imagine a world without mobile money – it’s God’s gift to us,” Mwiti Mwenda adds. Another key moment came when Vodafone launched M-Pesa, the mobile-based money transfer service, in 2007 for Kenya’s mobile network titans Vodacom and Safaricom. “M-Pesa has transformed the thinking around what people are able to do online,” says Eric Thimba, CEO of MOOKH, the e-commerce platform enabling sellers to easily set up their own online stores. Comprising 81% of Kenya’s mobile transaction market shares in 2016, M-Pesa was the trailblazer of Kenyan fintech to say the least. “It’s opened up a whole new world of possibilities in terms of being able to collect payment,” Thimba argues. 32
It encouraged startups like Thimba’s to service the country’s huge working class, known as the Jua Kali, which before desperately lacked formal financial access. “[They’ve] been called Jua Kali for the longest time because it means fierce sun,” Thimba explains. “So it’s all these guys who work in the hot sun for this informal sector that employs a lot of people.” Some even argue it’s replaced the traditional banks and financial services. “I think the normal financial structures that exist are no longer relevant to the needs of businesses now,” Thimba continues. And it’s not just the Jua Kali that’s benefitted from easier access to capital – so have the country’s entrepreneurs. “As with other emerging economies, a high percentage of Kenyan startups fail within the first three years of operations with working capital identified as one of the key issues as the main reason for failure,” Randall says. But thanks to the rise of these alternative lenders, new ventures have an easier time sourcing money. “Entrepreneurs who previously struggled to obtain formal finance due to a lack of credit history now have an opportunity to benefit from mobile lending solutions,” Randall argues. While fintech is the nation’s crown jewel, it’s not the only sector that shines in the country. “Kenya’s startup scene is one of the most attractive in the continent, drawing entrepreneurs from all spaces with healthtech, fintech and agritech being given major emphasis,” says Mwiti Mwenda. Indeed, four Kenyan-based companies adorn the continent’s top ten investments this year. And from CDC Group securing $10m for solar energy company M-kopa to True Ventures leading a $5m seed round for agritech startup WeFarm, it speaks volumes about Kenyan tech as a whole. “Entrepreneur communities are cropping up everywhere – they just meet to discuss challenges and encourage each other,” Mwiti Mwenda continues. Given the massive growth of the startup sector, it’s hardly surprising that VC firms are eager to invest in the country. “I see a lot of African-focused funding coming to Kenya,” says Mwiti Mwenda. “Most of this funding is sector-focused [so we’ll] see more startups coming up in fintech, agritech and healthtech.” While it’s yet to sport unicorns on its plains, Kenya saw a 58.57% funding increase between 2016 and 2017,
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I think the normal financial structures that exist are no longer relevant to the needs of businesses now Eric Thimba, MOOKH OCTOBER 2018 ELITEGLOBAL
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tech hubs consisting of accelerators, incubators and other organisations helping startups call Kenya their home.
$30bn
was digitally transferred in Kenya in 2016, showcasing the strength of the fintech sector.
according to Partech Ventures, the global investment firm. This culminated in May this year when The Rise Fund, the investment firm, led a $47.5m series C round for Cellulant, the Kenyan digital payment scaleup. VCs aren’t the only ones being lured by the opportunities on the Silicon Savannah. Over the past few years there have been several initiatives to support the emerging startup nation. “Big companies are now looking to help and work with fintech innovators on the continent simply because they recognise the banks are slowly losing relevance,” Thimba says. Indeed, Kenya has seen 30 tech hubs of either accelerators, incubators or innovation centres open since 2016, according to GSMA, the trade body. And with 25 of them being in Nairobi, the country’s capital is the continent’s third best catered to city in terms of tech hubs. Moreover, several foreign organisations and nations have actively supported the growth of the Kenyan startup ecosystem. For instance, Visa’s Everywhere Initiative, the global innovation programme challenging startups to solve payments and commerce issues with the chance to secure $50,000, came to SubSaharan Africa for the first time in 2018. And it’s hardly surprising that Kenyan MOOKH won the top gong. “I think Kenya’s in that economic space
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$47.5m
was the size of Cellulant’s impressive series C round in May 2018, demonstrating the VC interest in the nation. Sources: GSMA, Central Bank of Kenya
right now where generally we’ll see more of these initiatives,” Thimba says. Britain’s one of the countries that has been signalling its more than happy to branch into the Silicon Savannah. Who could forget prime minister Theresa May’s infamous dancing moves on a Kenyan trade mission in August 2018? Elsewhere, Scott Russell, CEO of Paddy & Scott’s, the coffee company, has benefitted from the government’s enthusiasm firsthand when he was looking to start growing coffee in the country. “I was just impressed with the support from the Department of International Trade (DIT),” he recalls. On top of helping with research and travel grants, the DIT also introduced Russell to the Kenya High Commission. And he’s certain foreign initiatives are more than welcome by the Kenyan government. “I think they want to showcase to the world that Kenya’s open for business and that it can compete
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KENYA
and operate with European countries,” Russell explains. In fact, Kenya’s leadership has been pulling out all the stops to foster the economy’s fresh direction. “The government has started to appreciate the potential of startups in shaping the future of the economy,” Mwiti Mwenda says. Indeed, last year Kenyan president Uhuru Kenyatta unveiled his Big Four
plan. As well as adjusting budgetary sights for manufacturing, food, healthcare and housing to realise Kenya Vision 2030, the agenda also commits £167.2m to developing information communication technologies. Moreover, the last five years saw nationwide rollouts of fibre optic broadband. The government’s clearly been putting its money where its mouth is.
