BUSINESS CLIMATE SURVEY FOR SWEDISH COMPANIES IN THE UNITED KINGDOM 2020
KEY CONTRIBUTORS TO THIS REPORT Business Sweden in the United Kingdom Samiksha Jalan & Gustaf Bergström Swedish Chamber of Commerce in the United Kingdom Sofia Larsen & Jonas Eklund Embassy of Sweden in the United Kingdom Marika Amartey
© Team Sweden in the United Kingdom 2020 all rights reserved. This study may not be reproduced either in part or in full without prior written consent of Team Sweden and its constituents in the United Kingdom.
BUSINESS CLIMATE SURVEY FOR SWEDISH COMPANIES IN UNITED KINGDOM 2020
|
2
TABLE OF CONTENTS
FOREWORD ................................................................................. 4 EXECUTIVE SUMMARY ............................................................... 5 ABOUT THE SURVEY .................................................................. 6 ECONOMIC OUTLOOK ................................................................ 7 THE MARKET ............................................................................. 11 HOW SWEDISH COMPANIES SUCCEED IN THE UNITED KINGDOM ................................................................................... 15 ACTING SUSTAINABLY............................................................. 18 CONCLUSION............................................................................. 22 CONTACT US ............................................................................. 23
BUSINESS CLIMATE SURVEY FOR SWEDISH COMPANIES IN UNITED KINGDOM 2020
|
3
FOREWORD The United Kingdom has many prominent industries, a thriving start-up scene and one of the most important financial hubs in the world, London. Thanks to low entry barriers and a large market size, there are a lot of opportunities in sectors where Swedish companies can fully leverage their strengths. Sweden has a long-lasting trade relationship with the UK. Throughout England, Scotland, Wales and Northern Ireland, approximately 1,200 Swedish and Swedishrelated companies have established an office, and there are many more businesses that export from Sweden to the UK. The UK has a plethora of industries and a healthy climate for start-ups to grow a successful business. With the City of London, it is also home to one of the largest financial centers in the world. There are not only lots of opportunities for Swedish companies to do business, but the UK also functions as a stepping-stone for international expansion, especially in sectors where Swedish companies can make a real difference. Examples of these areas are energy and cleantech, healthcare and life sciences, consumer goods and retail, and infrastructure and ICT. Team Sweden in the UK (the Swedish Embassy, the Swedish Chamber of Commerce and Business Sweden) have conducted its first ever Business Climate Survey among Swedish companies in the UK, whose findings are presented in this report. The purpose of the survey has been to increase the understanding of Swedish companies’ performance in the UK and deepen our appreciation of the opportunities and challenges that the UK market poses. It sheds light on the key factors driving Swedish companies’ success in the UK as well as their strategies in the face of the current climate of uncertainty. In addition, it will hopefully serve as a reference in bilateral trade dialogues between Sweden and the UK. There is no doubt that the global Covid-19 crisis has major effects on the world economy, and Swedish trade is no exception. The results of this survey should therefore be considered in light of the recent developments. However, a key finding of the 2020 Business Climate Survey is that the UK remains a very important market for Swedish companies and that the trust in economic recovery is high among respondents.
H.E. Torbjörn Sohlström Ambassador of Sweden to the United Kingdom
Gustaf Bergström Trade & Invest Commissioner United Kingdom, Business Sweden
Lastly, we would like to extend our most sincere gratitude to the participating companies and respondents which have contributed to this report.
