Export outlook: It’s time British firms targeted CIVETS nations

Columbia, Indonesia, Vietnam, Egypt, Turkey, and South Africa offer export salvation, says Torrie Callander


Unlike the rest of the British economy, the early months of 2012 saw a marked improvement in manufacturing data from across the world. This came as some relief following 2011, a tough time for British manufacturers, when the UK and Eurozone posted negative manufacturing growth figures for the second half of the year. Even China – the shining light of the global economy – saw slower growth in the final quarter of 2011.

But while hopes for bullish figures for the sector evaporated this week with the news UK manufacturing has once again stalled, it’s clear how quickly things can change. Disappointing figures from China last month and the Eurozone crisis rearing its head again have shown that global growth is slowing.

Nevertheless, as manufacturing data from the first quarter of 2012 for the UK showed significant signs of improvement the government’s policy of trade missions and improving overseas relations has merit. Increased focus on emerging markets could yet ensure the future brightens for UK manufacturers.

The rise of CIVETS nations

This is particularly true for those who focus on new export markets such as the emerging CIVETS nations. These countries (Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa) are tipped as the next big export market. They are economies on the rise. Strong raw material production, cheap and youthful labour forces and improving infrastructures are the major points of note. It is fair to expect that, as these countries continue to develop, so will their demand for overseas manufacturers. UK businesses would be wise to take note.

However, British manufacturers cannot allow complacency. The traditional export market many UK manufacturers – the Eurozone – is struggling to battle economic woe, with the prime minister citing the ripple effect as the reason for the UK entering a double-dip.

In a time when the world-as-one faces the prospect of a second recession within five years – competition is fierce. Businesses across the world are fighting for survival in a shrinking marketplace. The currency markets are also extremely volatile, making the pricing of imports and exports an increasingly difficult task. So what can British businesses do to stay ahead of the game?

There is no doubt that the UK Government is pushing the export agenda hard. Exports are essential for the UK manufacturing sector to grow, and it is a bandwagon that businesses would be wise to jump onto. However, the question of “where” is the most important.

China is for the sharp and the brave

Demand from Europe is at risk of shrinking so long as current economic problems continue. This is exactly why George Osborne has made recent visits to China – in order to champion UK exports and offer London as a trading centre for the Chinese currency, the Renminbi.

However, the Chinese market is now well established and fiercely competitive. Domestic manufacturing is still in a period of accession and demand for higher priced consumer goods is limited. Therefore, UK manufactures who intend to export to China will need to price keenly and be very astute in their currency management, lest profits be impacted upon.

Surely the best way to get ahead is to be a pioneer in a strongly developing marketplace. With the support being offered by the UK government to those businesses wishing to export – the time is right for British manufacturers to look for new customers overseas. With the CIVETS continuing to expand and develop, UK manufacturers should look to these nations for that marketplace, and take the opportunity to get established there before other countries steal the march.

Torrie Callander is a corporate trader at foreign exchange provider, Global Reach Partners  

 

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