Written evidence from Stephen Perry
INTRODUCTION
Stephen Perry is Chairman of London Export Corporation,
Chairman of the 48 Group Club and Vice Chair of CBBC. Stephen
was the first Chair of the 48 Group sub-committee that opened
up their offices in China, now within CBBC and considered to be
the pearls in CBBC's crown. Stephen has been involved with Trade
Promotion for 40 years, and has probably made more trips to China
than most business people. He has concluded countless deals as
principal and broker. And concluded many technology transfers
and investments. This is by way of evidence of relevant experience.
THE PROBLEM
It is indeed unfortunate that the tens of CBBC executives
in China and the tens of UKTI executives in China, working hard,
cannot make a bigger dent in British export figures to China.
It is not for want of effort. Perhaps UKTI's prioritisation, in
China, of all its 15 international priority industry sectors,
gives some guide to the problem of over working the China market.
Too many priorities in UKTI and another whole number of priorities
in CBBC. The problem is sometimes suggested to be lack of compatibility
but this then prevents any other reasons being identified. In
reality we are dysfunctional and fragmented, and, thereby, unable
to master the relevant business leadership and skill sets required
for this complicated market.
We engage in back slapping but the reality is that
our structure is not suited to the purpose.
Working hard at all these sectors does not conform
to what we know about Chinese markets. They are complex and require
top down, and bottom up marketing, as well deep China experience.
There is no way the UK can work in this mass way at a market like
China. In this respect the China market is like all markets, where
the UK seeks to break into new sectors, or market shares. It requires
rare skills. Large numbers of people will not be a solution.
The problems we face in China will be the same in
all developing markets where rare skills and business leadership
are prerequisites to getting the right job done.
We can offer services to all, but we try to develop
sectors in China, regions in China, and regions in the UK. All
through a complex matrix of UKTI and CBBC, and
Trade Associations and Chambers. Instead a smaller focused approach
that left would produce more success.
Exiting from many downstream activities would ensure
time is spent on how to open markets, with the private sector
being encouraged to provide detailed implementing activities such
as research, interpreting, mission organising.
But the core of the problem is that different aspects
of the operations are housed in different silos. Private sector
Trade Associations, some receiving funding, most not, compete
with Chambers—some getting funding, some not, who are competing
with UKTI and CBBC, working largely from government funds. Then
there is the CBI, the IOD and other similar bodies.
Compare this to the simpler forms of Germany's Chamber
based approach, or Hong Kong's HKTDI, and we can see that we need
to simplify this.
For our businesses, Trade Promotion and services
are offered by a myriad of organisations, who often compete with
each other.
We need to have a target of one trade promotion organisation
for the country.
What follows is a proposal to simplify and streamline
this work and put it where it needs to be, dependant largely on
providing and selling to the market what it needs, under proven
private sector trade services and promotion leadership. Government
funding denies the test that the service is needed—sales
of the services—the basic feature of Commerce, absent in
UKTI.
The unifying of organisations like CBBC and UKTI
and the Chambers and Trade Associations within one structure,
would lead to economies, and provide a better environment for
drawing in private sector specialists to lead the regional and
sector divisions. CBBC, whilst separate from UKTI, is still led
by the staff and not by China specialists.
Healthcare is a priority in China in the new five
year plan. It is a priority of CBBC, UKTI, the Department of Health
and countless trade organisations. Yet I cannot see any in-depth
understanding of the core Chinese policies for privatisation of
healthcare in China, nor can I see a national multi level UK plan
for attacking the Chinese healthcare market. this is the way of
most sectors.
Only by uniting these groups under one umbrella led
by sophisticated business leaders will we value serious market
research as the basis for action. From this we can develop focused
and targeted actions from Ministers down to the implementing arms.
The private sector Trade Promotion organisation would be responsible
for developing the sector plan, which would then be passed to
Government for playing its part. But the core work would be done
by the private sector led UKTI.
THE PROPOSAL
Our successful British exporters and overseas investors,
our companies who market services to business, ought to lead the
private sector based UKTI, freeing its hard working staff from
the tedium, of government processes. As they increase the market
sourced revenues they will also lighten Government from the need
to fund this area so extensively. The fusing of Companies House
into this new structure would provide an added positive feature
by making it the nerve centre of Companies as it does in Germany.
The challenge facing British Trade Promotion is to
work in an ever more professional globalising world, and focus
its resources on realistic and achievable goals. Getting Trade
Promotion right is the sine qua non of the British core strategy—exporting
to stay alive. It requires skills of business and not those of
Government. Let business run it. It is their natural skill.
The problem internally is the fragmented British
infrastructure for dealing with British trade promotion left over
from history, which inhibits a streamlined and efficient delivery,
which should be reflected by payment for services.
Ie the service is not market driven. We presume that
Trade Promotion cannot change what the UK produces and can export,
but it can make a huge difference to our volume of exports and
our overseas investment success or failure.
The challenge is to match need with availability
of globally competitive products in a way that efficiently uses
resources. This is addressed by comparing product with demand,
and trying to match them or harmonise them in markets determined
as containing substantial upside for the UK.
Investment overseas is a consequence, usually, of
development of export markets, although there are examples of
direct entry through investment.
This note concentrates on identifying a new way of
developing UKTI as a private or semi private sector organisation,
led by business, and required to reach 50-66% revenue from the
market by sales of services within five years. This would involve
a process of uniting and streamlining the, hitherto, dislocated
delivery mechanisms.
UKTI would have a mission to develop alliances with
the Chambers and Trade Associations, so that each group delivered
services and did not compete. So, for example, Trade Associations
might be the sole vehicle for missions overseas, but the leadership
of them might be through UKTI, and its overseas offices. The Chambers
might be the sole delivery agents for local services, although
some of them may come from UKTI or Trade Associations.
UKTI would have to restructure to give full representation
to the Trade Associations and Chambers.
As the groups develop so a more integrated organisation
would develop, ultimately being totally integrated.
UKTI could merge with Companies House to give it
the kind of data base, and central business role that the German
Chamber movement depends on for its integrated service delivery.
The funding of UKTI would go through a transitional
phase of, say, five years during which it would increase income
from service delivery, and sales there from.
Ultimately Government funding would largely be for
specific targeted purposes of specific durations with targets.
This paper does seek to be prescriptive about who
might be the business leadership of this, or what and how it does
its work.
That would lead to red herring discussions. The main
purpose is to seek support for the transfer of UKTI into a Private
Sector led group who would increasingly earn its way, and would
have a mission to end the fragmentation of Trade Promotion and
Business Services.
The issues raised here draw mainly on China, but
the other key developing markets—Brazil, Russia, India and
South Africa all require the same commitment to research and leadership
from those in the business world.
Government is at its best when it develops policy,
government to government relations, regulates and funds new developments
to get them off the ground. Implementation of Trade promotion
is best done by the business world, regulated and funded selectively
by Government. Government can do an excellent job of supporting
industry in its work with key targets in Government. those parts
of UKTI dealing with Government Trade policy could then be free
to return into BUIS.
These twin functions need careful harmonising as
they are in countries like Germany.
This paper is entirely my personal opinion, and is
not the opinion of any organisation I represent.
4 April 2011
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