My prediction is that in the next five years Kenya will have the most attractive space not only for startups but businesses Brian Mwiti Mwenda, Hope Tech Plus
However, it’s not all sunshine and roses. With Kenya’s traditional banking infrastructure not up to scratch, it’s tough for startups to clear credit checks and enjoy formal loans. “This is typically down to local financial institutions not having the infrastructure in place to accurately score a citizen’s creditworthiness,” says Randall. As a result, lenders often demand high security before dishing out loans. “With a limited or no credit rating, taking the first step on the credit score ladder is extremely difficult,” he continues. Moreover, political drama still saps the coffers of businesses and even threatens economic fallout. As a case in point, after losing last year’s election Kenya’s opposition coalition, the National Super Alliance (NASA), drummed up economic boycott against all companies aligned with the new government. And after marching into a busy phone shop, NASA’s leader Raila Odinga not only boycotted but accused Safaricom of fiddling electronic ballots while wiring election results to the electoral commission. “On the flip side though, this negative publicity worked well for these companies with some reporting the highest profit margins ever,” Mwiti Mwenda says. So what’s next for the country? If, as one would optimistically predict, Kenya’s government keeps encouraging startups with tech initiatives and the country avoids political earthquakes, then the Silicon Savannah is set to flourish. “My prediction is that in the next five years Kenya will have the most attractive space not only for startups but businesses,” Mwiti Mwenda bullishly concludes. “Watch this space.” OCTOBER 2018 ELITEGLOBAL
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Andrew Finley stakeholder and relationship director at Oxford Innovation
World at your feet Despite Brexit looming around the corner, more SMEs are bullish about looking beyond British borders but are often hit with mixed messages. International business consultant Andrew Finley reveals what to look out for before sailing overseas
hen preparing for growth, the end game for a company is to be self-sufficient and leave a global footprint. But given the world of international business can be both daunting and exciting, owners must implement the necessary components to successfully operate and compete across different markets. Before any future foundations are laid or forecasts are predicted it’s essential for SMEs to assess their strengths and weaknesses to know their business inside out and how to pitch it to international clients. Having a clear strategy in place including a collaborative approach to employees, service providers, customers and plans for global activities is the first step. Many of the businesses I deal with at Oxford Innovation, the business coaching organisation, are focused on export so we tailor the discussions to reflect their changing needs. The sales environment is highly competitive so businesses must be on the mark when setting out their stall. There are complex interconnected disciplines like accurate cashflow
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forecasting and many SMEs have run into financial difficulty despite rising sales revenues. One of the challenges for businesses is making sure a reliable supply network is in place as this will aid the development through robust production capability, cashflow and secure the long-term viability of the company. If you run out of cash or can’t meet the demand for orders, it’s an invitation to trouble. Having the right supply network ensures quality control and price determination. Fundamentally for a vision to work, a manager must get every employee on board by communicating the business’ direction and, on reflection, what works well and not so well. To achieve growth on a global scale the business not only needs to have a grip on sales channels but also a geographically appropriate brand message. Pitching a product successfully on a domestic front isn’t necessarily the same as targeting a brand to international shores. Monies need to be allocated for separate marketing and promotional exercises, whether this is B2B or B2C. Additionally, having an action plan and risk management strategy to deal with any potential complex risks is critical. A sensible strategy for companies to achieve growth is to address each area sequentially. First, build an integrated plan for the business that encompasses all key disciplines and then design a long-term and carefully thought out vision. And when approaching the domestic and international markets it’s essential to look at your business challenges from two perspectives – external and internal. Indeed, a well-run organisation needs both to be aligned.
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world of
opportunity 02 | WELCOME 03 | KEYS STEPS FOR EXPANDING ABROAD 06 | ONLINE: AN OVERSEAS OPPORTUNITY 08 | BEYOND EU BORDERS 10 | THE EXPORT RUMOUR MILL
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WORLD OF OPPORTUNITY
Welcome
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n a climate that’s currently filled with uncertainty, concern and rumour, UK business leaders are constantly being updated with various reports about the risks surrounding their companies. But what about the opportunities? Those beyond Britain? We’ve spoken with a series of entrepreneurs about their experiences of operating internationally and started at the best possible place – the beginning. If you plan on launching your company abroad, it stands to reason you won’t have all the answers, which is why we’ve questioned those who have been there and done it on what they believe are the most crucial things to consider in order to successfully secure a footprint overseas. With everything from costs, strategies and being honest as to whether the market actually wants your service, you should have everything you need to get the ball rolling with an export plan. There’s an incredible amount of data doing the rounds on what seems to be a daily basis surrounding Brexit and the UK’s future. So we’ve crunched the numbers and rounded up the key figures in one infographic to bring you up to speed.
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Setting up shop overseas may seem like an uphill struggle and, while we’re by no means saying it’s easy, online has helped the ambitions of entrepreneurs to open overseas and achieve sales. Indeed, we’ve heard how some business owners haven’t even had to set foot on a plane to attract international customers thanks to the internet. As one leader puts it: “Cross border e-commerce is the backbone for our ambitious business growth.” So we’ve covered what to consider when growing abroad and how the web can help your ambitions but the next question is where should you go? China is a solid destination for its market opportunity thanks to a love of Brand Britain as well as the spending power possessed by local consumers in the country. Finally, some things you’ll hear on the grapevine about export will be true and others the work of fiction. We’ve done some myth-busting to break down what you can expect to hear when setting out overseas to give you a head-start on what’s true and what’s false. Happy exporting!
www.worldfirst.com
06/07/2018 13:38
worldfirst
Follow the leaders Growing a company overseas can seem daunting, so we’ve secured first-hand pointers from business leaders that have successfully expanded beyond the UK “It’s important your website talks directly to your new market. Having a platform that sells in pound sterling isn’t going to entice a US audience. Speak to your new audience by pricing products in their national currency and, if you can, make the shipping, returns and delivery process as barrierfree as you can.”
Richard Valtr is the founder and CEO of Mews, the hospitality software provider
Niamh Barker, founder of The Travelwrap Company, the cashmere wrap retailer “The most important thing for us was making sure that customers around the world have a positive journey with us, from when they order an item to when they receive it. It’s vital not to rush into making decisions and to look at all the options when it comes to order fulfilment.”
“Research into the market size, native languages and customer behaviour in your desired location are important to think about. This will ensure you understand your market well. Also, your financial situation – make sure you’ve got budget and resources to expand in the way that you want to.”
Ashleigh Hinde, founder of Waldo, the direct-to-consumer contact lens brand
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“Have a very clear business plan with a clear export strategy. Ensure your value chain can accommodate an importer-distributor margin and remain market-led if it’s a premium brand proposition. If you’re serious about export, having credibility is key, otherwise you will not attract the right partners.”
Mark Dawkins, co-founder, Langley’s England, the gin brand
Tom Jeffrey, e-commerce manager at Jules B, the luxury clothing brand
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“Seriously consider whether or not your product or service has a potential customer base in your new market. While you may be successful in your home country, this doesn’t always translate to success overseas. Put simply, if there’s no need for your service or product, and you do not undertake due diligence on a new market, you’re doomed to fail.”
“It’s very unlikely you’ll be an expert in the country you are doing business in, so always try to find a local partner that understands the landscape. This is a strategy we’ve pursued to great success in South Korea and Japan.”