Peter Sandberg Managing Director Swedish Chamber of Commerce for the United Kingdom
EXECUTIVE SUMMARY
Around
1,200
Swedish companies are active in the UK
-
Challenges of the UK market
Advantages of the UK market -
High GDP per capita Ease of doing business Market size
-
Brexit Changing business climate Highly competitive
Profitability
Outlook
Corruption
77%
46%
87%
of respondents had a profitable 2019
of respondents expect a decrease in 2020’s turnover
of respondents don’t perceive corruption as a concern
Respondents’ business areas
Respondents’ success factors
Respondents’ company size
30% Industrial 28% Professional Services 23% Consumer
-
Cost efficiency Digitalisation and e-commerce Brand awareness
-
53% large companies 18% medium companies 30% small companies
ABOUT THE SURVEY Respondents constitute a mixed crowd
SIZE OF COMPANIES
With its proximity to Sweden, many Swedish companies naturally consider expanding to the United Kingdom at some point. It is an attractive market for a number of reasons; home to 67.8 million citizens, and its population enjoys a high GDP per capita. The UK ranks as one of the easiest places to do business in the world according to World Bank. It is home to the world’s business law, pro innovation regulators, robust market infrastructure and the gold standard in corporate governance standards. The UK has more flexible and liberal labour laws than most other EU countries. Today, more than 1,200 Swedish companies are active in the UK. How are these companies experiencing the business climate in the UK? For the first time, Team Sweden carried out a survey to understand how Swedish companies, actively operating in the UK, perceive the market conditions and the economic prospects of their business. Where possible, the survey also shows if and how the views diverge across company type. The report provides insights about the economic outlook in the UK including interesting facts about the market. It also sheds light on the key factors that allow Swedish companies to succeed in the UK. The Business Climate Survey will be conducted regularly in the future to track and analyse changes over the years. This year, the survey was sent out to 199 respondents, with 40 respondents providing answers to the questions below. The answers were collected during March, April and May 2020. Interviews were conducted with selected companies for a deeper understanding of the factors driving their responses. Around 52 percent of respondents were large companies, followed by 30 percent small companies and 18 percent mediumsized companies. In terms of industry affiliation, professional services, consumer products and industrial players are nearly equally represented in this survey. Around two thirds of companies were founded between 2001 and 2015, while younger newcomers constitute around 15 percent. It should be noted that the size and industry composition of our respondents is not representative of the overall UK business landscape. Any of the statistics presented in this report are solely indicative of our respondents’ experience in the UK market. Furthermore, the response period coincides with the very disruptive start of the Covid-19 pandemic in the UK, thus the responses should be read in the light of recent developments.
Large
Small Medium
NOTE: Global employees. Large >1000. Medium 250-1000. Small 0249.
MAIN BUSINESS AREAS
NOTE: 30% Industrial. 28% Professional services. 23% Consumer.
AGE OF COMPANIES % 80 60 40 20 0
NOTE: Mature (-2000). Experienced (2001-2015). Newcomer (2016-)
ECONOMIC OUTLOOK The UK may be heading towards the sharpest recession on record due to Covid-19 The United Kingdom is a highly developed social market and market oriented economy. It is the sixth largest national economy in the world when measured by nominal gross domestic product (GDP), ninth-largest by purchasing power parity (PPP), and twenty second-largest by GDP per capita, comprising 3.3% of world GDP. The service sector is the most important and accounts for 79 percent of the UK's GDP. The biggest segments within services are; government, education and health (19 percent of total GDP), real estate (12 percent), professional, scientific and technical activities and administrative and support services (12 percent), wholesale and retail trade (11 percent), and financial and insurance (8 percent). Industry accounts for 21 percent of the GDP and the largest segments within this sector are; manufacturing (10 percent of total GDP) and construction (6 percent). The agriculture sector accounts for only 1 percent of GDP. Composition of the GDP on the expenditure side; household consumption (65 percent), government expenditure (20 percent), and gross fixed capital formation (17 percent). Exports of goods and services account for 28 percent of GDP while imports account for 30 percent, subtracting 2 percent from GDP. In Q1 2020, the world was hit by the global pandemic Covid-19. With the arrival of the pandemic, nearly every aspect of the economy was hit, dragging growth to a record fall. The economy shrunk by 3% in the first quarter of 2020, followed by an unprecedented 25% decline in the three months to June. For the year as a whole, the economy is expected to contract by 14%. This would be the biggest annual decline on record, according to Office for National Statistics (ONS) data dating back to 1949. Services, construction and education saw record declines, and car sales and restaurants all falling substantially. Although very few industries saw growth, there were some that did, including IT support and manufacture of pharmaceuticals, soaps and cleaning products. The pandemic also hit trade globally, with the UK imports and exports falling over the first half of the year, including a notable drop in imports from China. While UK’s growth is expected to rebound in 2021 by 15%, the size of the economy is not expected to get back to its pre-virus peak until the middle of next year.
