Examination of Witnesses (Questions 20-39)
UKTI, DTI AND FCO
24 FEBRUARY 2004
Q20 Mr Berry: I am not clear how you
respond to that. From the point of view of the British interests,
somebody somewhere has to make some decision about priorities.
Mr Holmes: Yes.
Q21 Mr Berry: It would be terribly unreasonable,
would it not, simply to respond to the industries which happen
to have the loudest voices? As I say, they are all clamouring.
Somebody has to decide whether it is going to be agriculture,
education, power or whatever. I would like a better feel for the
analytical approach that is adopted by UKTI.
Mr Holmes: I understand. We have
a three-pronged approach, as it were. We have the regional elements,
where we have our teams doing the trade development work that
we discussed earlier on. Then we have a relationship between the
posts overseas (our overseas arms, as it were) who are giving
advice about what opportunities exist in the markets where they
think we should be putting our activity. Then we also have UK
industry saying, "There is no way we want to go to sell widgets
in Outer Mongolia, that does not make sense, but we would like
to sell lots of widgets to China because that is the big, sexy
market at the moment and we must get out there and do everything."
We then have an analytical discussion about the nature of opportunities
within markets and it is part of our role in the international
trade development side to argue the case where we think it is
insanity to waste time. And the industry will say, "We think
there are real opportunities in Kazakhstan and we say, "What's
your evidence for this? Our post in Kazakhstan is telling us there
is no real possibility of doing any business in this sector whatsoever."
So there is an informed debate, if you like.
Q22 Mr Berry: I appreciate that, in general
terms, is the kind of process. What strikes me about these three
countries is that financial services do not appear as a priority
sector anywhere. Again, virtually every inquiry we do on UK economic
involvement overseas suggests that our financial sector is lagging
behind that in other countries. Are financial services not there
because British banks and financial institutions are not interested
in these three countries?
Mr Holmes: No. They are very much,
but they are already there doing business, invariably, so we are
not necessarily using that as a sort of proactive sector, we are
doing a bit more work in terms of supporting their continual investment.
If you look at all those three markets, you will see HSBC and
Standard Chartered, for example, are key players in the banking
sector, and you have companies like Prudential which are very
active in the insurance sector. We do a lot of work, in post particularly,
in supporting their activities. That is perhaps part of the work
that has not been covered so far, but it is very much a key part
of the overseas network's role in doing . . . how shall I put
it? . . . the work with or against local regulation, dealing with
issues like local corruption, even. There is a whole range of
kinds of support that we would give those, but that does not make
them a priority sector necessarily.
Q23 Mr Berry: All right. That is the
nub, is it? I am surprised, in a sense, because globally financial
services are a rapidly growing sector. Yes, there is involvement
in these three countries, a very substantial involvement, and
I am just surprised that financial services are less of a priority
than some of the other sectors on the list.
Mr Holmes: Every sector is a priority
sector in every market. In a sense, you have hit on the markets
where financial services are undoubtedly an important component
of our trading relationship with the countries concerned but they
are not perceived, for this particular market, on the basis of
discussion with the industry, as being a sufficiently high priority
for putting limited resource.
Mr Berry: Thank you.
Q24 Chairman: For the record, could I
try to get it clear in my own mind. About five years ago, you
would have been working for British Trade International.
Mr Holmes: Five years ago? No,
I do not think . . . 1998. Yes, you are right. Yes.
Q25 Chairman: Yes. After that you would
have been Trade Partners UK.
Mr Holmes: Yes. Still British
Trade International.
Q26 Chairman: Pardon?
Mr Holmes: British Trade International
was divided into Trade Partners and Invest UK.
Q27 Chairman: Then after that you become
UK Trade & Investment.
Mr Holmes: Yes.
Q28 Chairman: Which is British Trade
International, as was.
Mr Holmes: Yes.
Q29 Chairman: Except you are now sectorally
based rather than—
Mr Holmes: And we have integrated
the trade and the inward investment parts.
Q30 Chairman: Would it be rude to ask:
Is there another review going on? How long will you be UK Trade
& Investment? I know you are just the messenger in this and
we might want to get the person who is responsible for these biennial
step-changes in, but, if it is confusing for us, what the hell
is it like for British business people when there is a different
logo, a different name. I am merely asking you not in the sense
that you are to blame—and those who are to blame never come
to see the likes of us because they are too grand or too stupid
or both—but how do you find dealing with the people who
want to trade and they have gone diligently through the local
trade partners in the area, gone to the regional development agency,
and then they find that there is the same place in Victoria Street
but by a different name and with a different logo?
Mr Holmes: Chairman, I do not
feel insulted or anything else by your question because I think
you make a very, very fair point, but one of the problems we had
with the old BTI network was that we had three brands to represent
what, to all intents and purposes, even at that stage, was one
organisation. We did a lot of research of the customer base—the
people who use our services primarily but also other stakeholders
out there: the regions, the devolved administrations and so on—and
it was very clear that we needed to do something about the then
very confused circumstances. I think within the organisation we
are all agreed that the move was the right one. I think within
the organisation it is fair to say that we would agree with you
that the last thing we want is to go over this whole process again.
We now need to get on with UKTI, make it work, create greater
brand recognition. That is still an issue for us. Perhaps, going
back to Mr Evans' first question, it is part of the problem. We
would hope that you as the widget maker from wherever will say,
"Ah, UKTI. Yes, I know exactly what they do. Perhaps they
can help me," instead of casting around. So we still have
a problem, I guess, of brand recognition on which we are working
all the time.