Omar Rahim, CEO of Energi Mine, the energy company
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SUPPLEMENT world of opportunity TITLE
Of UK-based businesses expect their overseas trade to increase over the next year
Is the amount exported UK goods and services will increase by 2020 - which will double by 2030
The value of international imports in April 2018 – a 2.5% increase from last year
of London-based SMEs make a foreign transaction each month, followed by 30% of the South East and West Midlands
The value of international exports at the start of Q2 in April 2018, showing an increase of 6.6% year-on-year
of European businesses are moving operations out of the UK following Brexit – down from 15% in 2017
of UK SMEs export to Western Europe, making it the most popular destination, followed by Central Europe, the Nordics, Eastern Europe and the US
SMEs invested in exports in Q1 2018
of small businesses are positive about leaving the EU
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of UK SMEs trade internationally in Q4 2017 – down from 52% in Q4 2016
Source: Bibby Financial Services, UBS Evidence Lab, WorldFirst, HM Revenue & Customs, HSBC/gov.uk
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06/07/2018 13:39
XERO
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Online:
An overseas opportunity
The power of online shopping and communications means companies can now cross countries at the touch of a button, so we’ve spoken with the leaders who did exactly that with their businesses to head overseas
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he UK high street has been hit hard throughout 2018, with a seemingly endless list of retailers including John Lewis, Toys R Us and House of Fraser announcing store closures. Comparatively, online retail is surging. An IMRG Capgemini sales index revealed that purchases online spiked by 19.4% year-onyear in May 2018. Commenting on the study, Andy Mulcahy, strategy and insight director at IMRG, said: “Growth for the online retail market has been exceptionally strong so far in 2018, with May’s result being the highest
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for that month in eight years. It’s becoming increasingly clear that shoppers are favouring online channels over physical ones to a greater degree than they used to, which is accelerating the pace of change for multichannel retailers.” Of course, online shopping doesn’t just support consumers and make their lives easier, it simplifies things for retailers in many ways, particularly when it comes to expanding the business and operating overseas. Indeed, rather than physically visit countries, look at locations and property options, introducing an
online store into a new market can speed up the process. Jules B, the luxury clothing brand, is one such company that didn’t even venture overseas to explore markets before selling in them, it just went in for the kill, according to Tom Jeffrey, Jules B’s e-commerce manager. Explaining why the move outside the UK was made, he says the opportunity to build the brand was too good to pass up. “Selling outside of the UK meant we could expand our potential customer base and bring our unique mix of brands and styles to more people,” Jeffrey details. “These things always
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take a lot of work and figuring out to begin with but it’s been a worthwhile process and has increased brand awareness for us in a way that couldn’t have happened if we were only selling in the UK,” he says.
“Without having to physically leave the country, we’ve reached a point in which international orders represent 20% of our business and this figure is constantly increasing.” When assessing where to launch, the brand turned to Google insights and keyword tools alongside paid advertising to weigh up the best options suitable for its growth. And although there were challenges, they’ve been overcome and have literally paid off. Jeffrey says: “With the tools and technology we have access to now, selling online is certainly the easiest way to take a business overseas and make that expansion. Without having to physically leave the country, we’ve reached a point in which international orders represent 20% of our business and this figure is constantly increasing.” In terms of the approach to achieve sales, Jules B is open-minded with the method it chooses, although online marketplaces have both been valuable. “We look at all options, from Amazon and affiliates to apps and third party platforms, to help us build the Jules B brand and generate traffic to our site,” says Jeffrey. “We already use both Amazon and eBay to drive sales and have found this to be a successful strategy.” China is one such market that businesses should pay attention to closely if they want to branch out to new territories. According to PwC, the professional services firm, the Far East country is the biggest e-commerce market with online sales of $307.4bn in Q1 2018 – that’s a 35.4% rise year-on-year. Langley’s England, the gin brand, secured a deal to enter Asia in 2018 and cofounder Mark Dawkins said he’s keen to achieve the success there that it has in Europe and the US. He believes that an international presence is needed in order to be a true brand. “40% of our global sales are currently from the UK but we have a clear three-year plan to reduce that reliance to 20%, whilst still doubling the UK sales,” says Dawkins. He notes that export sales were crucial to let the business reinvest in its marketing plan to scale abroad.
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Interestingly though in the case of Langley’s, achieving online sales abroad hasn’t been as key for the business as it has for Jules B. “Our brand is available on many online retailers and we have a good online presence via our non-commercial website and social media platforms but importers do not buy from their brand partners online and we’ve noticed that not many overseas consumers do either,” Dawkins says. Focusing on Amazon specifically, it hasn’t been particularly prominent for overseas sales either but does have its benefits. “It has been very good for us in the UK and if you are a successful performer with a good sales performance on Amazon it does prove the saliency of your brand and that does make import partners sit up and take notice,” he adds. “It has a similar impact to having good sales in multiple grocers these days.” Elsewhere, Niamh Barker, founder of The Travelwrap Company, the cashmere wrap retailer, has been able to enter most foreign markets with the power of the internet without travelling to them in person. “For our overseas audience, our signature product, Scottish cashmere travelwrap lends itself well to an online audience,” Barker explains. “Our brand emphasis on the quality, craftsmanship and British heritage provides reassurance and reduces barriers to purchase for overseas customers.” With that product reassurance and brand exposure overseas, Barker feels the business expanding outside of the UK has been low risk. “As customers spend more and more time shopping online our strategic growth plan continues to be following our customers anywhere in the world. Cross-border e-commerce is the backbone for our ambitious business growth.”
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Beyond EU borders What the UK’s SMEs may have thought of being a slow death with the triggering of Article 50 has resulted in increasing profits from the Far East
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here are no second thoughts about China being the largest economy on a purchasing power basis. Whether it was British beer, Whittard tea from Chelsea or British pork, China seems to have taken a shine to goods manufactured in Blighty. And the UK was always viewed as a gateway to entering the tech industry with the increasing startups. China’s interest in the country was shown when it issued the first overseas sovereign RMB bond in 2014. This means endless opportunities for UK-based companies. As the Brexit countdown ticks even louder with each passing day, business owners widen their gaze beyond the EU over to the Far East. Post-Brexit vote, the UK’s trade increased by £0.6bn with countries outside of the EU and declined £1.2bn with countries inside the EU in the first quarter of 2018, figures from National Statistics show. While businesses believed that failing to reach a deal with the EU could
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be fatal and the single market access is crucial, SMEs are now confident about expanding and are being able to produce profits from overseas. In fact, 60% of medium-sized business leaders plan to increase investment in exports beyond the EU in response to Brexit according to research by Mills and Reeve, the national law firm. The study based on a survey of 500 companies said that despite an unstable economy being foreseen, businesses are feeling bullish with 83% of them planning to increase their turnover this financial year. But Brexit is not the only reason for expanding in other countries. Many Asian investments were being directed to the US until now. But figures by Magister Advisors, the M&A advisory firm, witnessed a change when Asian investors turned their back on America after Trump’s punitive trade tariffs. This would mean that foreign investment from Asia would scale up UK businesses far faster.