ECONOMIC OUTLOOK
PROJECTED GDP GROWTH IN THE UK Per cent 10 8 6 4 2 0 -2 -4 -6 -8 -10
2016
2017
2018
2019
2020
United Kingdom
World
Projection United Kingdom
Projection World
2021
NOTE: Constant prices. SOURCE: Oxford Economics 15/05/2020
Swedish companies had a profitable 2019
Despite the slowing growth of the UK economy in recent years, the vast majority of respondents in our survey report a profitable financial performance in 2019. Breaking down the respondents into company size, a more nuanced picture emerges; larger companies indicate better profitability than medium-sized or small companies. 17 percent of small companies have reported to only have reached break-even or incurred a loss on the UK market, 42 percent of smaller companies reported to be profitable. 100 percent of mature or large companies report profitability on the UK market, and 67 percent of the medium sized companies reported profitability. It appears that smaller companies face more challenges. HOW WOULD YOU DESCRIBE YOUR COMPANY’S FINANCIAL PERFORMANCE IN THE UK IN 2019? Per cent 90 80 70 60 50 40 30 20 10 0
Loss
Break-even
Profitable
NOTE: The number of respondents for this question was 36. “Don’t know/ Not applicable” responses are included but not shown in figure. SOURCE: Business Climate Survey for Swedish Companies in United Kingdom 2020
BUSINESS CLIMATE SURVEY FOR SWEDISH COMPANIES IN UNITED KINGDOM 2020
|
8
ECONOMIC OUTLOOK
It is interesting to see that Swedish companies who took our survey seem to have internalised the challenging business climate posed by the pandemic in their turnover expectations. 46 percent of respondents expect their industry’s turnover to decrease either significantly or slightly, while 41 percent expect an increase. This optimism is most pronounced among medium sized companies, where 67 percent of respondents expect an increase in turnover. Out of the three segments professional services, consumer products and industrials, Swedish companies active in the professional services segment are most optimistic. Swedish industrial players are least optimistic, as supply chain disruptions continue to hamper business activity.
COMPARED TO THE DEVELOPMENT IN THE PAST 12 MONTHS, WHAT ARE YOUR EXPECTATIONS FOR THE COMING 12 MONTHS FOR YOUR INDUSTRY IN THE UK REGARDING TURNOVER? TURNOVER WILL… Per cent 50 45 40 35 30 25 20 15 10 5 0
Decrease significantly or slightly
Remain unchanged
Increase slightly or significantly
NOTE: The number of respondents for this question was 38, “Don’t know/Not applicable” responses are included but not shown in figure. SOURCE: Business Climate Survey for Swedish Companies in United Kingdom, 2020
Overall, industry forecasts paint a bleak picture for the UK economy in 2020. Industry experts claim that the UK economy may be likely to suffer the worst Covid-19 damage compared to its European counterparts. Unemployement rate could increase to 9% and inflation could drop to zero in 2021, according to the Bank of England.
BUSINESS CLIMATE SURVEY FOR SWEDISH COMPANIES IN UNITED KINGDOM 2020
|
9
ECONOMIC OUTLOOK
Swedish companies remain positive about future investments in the UK When asked, most of the companies, 46 percent, intend to increase their investment level slightly or significantly, which shows that Swedish companies have not deterred their willingness to grow in the UK despite the downturn in the market caused by Brexit and Covid-19. However, there is a nearly equal number of companies that indicate that their investment plans may decrease in the face of the pandemic. Breaking the companies down by size provides a more nuanced picture. We find that small companies are most positive in their investment plans, while larger companies lean more towards decreased investments. In an interesting finding, medium sized companies are holding their ground by keeping the investments unchanged or slightly increased.
