British firms urged to ‘look east’, discover opportunities in Asian markets when Brexit comes
While all eyes are on how Brexit, expected to take place one year from now, is going to be carried out, businesses in the UK should seek out new markets such as mainland China and Hong Kong, according to HSBC.
“When changes come, such as Brexit, it forces companies to revisit their business strategy and look at how they can expand into new markets,” said Amanda Murphy, head of commercial banking at HSBC UK during an interview in Hong Kong.
“There’s still lots of growth potential for British businesses in Hong Kong and China, especially when you think about how many UK companies have not explored those markets yet,” she said.
China is the UK’s fifth largest trading partner in terms of total trade in goods and services, and the second largest non-European Union partner after the US, according to the BBC.
In 2016, trade between the UK and China was worth £59.1 billion (US$83.85 billion), with the UK running a trade deficit of £25.4 billion with China during the period.
While the EU remained the UK’s largest trading partner in the July to September period in 2017, British exports to China have increased by 64 per cent since 2010, according to the Office for National Statistics.
“Some British companies are fearful about exporting to other countries, they think they need to be much more established and bigger than they currently are, or they feel they might misunderstand the customers, the laws and the markets in foreign countries,” said Murphy.
She pointed to Hong Kong’s historical ties with the UK, citing the widespread use of English, a common law legal system, and the city’s “very pro-business environment”.
British apparel retailer Jack Wills is one of the companies that have explored opportunities in Hong Kong. A client of HSBC, the apparel brand now has six stores in Hong Kong and an e-commerce strategy in place to enter the Chinese market, according to its co-founder Peter Williams.
“Our Hong Kong business is driven by demand from those visiting from the mainland, so the ability to continue selling to them online after they have visited our stores in Hong Kong really appeals to our expansion plans,” Williams said.
The brand, founded in 1999, entered the Hong Kong market around eight years ago.
“Hong Kong is the gateway to Asia, or even the whole world,” said Williams, “I find it such an easy place to do business, its ecosystem exists for everybody to succeed.”
In addition to Hong Kong, Jack Wills also has stores in Singapore, and it is looking at doing deals with local partners in Japan, Malaysia and South Korea.
“Historically speaking, British brands, probably because of the language issue, often go west first,” he said. “My advice to them is to look east first.”