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An example of a British business thriving in the Far East is Jaguar Land Rover, which racked up export sales in China after it opened its first engine plant in the country and is to be one of the largest exporters to the market. Indeed, while the full financial year ended March 2017 saw the firm’s retail sales up 16% year-onyear, China dominated the growth with a 32% sales spike over the period. That’s more than the 24% in North America, 16% in the UK and 13% in Europe. “We continue to make encouraging gains in key markets such as China and North America,” said Andy Goss, sales operations director at Jaguar Land Rover. This was seen in other companies as well. For instance, the sky-rocketing demand for luxury commodities led to a 4% increase in sales last year for Burberry, the British clothing brand, and much of it came from China. Similarly, Intertek, the product-testing company, said in its annual report that China, Vietnam, India and Hong Kong are main markets. Another business witnessing an upward growth was BP, the UK-headquartered oil and gas company. Its report said that energy consumption in China rose by 3.1% in one year making it the largest growth market for 17 consecutive years. It
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just goes to show how closely the fortunes of UK firms can be linked to Chinese markets. But export does comes with its challenges. For many exporting SMEs that sell in foreign currencies, foreign exchange risk is the most cited challenge and many see either gains or losses fluctuate due to exchange rates, given the depreciation of the sterling. According to Civitas, an independent think tank, SMEs find finance to be another mountain to scale when it comes to expanding abroad. But despite these challenges, figures from global currency company WorldFirst’s ninth quarterly Global Trade Barometer showed that of the 1,000 SMEs surveyed, one in four are looking to export to a new country in the next quarter. Of the ten markets that saw the greatest growth in payments from UK SMEs in the first quarter of this year, seven are outside of the EU. These include — Turkey, Norway, Morocco, Singapore, Russia, Indonesia and the UAE. Commenting on the issue, the chief economist at WorldFirst, said: “These SMEs will be our global exporting pioneers post-Brexit and it is vital that the government and wider industry does all they can to support them. This could mean anything from facilitating connections between UK small businesses and foreign counterparts, to offering advice and training on how to do business and communicate with international trading partners.” Despite the more confident outlook, 46% of those surveyed said that some form of external support would encourage them to export more. Digging deeper, 18% want help to discover international partners, while 17% want to see government to play a more active role. At times like these, government departments such as UK Export Finance (UKEF) is useful as it offers insurance and capital to viable UK companies. Elsewhere, the China-Britain Business Council is on hand to support and advise UK businesses who are considering entering the Chinese market. The UK government has been trying to aid businesses by equipping them with tools such as the legal proceedings and laws they need to know so as to reach its goal of £1tn worth of exports by 2020. Leaving the EU might pose a challenge but with the Far East as well as other international markets proving to be the silver lining, it seems like company heads would do well to look beyond EU borders.
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The export rumour mill You’ll see and hear a lot when it comes to shipping your business out across international borders but how much of it is accurate?
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eople will always have a difference of opinion when it comes to certain business situations. For example, is it better to bootstrap or seek funding early on? What works for one company will not necessarily work for another – although that doesn’t mean anyone is necessarily right or wrong. However, there’s a difference between opinions and what is fact or fiction. Some business myths come from assumptions and others from word of mouth but, regardless of its origin, a myth is still false. And when it comes to exporting, one such belief is that small companies can’t thrive overseas – which was denied by Dominic Jermey, the former UK Trade & Investment chief executive back in 2014. Supporting that further, the June 2018-released UK Export Finance report revealed smaller businesses accounted for 77% of the UK exporters that the government funding arm helped sell in 75 countries over the past year.
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So to prevent any other UK leaders falling for international information they believe to be accurate, we’ve spoken with a handful of entrepreneurs that have expanded globally to find out what fables they were fed during their expansion.
Beware the costs According to Omar Rahim, CEO of Energi Mine, which now operates in South Korea, there were a couple of standout myths he heard when looking at taking his company overseas and cost was chief among the factors. “Probably the first myth we encountered was that moving into new territories is phenomenally expensive,” Rahim says. “Really, it doesn’t need to be if you manage it properly. If you try and do everything yourself, from a distance then the costs can soon rack up.” The second thing he was led to believe is that
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you need to become a font of knowledge before daring to embark on an export expedition, which also proved to be inaccurate. Referring to cost and expertise, he advises: “In both cases, the key is to make use of local support specialists that know the ground you want to cover and can to get you up and running at reasonable rates, rather than trying to hire and negotiate deals on premises and services from afar.” We know that discussion with peers can be a good thing but you hear a mixed bag of positive and negative points, the latter of which could easily act as a deterrent. Indeed, Rahim was met with a fair share of horror stories when conferring with others. “Issues of spiralling costs and expansion plans becoming time vampires that drain the rest of the business are commonplace and you can’t help yourself but accept that it’s an unavoidable part of the challenge,” he details. “However it really doesn’t have to be that way. Just plan, be smart, and don’t try to do everything yourself. Local help is essential to being successful in new territory.”
conserving a company once it’s up and running in an overseas market. Commenting on his experience, Richard Valtr, founder and CEO of Mews, the hospitality software provider, says: “Much gets made of the pains of starting up and maintaining businesses in other countries. For us, hiring our financial director and using a cloud service has really helped us streamline processes in all of these different countries. Of course, there is no startup that seems to remove the headache of transfer pricing but startups shouldn’t be afraid of the risk and must be willing to accept some costs in order to establish multi-market growth.”
Piece of cake Seemingly, myths tend to be linked to negative elements surrounding exports. However, on the other side of the coin, Tom Jeffrey, e-commerce manager at Jules B, the luxury clothing brand, revealed people think internet retail is a walk in the park. “That the online market place is ‘easy’ is a myth,” he declares. “A lot of people think it’s easy but it takes a lot of time and effort to do it right. We would always recommend putting the effort in at the start as it will make everything more stable and automated in the long term, which makes doing business online and continuing to expand much easier.”
It’s too risky For Ashleigh Hinde, founder of Waldo, she could have quite easily been put off exporting altogether had she taken the words of peers to heart. “Generally speaking, the feedback I’ve experienced around internationalising is that people are very risk averse and tend to warn against it,” Hinde reveals. The key, she believes, is to take a step back and assess the risk for yourself as it’s you who knows your business better than anyone else. “For a lot of products their points might be valid but I think it’s important to look at your business through your own lens and make decisions, particularly regarding expansions, based on your own situation. Analyse your own company’s abilities and resources and if you truly believe it will work, don’t let people scare you.”