WHAT ARE YOUR COMPANY'S INVESTMENT PLANS FOR THE COMING 12 MONTHS IN THE UK, COMPARED TO THE PAST 12 MONTHS? INVESTMENTS WILL BE… Per cent 50 45 40 35 30 25 20 15 10 5 0
Leave market, or significantly or slightly reduced
Unchanged
Slightly or significantly increased
NOTE: The number of respondents for this question was 38. “Don’t know/Not applicable” responses are included but not shown in figure. SOURCE: Business Climate Survey for Swedish Companies in United Kingdom, 2020
BUSINESS CLIMATE SURVEY FOR SWEDISH COMPANIES IN UNITED KINGDOM 2020
| 10
THE MARKET The UK is often seen as an attractive market for Swedish companies The United Kingdom is ranked one of the top countries in Europe for “ease of doing business”, which indicates better regulations for businesses and stronger protections of property rights. The UK offers a supportive business environment that can be characterised by strong protections of property rights, favourable fiscal policy, a flexible labour market and high levels of financial freedom and openness to trade. Stable and efficient institutions, high quality public health, education systems and access to cutting edge technologies are key factors that support the competitiveness of the UK in the global market. The UK is ranked amongst the 10 best economies worldwide on efficiency of customs clearance process, quality of trade infrastructure, and logistics services in general. The UK is a neighbouring market to Sweden, and the countries have a long tradition of good trade relations. And there is a low language barrier in comparison to other markets, which simplifies operations on the UK market. There are twice as many new business registrations in the UK than in Sweden (2018). The UK has a great track record, and more companies locate their European headquarters in the UK compared to anywhere else in Europe. There is a high interest in Scandinavian products on the UK market. IKEA, H&M, Cos, Acne, Spotify and many others have succeeded in the UK. From the survey, we see that the majority of the Swedish companies were established in the UK before 2000 (68 percent). While 33 percent of the companies followed after 2000. IN WHAT YEAR DID YOUR COMPANY ESTABLISH OPERATIONS IN THE UK? Per cent 80 70 60 50 40 30 20 10 0
-2000
2001-2005
2006-2010
2011-2015
2016-
NOTE: The number of respondents for this question was 40, “Don’t know/Not applicable” responses are included but not shown in figure. SOURCE: Business Climate Survey for Swedish Companies in United Kingdom, 2020
THE MARKET
WHAT IS YOUR COMPANY’S MAIN INDUSTRY IN THE UK? Industrial equipment 12%
Consumer goods 10%
Business services 10%
Other 60%
Retail and wholesale 8% NOTE: The number of respondents for this question was 40, “Don’t know/Not applicable” responses are included but not shown in figure. SOURCE: Business Climate Survey for Swedish Companies in United Kingdom, 2020
Respondents in our survey are active across a wide range of industries, with the largest share operating within industrial equipment followed by consumer goods and business services. While not representative of the industry affiliations of the whole population of Swedish subsidiaries active in the UK, it compliments the overall UK economy very well. Respondents were divided as 30 percent from Industrial, 28 percent from professional services and 23 percent from consumer industries. In our survey, more than half of the companies employ a large number of employees (ranging between >1000 global employees) with 30 percent employing a smaller workforce (0-249 employees). Surprisingly, we see that companies within the professional services have a larger number of employees where as industrial companies recorded to have smaller number of global employees.
GLOBAL NUMBER OF EMPLOYEES OF SWEDISH FIRMS IN THE UK 2020 Per cent 60 50 40 30 20 10 0
Small (0-249 global employees)
Medium (250-1000 global employees)
Large (>1000 global employees)
NOTE: The number of respondents for this question was 39. “Don’t know/Not applicable” responses are included but not shown in figure. SOURCE: Business Climate Survey for Swedish Companies in United Kingdom, 2020
BUSINESS CLIMATE SURVEY FOR SWEDISH COMPANIES IN UNITED KINGDOM 2020
| 12
THE MARKET
The UK is one of the safest and easiest places to do business in The UK has more flexible and liberal labour laws than most other EU countries. The depth of expertise, and the range of products and services available to financial and professional services is unparalleled. The UK's business enviroment is set up to help firms to succeed. However, since 2018, business investments have declined, consumption has been dampened by weak growth in real income and public debt has remained at above 85% of GDP. Government authorities are focusing on Brexit preparations, which involve major administrative and legislative changes. One of the priorities will be to conclude a free trade agreement with the EU, and many analysts consider the end of 2020 deadline unrealistic. A comprehensive strategy is underway to increase productivity, based on supporting investments in physical and human capital. The government has committed to increase investment spending to 3% of GDP and to increase budget spending. The government also said it would not increase income taxes, value added tax or the cost of national insurance. Limiting the potential damage caused by Brexit, boosting investments and productivity to support growth are the main challenges the UK is facing. In our sample of Swedish companies active in the UK, there is a rather equal number of respondents perceiving the UK business climate as very poor or poor, as there are respondents indicating a neutral business climate. 37 percent of respondents see the current climate as neutral. Breaking down the data by size, we find smaller companies are more optimistic about the UK business climate as compared to the medium and large companies. We have to keep in mind that the responses may be driven by considerations of the current economic climate and the ongoing global Covid-19 pandemic.