Q31 Mr Evans: You are going to stick
with this then for a time now.
Mr Holmes: I would be very foolish
to say to you absolutely, categorically things will not change.
But I think we are all agreed within the organisation that we
need to get on with consolidating and delivering for our customers
the services that they want of us.
Q32 Chairman: Would it be an improper
question to ask what the cost has been of this rebranding exercise?
Or have there been savings and therefore this sleek and slimline
operation that we now have?
Mr Holmes: I cannot tell you what
off the top of my head what the actual cost was but I do know
that it was essentially financed out of savings from the amalgamation
of the three brands. I believe it was something of the order of
£300,000 that it cost to change all the recognition. But,
if you want, Chairman, I can let you have a note on that.
Q33 Chairman: If it would not be available
at disproportionate cost.
Mr Holmes: It certainly will not
be because at the time I am pretty sure the question was asked
in the House or we had a letter from one of your colleagues that
asked exactly that question, so I can deal with that.
Q34 Chairman: I just wonder, if it is
confusing to us, what is it like for people who every five years
try to find somebody in Victoria Street and find out that it is
the same folk in the same place but under a different name.
Mr Holmes: I believe, Chairman,
that we are working to get over the problems that you rightly
identify. I think with the new identity we are going to get over
that. I fervently hope and pray that I would be able, if I saw
you in five years' time, to say, "I told you so."
Q35 Chairman: All right. All I can say
is if it is hard for us, it is hard for British business, God
knows what it is like for the royals who have to head up—
Mr Holmes: I could not possibly
comment on that.
Q36 Mr Clapham: Bearing in mind what
we have said about the sector approach, I want to look at that
operation a little bit further. For example, I am a businessman
that is producing a product that is not in one of your priority
sectors, yet I am looking for an overseas market. For example,
I may be a mining machinery manufacturer who is looking for a
link into the Chinese market. Given what you have said about how
you pool together the information, you analyse the information,
et cetera, what kind of help would you be able to give to the
businessman in the circumstances I have just described?
Mr Holmes: I should say that although
we do have priority sectors we do say to our teams in posts overseas,
for example, you should keep abreast within reasonable limits
to all the main sectors in your market. As a mining machinery
manufacturer, certainly in China we would have people within the
commercial teams in market who keep an eye on that particular
sector. If you come along with your particular product, they should
be able to move straight into gear and offer you the kind of advice,
market information, support and so on that you would want. So,
although we have the priority sectors and they are where we, if
you like, put our proactive effort, that does not mean that our
teams are ignoring other sectors. They are certainly not. Again,
there is an issue of resource prioritisation there. We have finite
resources in individual posts. We have a lot of flexibility to
move from market to market where we can. We are looking all the
time, for example, at China, whether we have the right level of
resource to support the range of industrial sectors that we think
should be supported.
Q37 Mr Clapham: Within that sort of advice
that is given, presumably you would also be able to take that
advice over to the company as to how they ought to be approaching
their potential customer. The reason I raise that question is
because I recall back in the mid-1990s we were looking at a particular
aspect of trade—and it was not trade with China at the time,
it was when British Aerospace were trying to get into the market
with the 147 at the time there was competition from Fokker. British
Aerospace, having made their approach in the market, then vacated
whereas Fokker sort of camped out near the customer—they
bought office space—and they were there continuously lobbying.
At the end of the day, neither Fokker nor BAe actually got the
contract but it just shows that there are different approaches.
Would you be looking, for example, at the best approach and would
you be advising British customers to take that approach—and
it may be it is a German approach.
Mr Holmes: It would be horses
for courses really. It is a very interesting and important point
because, going back to the manufacturer of whatever, widgets or
mining equipment, we would be advising what is the best way to
market here. It is not necessarily direct export. It might be
through a joint venture partnership in manufacturing in the local
market, it might be through an agency agreement, sole agency or
other agreements, and we would be aiming there to give a range
of options really, and advice to support those options, and to
say at the end of the day to a customer, "We think this is
the best approach in this market for your particular product."
The same customer might go to another post and get different advice,
but that advice would, I hope, be the advice which was right for
that market as opposed to the first one.
Q38 Sir Robert Smith: Just thinking more
about measuring what business wants. If I manufacture widgets
and I am an entrepreneurial worldwide business and I go out and
find the market and develop it on my own, and you then come along
and give Nigel Evans advice and support to muscle in on a market
that I have started to open up on my own initiative, how do you
avoid being seen to damage others who can do it on their own without
support?
Mr Holmes: That is a good question.
Frankly, again, our bottom-line business as an organisation is
about the competitiveness of British companies and it is about
giving them the skills to become more competitive, in this case
through export. That is our bottom line, certainly in dealing
with the SMEs, leaving aside the big companies that we also support,
I am not aware of this as an issue actually ever having come up.
I can see why it could happen, yes, but it has never actually
seemed to us to be a problem about which we should get unduly
worried.
Q39 Sir Robert Smith: You talked about
gauging what business wants. In a market what business wants is
gauged by where they are willing to spend their money or which
supplier they want, and choosing which supplier they want to put
their money with and who they are going to employ. Would it not
make more sense if they paid less tax, had more money and chose
their own ways of exporting? Why do they need the State?
Mr Holmes: I hope you do not expect
me to comment on taxation!
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