Running wild Elsewhere, another myth that can get in the way isn’t simply costs of getting started or the risks once you’re there but
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Hungry to grow your business overseas? With the new World Account you can open local currency accounts and sell on any global marketplace. Compete like a local business, globally. Register at worldfirst.com
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Emma-Jane Packe managing director, The Supper Club
Prepare for success in the US t
here were some key takeaways from The Supper Club’s most recent event on expanding into the US. Firstly, make sure you’re crystal clear on what makes you different. Secondly, culture - who’s going to take that on and embed it into your new business? And thirdly, think about the practicalities and regulations when launching in America. The point on clarity came from Martin McCourt, chairman of Glen Dimplex, the electric goods company and the former CEO of Dyson, the tech company, who successfully led its US growth despite fierce competition from big local brands. “Marketing your business on a ‘me
too’ basis isn’t the way to succeed in the US,” he said. “Unless you’re taking something in there that’s never been thought of before or creating a whole new market, then you’re going to steal share from established competition – so you need crystal clarity on why you will stand out.” There were some different perspectives on culture, from exporting yours to adapting locally. “The assumption that Americans are just like the British is an expensive one,” warned Allyson Stewart-Allen, the Californian CEO of International Marketing Partners, the business consultancy, who has advised more than 200 businesses in 26 countries on how their brands can succeed in the US. “Americans will really relate well to something that has been adapted for them rather than imposed upon them from the UK. So do your homework, immerse yourself in the culture, because the culture is going to make or break your success.” So how do you adapt a UK business for a US market? “Culturally, you don’t need to pretend to be a US business,” said Patrick Eve, managing director of ZigZag Global, the return management firm, who successfully led a build and buy strategy to establish his former venture, TransferWise, the transfer scaleup, in the US. “You
can remain a British business but you need a very US-centric offering. Only use case studies of where you have succeeded locally, whether it’s with local partners or talent, to prove those US credentials.” Dominic Joseph, co-founder at Captify, the consumer-search analyst firm, moved to the US to launch the company’s New York office. “To embed our culture in the new business we looked for people in the US with the same values and work ethic – and there is a great synergy between the US and UK teams,” he explained, adding that the company has experienced rapid year-on-year growth, winning major US advertisers such as Comcast, Target and Directv. This roundtable discussion highlighted many of the practical aspects to consider. For example, research where your investors and customers are and where your talent is – consider time zones as well. Get a good lawyer and accountant and expect them to have a more active role as advisors on contracts, taxes, and visas – which can vary from state to state. Finally, if you’re expecting to travel regularly to the US get yourself global entry and if you’re planning to live there, speak to US immigration as early as possible because it can take three to six months to set up a visa. It’s worth the effort to make it a success, as Joseph concluded: “The US is ahead commercially because there is so much money being spent and there are different market dynamics in each region. If you can carve out your place in the US, it helps you understand what’s coming next in the UK.” OCTOBER 2018 ELITEGLOBAL
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Edging towards new territories With Morgan Goodwin, Abdul Mann is set to disrupt the international trade market with the online platform Edge:CTP By Varsha Saraogi
A
s Britain inches closer to the possibility of a no-deal Brexit, company heads are feeling increasingly anxious about what leaving the EU will mean for their businesses. Given these uncertain political conditions, it’s no secret many entrepreneurs are looking outside of the EU for their next opportunity. However, in doing so they face the challenge of cutting through a lot of red tape. And that’s where Morgan Goodwin, the business consultancy and software company, comes in. The startup was co-founded by CEO Abdul Mann and chairman Mark Sheahan. Their aim is to make it easier for SMEs sailing through international waters. “I want SMEs to trade globally without any second thought and, besides, a customer is a customer whether he’s in your country or another and the same goes for the EU after we Brexit,” Mann says. His solution was to create Edge:CTP, a platform aiming to be a one-stop shop for SMEs looking to expand internationally. Essentially, it cuts 50
through all the red tape and empowers entrepreneurs to know what legal hoops they must jump through thanks to it being connected to the European Commission’s market access database. The lightbulb moment came when the founders were asked to develop an export solution for the Scottish Chambers International (SCI) in 2010. But when SCI went into administration a few years later Mann and Sheahan didn’t abandon the idea. Instead, they launched Morgan Goodwin in 2012 as a vehicle to give life to Edge:CTP.
The future is undoubtedly in blockchain - it gives you the security and trust that businesses need today
Despite their technological expertise – with Mann having a background as a developer – and long-term plan, they required a mentor who had experience in the field. For the founders it was Murdo Beaton, the former director of international trade at Edinburgh Chamber of Commerce. “He helped us with the whats and hows to support national and international trading requirements,” Mann explains. Initially just aimed at assisting in trade certificates, Edge:CTP has since grown into a complete workflow solution for small-business owners. “When I explored the idea, I thought why don’t we develop a complete platform that generates certificates, controls stock, is a workflow [tool] for customer management and tracks orders and logistics,” he recalls. Essentially, instead of SMEs being forced to type in the same data over and over in a slew of different platforms to get the right documentation, Mann wanted smallbusiness leaders to only have to do it once. “We amalgamated all of those softwares into one platform,” he
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explains. “Just like decades ago, people carried various gadgets but now only need a smartphone.” Then in 2017 they launched Edge:CTP and now, 18 months later, even Asian companies are using the platform despite it only being available in English. Getting to this point was a turbulent ride for Mann. Especially when you consider that no startup can be successful without solid finances. “The difficult bit in terms of raising funds is telling yourself and the other investors that it’s not just a gamble,” he says. Luckily, Mann and his co-founder were able to raise £1.4m from VCs to build the Morgan Goodwin brand and develop the platform. The next step for Mann was to ensure the platform was capable of assisting in end-to-end deals. This is no small ask. Consider that when a company deals with a potential buyer or seller it has to go through the timeconsuming process of checking its stock, generating an invoice for the quotes and co-ordinating incalculable other details. That’s one of the things Edge:CTP aims to change. The platform enables company heads to do an entire
deal sitting right in front of a potential trader. “If both parties are on Edge:CTP they don’t need to get on the phone or correspond over email to place orders,” he says. “And if the owner decides to delegate the project to his manager, the risk of miscommunication is small as all the information is stored in the cloud.” Even though Mann was confident about his product after equipping it with these features, he did face some obstacles “the size of a skyscraper” to get the product off the ground. For instance, he was repeatedly rejected by various chambers of commerce. “Every time someone sees a potential for disruption, they’re most definitely going to say ‘no we don’t need that,’” he argues. “Even though what we’re offering is completely free new technology as opposed to their current service provider.” Indeed, it took Mann over a year just to get approved by the British
Chambers of Commerce and his frustration is palpable. “That resistance people have to change was the most difficult part for us,” Mann says. “And we still have to deal with it.” Even though his passion kept him going, Mann confesses he had moments of doubt. “I didn’t have a huge research and development team and saw the return on investment get further and further dim in the distance,” he remembers. “You then question yourself whether this was even worthwhile doing or not.” But while he struggled with doubts, Britain’s upcoming divorce from the EU has made his product more necessary than ever. “With Brexit the EU will [seem like] another country added to the list,” he says. “If you were trading with Angola, you would be exporting there after looking at all the requirements.” In his view, multinational companies have the OCTOBER 2018 ELITEGLOBAL
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The difficult bit in terms of raising funds is telling yourself and the other investors that it’s not just a gamble resources and spend millions on building systems that can help them with their trade. However, SMEs aren‘t as fortunate. Again, that’s where he hopes Edge can shine. “Whether you are exporting to Asia or the EU, the requirements and the processes will be available easily,” he says. Having all the strategies in mind, Mann is still treading slowly with the platform. He is aiming to roll out the complete platform in the English-speaking countries like the US, Canada and Australia by January 2019, although he’s more ambitious to see the feedback from countries like China, Russia, Brazil and India. Soon, he wants to see Edge:CTP being downloaded as an app. “We 52
haven’t gone to the App Store just yet. It’s anamorphic but we are looking to roll out an app later,” he says. Mann is also planning to improve the platform further. For instance, he’s actively looking at incorporating blockchain into the platform to make international transfers more secure. And it’s easy to see why he’s bullish about the technology solving many of these woes. One of the major aspects with blockchain is it creates a digital ledger. Every entry is stacked on the next and everyone can see who amended it. As a result, there’s more control of how the information is handled, which means more security if it’s used by people trading overseas. “The future is
in blockchain – it gives the security and trust that businesses need especially when trading with foreign countries,” he says. Housing more than 700 SMEs as clients from all across the globe on the platform, Mann ensures he gets real-time feedback about any glitches they encounter. With further developments, he’s set to have a huge portfolio in the next few months. And he believes the more people that sign up to use his or similar platforms, the better everyone will be. “As businesses and their customers become more easily connected, using combined trading platforms in order to kill the inefficiency in trading will become the way forward,” Mann concludes.