HOW DO YOU PERCEIVE THE CURRENT BUSINESS CLIMATE IN THE UK? Per cent 45 40 35 30 25 20 15 10 5 0
Very poor or poor
Neutral
Good or very good
NOTE: The number of respondents for this question was 38. “Don’t know/Not applicable” responses are included but not shown in figure. SOURCE: Business Climate Survey for Swedish Companies in United Kingdom, 2020
BUSINESS CLIMATE SURVEY FOR SWEDISH COMPANIES IN UNITED KINGDOM 2020
| 13
THE MARKET
Swedish companies find easy access to distributors in the UK There are a number of factors that determine whether or not the business environment is conducive to success. We asked Swedish companies to evaluate to which degree certain factors met their needs in the UK market. On average, respondents gave the highest score to access to distributors. Companies did not face many barriers in access to service providers, the market and suppliers. Companies seemed to find personal safety, work culture and the financial system satisfying. Trailing on the lower end of scores is the labor market regulation, customs, physical infrastucture and level of digitalisation.
HOW WELL DO THE FOLLOWING CONDITIONS MEET THE NEEDS OF YOUR COMPANY IN THE UK?
Access to distributors Access to service providers Access to suppliers Market access Personal safety Access to specialists and key personnel Work culture/business mindset Financial system Transparency and equal treatment Licenses, permits and approvals Corporate taxation Labour market regulation Customs Physical infrastructure Level of digitalisation 1 2 Not at all
3
4
5 6 Neutral
7
8
9 Fully
NOTE: The number of respondents for this question was 40 SOURCE: Business Climate Survey for Swedish Companies in United Kingdom, 2020
BUSINESS CLIMATE SURVEY FOR SWEDISH COMPANIES IN UNITED KINGDOM 2020
| 14
HOW SWEDISH COMPANIES SUCCEED IN THE UNITED KINGDOM Majority of Swedish firms use the UK’s business ecosystem for sales and marketing When asked about the kinds of operations undertaken by the company on the UK market, most respondents reported sales and marketing activities, with a total of 73 percent. Only 35 percent of companies in our sample utilise the UK business ecosystem for manufacturing or assembling their products. Around 23 percent of respondents perform research and development in the UK. Marketing and sales is particularly important for small and large companies, while provision of services plays a relatively larger role for medium companies.
OPERATIONS OF SWEDISH FIRMS IN THE MARKET
Marketing and/or sales Provision of services After-sales and/or support Manufacturing and/or assembly Sourcing and trading Research and development Other 0
20
40
60
80 Per cent
NOTE: The number of respondents for this question was 40. “Don’t know/Not applicable” responses are included but not shown in figure. SOURCE: Business Climate Survey for Swedish Companies in United Kingdom, 2020
HOW SWEDISH COMPANIES SUCCEED IN THE UK
The UK is a highly complex and competitive market Overall, there are a number of factors that equally contribute towards driving Swedish companies’ competitiveness in the UK market. It is not surprising that the most important factor named by the respondents in our sample is cost efficiency, indicated by around 38 percent of the companies, keeping in mind that the UK is a highly competitive and cost driven market. This is followed by digitalisation and e-commerce, and brand awareness, indicated by 35 percent of the respondents for each category. Public affairs work, i.e. maintaining relations with the government, has been ranked on the lower end of the spectrum, but still remains significant to the companies. It is not surprising that 50 percent of the smaller companies ranked brand awareness as the main competitive driver, and 57 percent of the medium companies along with 43 percent of the large companies ranked cost effinciency as theirs.
TO DATE, WHICH OF THE FOLLOWING AREAS HAVE BEEN IMPORTANT IN MAINTAINING COMPETITIVENESS IN THE UK?
Other
Public affairs/relations with government
Service development/adaptation
Staff development/training
Partnerships/local relationship
Product development/adaptation
Sales competence
Collaboration with/feedback from customers
Brand awareness
Digitalisation and ecommerce
40 35 30 25 20 15 10 5 0
Cost efficiency
Per cent
NOTE: The number of respondents for this question was 40. “Don’t know/Not applicable” responses are included but not shown in figure. SOURCE: Business Climate Survey for Swedish Companies in United Kingdom, 2020
BUSINESS CLIMATE SURVEY FOR SWEDISH COMPANIES IN UNITED KINGDOM 2020
| 16
HOW SWEDISH COMPANIES SUCCEED IN THE UK
The UK rides the tide of ‘Scandimania’ – the affiliation for Scandinavian products Over the years, there has been an influx of Swedish brands in the UK market spanning across all industries. When you walk down Oxford or Regent Street in London, you will for sure come across a few Swedish brands. Or when you’re shopping online, you can be sure to browse through a number of Swedish food and beverage products. The UK percieves Swedish brands in positive light keeping in mind their sustainability, innovation and quality angle. Sweden as a country has a solid brand reputation in the UK. Swedish companies see the UK as a market for benchmarking their activities against those of other companies in a multinational and competitive environment. Often the country is seen as a springboard for doing business in other parts of the world. Thanks to a large number of venture capitalists, family offices and business angels, London is also a major hub for companies that are looking for investors. The vast majority of companies in our sample reports that the “Swedish brand” positively contributes to their business activities in the UK. Companies active in consumer products especially benefit from the positive attributes connected to the Swedish brand. Only 28 percent of the respondents feel that the label of being a “Swedish brand”, has no or only little impact on their business success.
TO WHAT EXTENT Per cent 60 50 40 30 20 10 0
Not at all or little
Partially
To an extent or great extent
NOTE: The number of respondents for this question was 40. “Don’t know/Not applicable” responses are included but not shown in figure. SOURCE: Business Climate Survey for Swedish Companies in United Kingdom, 2020
BUSINESS CLIMATE SURVEY FOR SWEDISH COMPANIES IN UNITED KINGDOM 2020
| 17
ACTING SUSTAINABLY Swedish companies perceive almost negligible corruption in the UK Sustainable business practices include sustainable corporate governance. Healthy corporate governance is affected by the prevailing business environment of a given country. When asked whether corruption affects their business practices in the UK, the Swedish companies in our sample nearly unanimously reported that corruption in the UK affects their business only to a very little or little extent. This result holds true across company sizes and industries.
TO WHAT EXTENT DO YOU PERCEIVE THAT CORRUPTION IN THE UK AFFECTS YOUR BUSINESS? Per cent 90 80 70 60 50 40 30 20 10 0
Very little or little
Partially
Much or very much
NOTE: The number of respondents for this question was 39. “Don’t know/Not applicable” responses are included but not shown in figure. SOURCE: Business Climate Survey for Swedish Companies in United Kingdom, 2020
The global Corruption Perception Index (CPI) mirrors this finding. First launched in 1995, Transparency International publishes the CPI on a yearly basis, to put policy on the international policy agenda and track corrupt corporate and public governance. The Nordic economies stand out as leaders on the CPI, with Denmark, Finland, Sweden, Norway and Iceland taking five of the top eleven places. In 2019, The UK ranked 12th in the global comparison. Public sector corruption is seen as having worsened over the latest year in Britain, pulling the ranking down by a point in 2019.
ACTING SUSTAINABLY
CORRUPTION PERCEPTION INDEX 2019
SOURCE: Transparency International
Swedish companies don’t perceive human rights as a risk in the UK In the UK constitutional system it is generally assumed that the political branches of government should play a leading role in resolving disputes about the scope and substance of individual rights. However, the courts have become increasingly involved in adjudicating human rights issues over the last few decades. The protection of individual rights is now usually viewed as forming part of the ‘mission statement’ of the judicial branch of government, and human rights cases now form a considerable element of the case-load of the UK’s superior courts. Complementing its reputation and score as a country with a very low degree of corruption, the UK also enjoys a positive reputation around upholding human rights. Among our respondent companies, a whooping 97 percent report a very small or small risk to encounter human rights violations and/or labor rights abuses when conducting business in the UK. There were no companies in our sample that perceived an elevated risk of human rights violations in their business practice.
BUSINESS CLIMATE SURVEY FOR SWEDISH COMPANIES IN UNITED KINGDOM 2020
| 19
ACTING SUSTAINABLY
HOW DO YOU PERCEIVE THE RISK OF ENCOUNTERING HUMAN RIGHTS VIOLATIONS AND/OR LABOUR RIGHTS ABUSES WHEN CONDUCTING BUSINESS IN THE UK? Per cent 120 100 80 60 40 20 0
Very small or small
Neutral
High or very high
NOTE: The number of respondents for this question was 38. Don’t know/Not applicable” responses are included but not shown in figure. SOURCE: Business Climate Survey for Swedish Companies in United Kingdom, 2020
Sustainability may play a larger role in the purchase decision in the future Swedish companies operating in the UK find that their customer base is becoming more aware of sustainability and environmental impact. Nearly half of the respondents reported that their customers partially consider environmental aspects of a product or service in their purchasing decision. While 35 percent felt that the environmental impact drives majority of the customers’ purchase decision, only 15 percent felt that this was not a fact to keep in mind during the buyer’s purchase journey. The smaller and medium sized companies had an equal divide of 50 percent saying they partially consider the impact and 50 saying it plays a large role in the decision.