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How can UK SMEs overcome international trading challenges? Having launched a company to make export and import easier for SMEs, Abdul Mann has a few tricks up his sleeve which can be beneficial when venturing beyond the British Isles
Be prepared for the worst but overcome your fears
Understand the requirements and regulations
Be prepared with proper paperwork
In business, it’s common to get cold feet when doing something new. Entrepreneurs are more comfortable in their home country and familiar with the culture but that changes when exporting. Fear revolves around matters like getting paid on time to how a crisis situation can be fixed from half a world away. The first thing companies need to do is conquer their fear says Mann. Mitigate risks involved in getting credit reference checks on the company, consider getting an advance payment and get insurance in case of non-payment. These can be the red flags when setting up an export company to thrive in foreign lands. But if you have a product which is in demand, you must trade, Mann advises.
It’s of utmost importance for SME owners to ensure they’re aware of the policies in the country they’re about to enter. For instance, Iran is not allowed to do business with the US so even if an Iranian company wanted to buy American goods, it simply can’t. “The last thing you want to do is trade with a company that is sanctioned,” Mann says. “Controversially, if you’re an American company the advice you’ll get is ‘just export it’ and that’s because no country will turn away goods from the US but it isn’t the case for UK-based companies yet.” The silver lining is that your local chambers of commerce are available for advice and an integrated tool like Edge:CTP guides you step-by-step if you get stuck.
Once you know whether you can trade with a country and understand the rules, the next step is to ensure proper documentation. This can be a huge challenge as there’s a lot of paperwork needed to trade internationally. For instance, UK-based SMEs are required to get a certificate of origin to start with, not to mention the slew of contracts, licences and declarations you’ll need too. Missing or inaccurate documents can increase risks to your business, lead to delays and additional costs or even prevent a deal from being completed. Serious stuff indeed. Having a clearly defined contract agreement in terms of payment, customs agreements and logistics is crucial. This also eliminates any possibilities of mistrust between the two trading companies. OCTOBER 2018 ELITEGLOBAL
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Going to China
Eastern promises BY Eric Johansson
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Going to China
China is actively courting UK entrepreneurs to bring their businesses over to Asia. But there are challenges you have to be aware of before setting sail
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n a Tuesday morning in September, roughly five dozen people in smart casual business clothes climb the escalators to the first floor of an office building in central London. Walking past the slick corporate decor into a seminar room, they’re here to learn how to grow their SMEs and startups into China. After a small continental breakfast they all take a seat. At 9am on the dot, Scott Haughton, co-founder and COO at Envestors, the investment portal hosting the event, steps up to the microphone. Speaking to the sea of navy attire, he makes no secret as to why they should all be serious about taking their companies to China. “It’s an incredible place and it’s an opportunity that any UK company cannot ignore,” Haughton says. And he’s not wrong. While the Chinese economy’s growth has slowed down due to Donald Trump’s tariff war with the country, it’s still grown on average by 9.6% year-on-year since 1989, according to Trading Economics, the trade-tracking platform. “It’s already pretty much or about to overtake the US as the world’s largest global economy,” states Mark Hedley, regional director for London at the China-Britain Business Council, the organisation promoting trade and investment between the UK and the republic. The growth is partly fuelled by the country’s growing and increasingly affluent middle class. The percentage of the population that earned between $9,000 and $34,000 grew from 4% in 2000 to 68% in 2012. And according to McKinsey, the management consulting firm, that figure is set to jump to 75% by 2022. “The growth of the middle class in China means
there’s tremendous purchasing power in the Chinese market,” says Hedley. Indeed, in recent years the country has seen everything from shopping centres to tech startups rise up to accommodate the expanding bourgeoisie’s consumption cravings. Moreover, the republic’s government has launched a serious push towards upgrading its manufacturing sector to meet both the domestic and foreign demand for new products. “So there are huge synergies between the UK excellence in developing innovative technologies and China’s thirst for embracing and adopting them into its ecosystem,” he explains. From creating startup visas and launching incubators to launching VC funds like Silk Ventures and offering essentials like office space, the central government and the different provinces have done their utmost in recent years to encourage western entrepreneurs to venture into the country. “There are incentives, in particular for hightech startups, to set up and base themselves in China,” says Hedley. However, going overseas can be extremely challenging for UK entrepreneurs. “Some of the biggest things are distance and culture,” says Hedley. “It’s a long way, not just geographically but also culturally.” For instance, foreigners may find it difficult to adjust to the different norms and expected behaviours in corporate China. As an example, your network plays a much bigger role in the country than in the west. Who you know will literally mean the difference between success and failure. “You may find it’s necessary to spend more time on the softer side of
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Going to China
doing business rather than on your transactional side of things,” says Hedley. “But that’s a challenge I think a lot of companies are willing to embrace.” Moreover, as with any expansion into a new market, UK SMEs must also understand the laws in the country. “There are issues around the complications of corporate structuring and tax and getting your profit out of China,” says Hedley. Fortunately, whether you’re trying to tackle the intricacies of the republic’s unofficial networks or finding out which regulatory hoops to jump through, there’s a simple solution to your woes – find some friends. You can overcome these obstacles by partnering up with an organisation that’s either from China or already has a presence in the market. “None of these challenges are insurmountable with the right advice and the right preparations,” summarises Hedley. Another challenge has to do with copyright. It’s hardly a secret China has a bad reputation when it comes to protecting intellectual property (IP). This was something Nick Beckett, managing partner at CMS China, the law firm, discovered first-hand when he moved to Beijing six years ago. “A lot of my colleagues and friends thought I was totally crazy going to China as an IP lawyer,” he remembers, speaking at the seminar. However, contrary to the notion that the republic is a haven for bootleg ripoffs, Beckett argues the country is increasingly taking copyright seriously. Not only are the laws on par with what you’d expect in the west but
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it’s also becoming more rigid in upholding regulations. For instance, the courts have beefed up their knowledge about IP legislation and tech matters, even launching specialist courts to tackle these cases. As a result companies like Christian Dior, Lego and Land Rover have all won huge IP battles in China. “Your ability to protect your rights have improved significantly in recent years,” he says. Still, that doesn’t mean protecting your IP is easy. “I’m not saying there isn’t a challenge,” Beckett says. “China is probably more of a challenge than most markets but there are some things you can do.” His main advice is to register your brand in China as quickly as possible to avoid anyone else doing it in bad faith to make a buck out of your hard work. That means both the English name of the company as well as any translation of it. The same thing goes for your copyrights and patents. Similarly, business owners are also advised to put employee contracts in place to protect against workers exiting the company with invaluable knowhow from either going straight to a competitor or setting up their own enterprise. “You would need to do it there more than you’d probably need to do it elsewhere,” Beckett says. But that leaves the question of where in China you should set up shop. “There’s different strategies that Chinese cities are aiming for,” explains Angel Zhang, international affairs director at Shenzhen Juneng Capital, an organisation promoting international technological cooperation. “You have to understand that it’s a large country and that each city has its own strengths and weaknesses.” While Beijing is the capital of China, it’s dominated by state-owned business. So if you run a tech startup you may have better luck in cities like Shenzhen, Shanghai or Hong Kong that have more high-tech profiles. For instance, the unicorns DJI and Huawei both hail from Shenzhen and Shanghai is the home of roughly 30 $1bn companies, depending on how you count. “So it’s a good idea to actually brainstorm what city that is the best fitting for your business and what you’re looking for,” argues Zhang. Obviously, going to any foreign market is a huge undertaking under any circumstances and China is no exception. However, given the size of the market, going there is an opportunity well worth the effort.
ELITEGLOBAL OCTOBER 2018
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Get your business China ready
The China-Britain Business Council (CBBC) helps UK companies of market in the world. CBBC provides:
o o business services o o a membership programme delivering access, seminars and networking Visit www.cbbc.org to get your business China ready. ChinaBritain
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08/10/2018 19:13
Cultural catastrophes
Big brand Blunders
Entering international markets is exciting but some companies have gotten carried away over the years and committed numerous language and cultural errors. And some mistakes present truly laughable lessons for UK firms Coca-Cola’s bad geography
aking your business global is a huge step that can unlock incredible success or, alternatively, grab the attention for all the wrong reasons. From Pepsi bringing “your ancestors back from the grave” in China to IKEA selling sexy furniture in Thailand, are these the funniest faux pas international businesses have ever made?
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Pleasing customers isn’t easy but some companies have gone hugely amiss. In an attempt to add a personal touch to its New Year campaign in Russia, Coca-Cola created the bitter taste of anger by illustrating the country as a snow-covered map where Crimea, the contested land between Russia and Ukraine, was missing. After reissuing the advert, it sparked ire in Ukraine as Crimea this time showed up on Russia’s map. As a result, Ukrainian customers took to Twitter to show themselves pouring Coke down their toilets.
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By Yoana Cholteeva
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Pepsi lost in translation
Getting lost in translation is runof-the-mill but some examples really stand out and it’s something even Pepsi has had the displeasure of experiencing. During its expansion to China, the company aimed to attract with the alluring slogan “Pepsi brings you back to life.” Unfortunately, the elaborate Chinese translation turned it into the phrase “Pepsi brings your ancestors back from the grave.” It’s apparently setting slightly high expectations.
ELITEGLOBAL OCTOBER 2018
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Cultural catastrophes
Burger King’s World Cup own goal
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The World Cup season was exciting for all, which prompted businesses to offer freebies galore. But Burger King in Russia came up with a really striking deal and not in a good way. The burger chain offered £36,000 and enough Whoppers to last a lifetime to Russian women impregnated by World Cup players. They advertised the deal on VK, a Russian social network, promising the prize to “girls who manage to get the best football genes,” and “lay down the success of the Russian national football team.” The beauty of marketing.
Pampers tells tall tales
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Who would’ve known folklore is an essential consideration when exporting? Procter & Gamble, the American multi-brand consumer products firm, didn’t. It introduced Pampers to Japan with artwork of a stork delivering the nappies, a play on the myth of the baby-delivering birds recognised in various countries – except Japan. The picture unleashed confusion and locals had no idea why the baby was carried by a stork because the Japanese fable has giant floating peaches bring babies to their parents.
Coors campaign goes down the toilet
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Coors, the US beer brand, learned the hard way that translating slang isn’t the smartest move. When launching its Turn It Loose campaign in Spain, the company didn’t take into account the language specifics and the phrasing of the campaign ended up with an expression meaning “Suffer from diarrhoea.” At least the Spanish will long remember the brand’s name – although they may decide sangria is a safer option.
HSBC requests you “do nothing”
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Though their services revolve around numbers, banks aren’t immune to language boo-boos, which was demonstrated well when HSBC came up with a rather nonchalant call to action. The brand’s “Assume nothing” message was mistranslated in numerous territories as “Do nothing.” We’re willing to bet it didn’t attract many to use its service. The bank’s blunder meant it ended up spending $10m to change its motto to “The world’s private bank.”
OCTOBER 2018 ELITEGLOBAL
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Cultural catastrophes
Happy Ramadan from Tesco
The power of Electrolux
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English-speaking companies are guilty of more than their fair share of shockers but let’s not forget the error of Electrolux, the Swedish vacuum manufacturer. Little did the Scandinavian brand know about English lingo when it popularised its products with the tagline “Nothing sucks like an Electrolux.” While the message certainly amused a number of customers, we’re not quite sure it boosted sales.
IKEA’s sexy furniture
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When IKEA opened a new store in Bangkok it aimed to keep its roots and retain the original Swedish names of the furniture. Sounds reasonable, right? Interestingly though, some of them were slightly sexual. Indeed, a Norwegian town inspired the Redalen bed but in Thai the word is likened to a term for oral intercourse. Similarly, the retailer’s Jättebra plant is a term close to slang for sex. The Swedish sin is apparently alive and kicking, albeit slightly unintentionally.
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We admire Tesco’s intention to be inclusive when it arranged a Ramadan-friendly food stand in 2015. The only problem was one of the aisles in a London store displayed smokey bacon flavoured crisps with the message Ramadan Mubarak. The idea of wishing a happy Ramadan with a taste of pork was found a bit inappropriate since it’s forbidden in Islam but the man who first spotted the faux pas, Raza Hassan, told the Independent that he was rather amused by the irony rather than actually offended.
Colgate’s infamous toothpaste
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When Colgate launched a batch of toothpaste in France it did so under the moniker Cue. Apparently, the business neglected its market research because Cue was recognised as a popular pornographic magazine in the country and the word was also slang for butt – something most people probably wouldn’t wish to be found anywhere near their mouths.