BUSINESS CLIMATE SURVEY FOR SWEDISH COMPANIES IN UNITED KINGDOM 2020
| 20
ACTING SUSTAINABLY
IN YOUR VIEW, TO WHAT EXTENT DO CUSTOMERS IN YOUR INDUSTRY IN THE UK CONSIDER ENVIRONMENTAL ASPECTS OF A PRODUCT OR SERVICE IN THEIR PURCHASING DECISION? Per cent 50 45 40 35 30 25 20 15 10 5 0
Very little or little
Partially
Much or very much
NOTE: The number of respondents for this question was 40. “Don’t know/Not applicable” responses are included but not shown in figure. SOURCE: Business Climate Survey for Swedish Companies in United Kingdom, 2020
When elaborating on their answers, Swedish companies report that there may be a few challenges related to sustainability and how to mitigate these risks. "Like all major economies the challenge is adapting to a more sustainable model voluntarily which means without a significant impact on incomes.This requires strong leadership from Government." "This is mainly a concern when it drives OPEX in terms of power consumption. We see an increased focus and interest, however it is not determining or influencing vendor decisions significantly today." "All our products consume energy. Some sectors such as construction equipment / rental are still price driven." "Player safety - to keep our customers safe and away from problem gambling by tracking their activity with us and support and inform them about a healthy use of our products as well as follow local and global regulatory advice. "
BUSINESS CLIMATE SURVEY FOR SWEDISH COMPANIES IN UNITED KINGDOM 2020
| 21
ACTING SUSTAINABLY
CONCLUSION The UK will remain an important market for Swedish companies for years to come The Business Climate Survey, published by Team Sweden in the United Kingdom, aims to increase the understanding of Swedish companies’ and their subsidiaries’ performance on the UK market and shed light on the key factors driving Swedish companies’ success as well as their challenges in the face of the current climate of uncertainty. There is no doubt that the spread of Covid-19 has interrupted global business, by disrupting supply chains, halting economic activity and triggering far-reaching government responses. While the findings in our survey show that Covid-19 has reduced respondents’ short-term appetite for investment as well as their current sales and nearterm sales expectations, in-depth interviews with respondents have shown that the UK remains an important market for Swedish companies. Companies in our survey benefit from the strong positive associations of the “Swedish brand” as innovative, sustainable and trustworthy, as well as their edge in digital solutions vis-à-vis the lagging of the UK’s digitalisation. Under pre-crisis conditions in 2019, they vast majority enjoyed profitability on the UK market and there is a sense of confidence in the strength of the UK economy to return to growth.
BUSINESS CLIMATE SURVEY FOR SWEDISH COMPANIES IN UNITED KINGDOM 2020
| 22
ABOUT US BUSINESS SWEDEN Sweden is a powerhouse of innovation, sustainability, co-creation and equality. This makes it a formidable platform for companies to both expand upon and use as a brand that meets the demands in an increasingly purpose-driven world. With a unique governmental and private sector mandate, we are specialists in both helping international companies to access this highly dynamic market and supporting domestic ones to utilise it as a platform for global growth. +44 20 72585130 united.kingdom@business-sweden.se www.business-sweden.se SWEDISH CHAMBER OF COMMERCE FOR THE UNITED KINGDOM The Swedish Chamber of Commerce for the UK is the ultimate business platform for Swedish and UK businesses. We help businesses establish, grow and develop, through our wide range of business services, matchmaking, events and programmes. We represent some 400 businesses, from start-ups, to SMEs, unicorns and large multinational corporations, from across all sectors and industries. Founded in 1906 – by business and for business – we have connected the Swedish-British business community for over a century. +44 02 7224 8001 info@scc.org.uk www.scc.org.uk EMBASSY OF SWEDEN Sweden has diplomatic relations with almost all States in the world. It has embassies and consulates in around half of these. Sweden's foreign representation consists of approximately 100 missions abroad and 350 honorary consulates. +44 20 7917 6400 ambassaden.london@gov.se www.swedenabroad.se
BUSINESS CLIMATE SURVEY FOR SWEDISH COMPANIES IN UNITED KINGDOM 2020
| 23
BUSINESS CLIMATE SURVEY FOR SWEDISH COMPANIES IN UNITED KINGDOM 2020
| 24