ELITEGLOBAL OCTOBER 2018
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5 06/07/2018 13:39
Financing Abroad
Finding foreign funding BY Varsha saraogi
Receiving investment when expanding abroad is no less than a mountain to scale. So what can entrepreneurs do to reach the summit and smoothly secure money?
F
rom Pret a Manger’s flat white at Penn Station in New York to Fortnum & Mason’s gift hampers in Dubai, the footprint of British businesses has been stamped across international markets for decades. So it’s no secret the power Brand Britain wields is immense. This is why, despite Brexit being around the corner, entrepreneurs are continually displaying their resilience by looking beyond British borders. Indeed according to a report by DMCC, a Dubai-based government trade body, 42% of 1,100 UK SMEs surveyed confessed having more inclination for becoming global players in a post-Brexit world. But companies can’t taste success without their fair share of financial and operational hardships. While you might have a breakthrough product, a planned marketing strategy and a dedicated team, money is undoubtedly the number one concern to scale. And whether it entails pitching to a panel of investors, the endless paperwork for a bank loan or using crowdfunding platforms, it’s essential to secure money smoothly when going global. For instance, the first task on your checklist must entail doing enough research on the country you’re looking to enter. “Even down to matters of etiquette,” says Johnny Hon, chairman and founder of The Global Group, the Hong Kongbased VC firm. For example, small talk and good manners are valued highly in China. “It’s vital anyone considering overseas investment does their homework and is fully aware of the complex, unique features of the market they’re hoping to engage.” Familiarity with the culture not only helps a business owner tap into the target audience but also provides an all62
ELITEGLOBAL OCTOBER 2018
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Financing abroad
It’s vital that anyone considering overseas investment does their homework and is fully aware of the complex, unique features of the market they are hoping to engage Johnny Hon, The Global Group
important upper hand when pitching the company to potential investors. Before getting carried away though, it’s necessary for entrepreneurs to realise an investor has the power to make or break their business. “The old adage that you only get one chance to make a first impression rings particularly true here,” Hon says. In most cases, investors help startups navigate through a number of technicalities like local regulations, government control and specific import or export policies. This is unlikely if you were to borrow money from a bank as they “don’t have the critical insider information an investor does,” according to Hon. “Relevant investors or advisors mean that you can conduct business and minimise costs in the most effective way.” However, no matter how silver-tongued you may be, convincing an investor isn’t easy. For starters, showing tangible results of your sales strategy in your home market is what piques their interest so it’s important the UK isn’t left forgotten like an unwatered plant once international strategies take root. “If you can prove your concept is successful in the UK, you’re already in a very strong negotiating position for expanding your idea abroad,” Hon explains. That’s what drove him to invest in UK-based loyalty card app developer Bink, as he wanted to “support the technology’s growth into foreign markets.” Hon isn’t alone in his thought process. Benoit Wirz, an angel investor at Brighteye Ventures, the European VC firm agrees, adding that along with proof of profits, a complete strategy is necessary. “If you can initiate a conversation by laying out a six to 12-month plan and then follow up as you execute on that, by the time you actually ask for money you will have demonstrated
what your investors are looking for – capacity to execute,” he advises. One of the pros UK companies have, even after the detrimental political conditions, they’re continually getting funding – increasingly via crowdfunding platforms. And that’s what helped Syed Ahmed, CEO of Savortex, the UK-based smart hand dryer business. He used a combination of backing from government startup fund Innovate UK and crowdfunding to access the markets in UAE. “Rather than raising capital through traditional models such as banks or VCs we opted for crowdfunding because that would give us the ability to raise money without losing too much company control,” Ahmed says. In this instance he selected Eureeca, an equity crowdfunding platform, where his potential investors were also his target buyers. But having accepted government funding, Ahmed believes it’s not the best method for entrepreneurs. “The issue with public sector money is that the processes are daunting,” he admits. “The decisionmaking process is very slow and when your business is growing, you require capital at a fairly quick rate. It has to be reactive.” However, in terms of crowdfunding, Ahmed wasn’t alone in taking this route to great success. Scottish craft beer business BrewDog raised £11.3m using this method to grow across Europe, Asia and Australia and digital banking service Revolut went on to become a unicorn after its initial crowdfunding round on Seedrs when taking the company abroad. Monzo, the digital bank, also crowdfunded and got $1m within 96 seconds of registering on Crowdcube. Ahmed believes the benefits of crowdfunding for startups are not limited to funds. “Apart from finance, it gives you access to easier routes to markets, possible partnerships and joint ventures,” he says. That’s not to say entrepreneurs should just expect to run on hand-outs. Ahmed admits the first step for a startup to gain momentum in a new country is to use their own savings and establish the brand before seeking money. “At the start of any business, bootstrapping is a great way to learn because you understand how to transform your vision to finances,” he opines. Looking at the various pros and cons of all the international investment options available to business owners, making inroads in another market depends upon your point of entry. Given businesses are booming in Britain, it’s safe to say UK entrepreneurs needn’t bend over backwards for an investment even if there is a no-deal Brexit. “If you’re a fast-growing, high-margin business addressing a market in a unique way, your investment prospects will be better across geographies,” Wirz concludes.
OCTOBER 2018 ELITEGLOBAL
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06/07/2018 20:42
Blockchain 101
How does blockchain work? BY varsha saraogi
Find out how you can capitalise on blockchain technology for your business
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rom boosting payments and supply chains to improving healthcare and smart contracts, blockchain is set to revolutionise the way business is done. Essentially, blockchain is a shared digital ledger that’s managed by a global network of computers in a more secure way. Imagine a massive, connected and decentralised Excel file. Information held in the database is distributed and continually updated by the computers in the network. Every entry made is added on the next so everyone accessing it can be kept in the loop of who amended it. And everything that’s been
entered remains there for time immemorial thus making it easier to keep a tab on the progress of a deal or transaction. In the blockchain world business heads can handle large amounts of transactions automatically through smart contracts. You don’t need to trust another party, you can always verify the contract, its contents and its history. Smart contracts allow organisations to embed information and make payments into a blockchain network for the automatic handling of transactions sans any intermediaries. So if you’re looking to utilise this technology, here are the fundamental steps:
Step 2
Step 1 After installing the necessary software, every computer in the global network has access to a shared record.
The computers on the network verify transactions in chunks of data called blocks. Once a computer verifies the transactions, the network adds the block at the end of a chain of other blocks.
Step 4 At any given exchange, you’re able to see exactly who’s had ownership and made amendments as every stage is automatically logged eliminating the need for a middleman.
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Step 3 These blocks stretch back all the way to the earliest transactions in the system in an unbroken chain and everyone seeing the blocks can view the changes that have been made.
ELITEGLOBAL OCTOBER 2018
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Hungry to grow your business overseas? With the new World Account you can open local currency accounts and sell on any global marketplace. Compete like a local business, globally. Register at worldfirst.com
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Tangerine London, UK
Join the thousands of UK businesses like Tangerine that are successfully selling overseas. Visit great.gov.uk
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