Further written evidence from UK Trade
& Investment
INTRODUCTION
1. This paper supplements the written evidence
submitted jointly by the Department for Business, Innovation &
Skills (BIS), UK Trade & Investment (UKTI), and the Export
Credits Guarantee Department (ECGD) in September 2010, to the
BIS Select Committee's "Government Assistance to Industry"
Inquiry. The evidence submitted here responds to the Select Committee
Announcement No. 24, 24 November 2010, of its new Inquiry, "Rebalancing
the Economy: Trade and Investment."
2. This paper presents responses from UKTI
to the points being considered by the Select Committee. BIS has
advised that the Committee is being provided with copies of the
Trade and Investment for Growth White Paper (CM 8015), and that
this covers the questions relating to BIS and ECGD on providing
support for exports and investment.
3. The points relating to UKTI are now considered
in turn.
HOW THE
GOVERNMENT MEASURES
SUCCESS IN
ITS SUPPORT
FOR TRADE
& INVESTMENT
4. UKTI has developed the Performance and
Impact Monitoring Survey, PIMS, to measure the impact of its trade
services on the companies using them, and UKTI's performance in
delivering these services.
5. PIMS enables UKTI to evaluate the benefits
that its customers derive from using its trade services. An independent
market research company carries out quarterly telephone surveys
of a statistically representative group of users of UKTI services.
Altogether, some 4,000 businesses are interviewed each year. An
annual survey of UK exporters who have not used UKTI services
is also carried out, as an additional way of assessing the difference
UKTI's services can make to companies.
6. In a 20 minute interview, the PIMS survey
asks business owners a series of questions about the benefits
their company has experienced as a result of using UKTI's services.
This includes both qualitative and quantitative business benefits;
financial benefits; access to information/contacts not otherwise
available; improvements to overseas marketing strategy; and their
assessment of the quality of, and overall satisfaction with, UKTI
services.
7. The PIMS survey covering 2009-10 show
that UKTI helped some 23,600 UK businesses, with the following
specific impacts:
- British companies attributed an additional £5bn
to their bottom line profits as a result of working with UKTI,
up from £3.6 billion the previous year.
- This represents £19 benefit for each £1
of Government spend on UKTI trade services, up from £16:£1
the previous year.
- The £5bn additional profit reported by UKTI
clients represents over £35 billion additional UK exports
generated as a direct result of the support UKTI provided.
- 41% of companies reported new or safeguarded
jobs as a result of using UKTI trade services.
- 67% of UKTI customers reported significant business
benefit from upgrading their approach to overseas markets, gaining
access to contacts and information not otherwise accessible, and
overcoming legal or regulatory difficulties or cultural differences
affecting access to opportunities overseas.
- 39% of UKTI clients expect substantial growth
over the next five years compared with 23% of other UK exporters.
Some 87% of UKTI trade clients expect at least moderate growth,
compared with 78% non-user exporters.
- On average, UKTI trade support generates an additional
£65k of research and development (R&D) per trade client.
This reflects the role trade support can play in increasing the
UK's overall innovation capability and R&D.
- Some 53% of all businesses assisted through UKTI
trade services improved their business performance as a direct
result of UKTI support.
- Around 70% of businesses assisted reported improved
productivity and competitiveness.
- Users of UKTI services are much more likely than
non users to be in high growth markets (61% vs. 44% for non users);
are more likely to plan to increase exports in response to the
depreciation of Sterling (47% vs. 37%); and are more likely to
have benefited from the depreciation overall (33% vs. 25%).
8. On inward investment, UKTI supports overseas
companies looking to invest or expand their operations in the
UK, through managing relationships and working closely with key
clients. Consequently, efficiency and productivity are not measured
in exactly the same way as trade services. We undertake an extensive
analysis of the effectiveness of our inward investment network,
providing a rigorous assessment of performance that allows us
to optimise our use of resources. Nearly half—758 of the
1,619 inward investment projects landed by the UK in 2009-10—were
assisted by UKTI. Of these, nearly 80% agreed that UKTI (or its
RDA delivery partners) had a significant, favourable influence
on the decision to locate or expand in the UK, or on the scale
or scope of the project. This assessment, that UKTI has assisted
in the decision made by a company, is arrived at by satisfying
a set of criteria, populated by data from investing companies
and agreed with UKTI's partners in the English Regions and the
Devolved Administrations. Other data analysing the decision to
invest, made by companies assisted by UKTI, is taken from PIMS'
inward investment survey, October 2010.
The role of UKTI
with regard to identifying opportunities in:
- Established markets;
- Emerging markets;
- Key sectors; and
working with businesses both large and small to take
advantage of these opportunities.
9. The economic crisis and globalisation
have shifted economic weight east and south. This means that the
emerging powers in Asia, Latin America and the Gulf are essential
to our interests.
10. UKTI uses a range of criteria - including
market size and potential for growth, strategic importance and
match to UK capability—to assess the importance of individual
markets and the likelihood of UKTI helping British business interests.
In this way we can determine which high growth and emerging markets
to prioritise in order to deploy our resources to best effect.
11. In prioritising emerging and high growth markets
we need to be mindful that 70 per cent of Britain's exports in
2009 went to the European Union, North America, Japan and Australasia.
These markets also generated over 70% of our new investment projects.
So we need to retain a proportionate presence in developed markets
where real barriers still exist.
12. UKTI's new strategy will, therefore, confirm
that we will maintain a proportionate presence in important developed
markets, but over time additional resources will be moved to the
high growth and emerging markets, in order to match both the opportunities
and the demands from our customers.
13. One of the aims of Government policy is to
rebalance the economy to achieve sustainable growth. This means
focusing efforts on the sectors where we add most value, in the
markets where the potential for growth is highest, and on the
businesses of tomorrow. UKTI has undertaken a comprehensive review
of its sector focus, in cooperation with BIS sector teams and
economists, so we can target resources where they will have the
greatest impact. The results will be available in the near future.
14. Promoting UK companies and institutions that
provide environmental solutions and technologies in response to
climate change, with green export campaigns in the markets where
research has identified the greatest potential, will be at the
heart of UKTI's sector focus.
15. In order to take advantage of the opportunities
arising in these markets and across these Sectors, UKTI will step
up its efforts to support UK companies through an expanded programme
of outreach events:
- A new High Value Opportunities programme will
target carefully selected large scale opportunities around the
globe, such as telecommunications, railways, ports, hospitals
and education, covering construction, supply and maintenance.
These major projects also offer niche opportunities to SMEs. This
will enable the UK to compete in a space traditionally dominated
by other major European countries and marks a shift in government
trade support towards "bringing opportunities home".
- There will also be a new online "peer-to-peer"
self-help community network where UK companies can share knowledge
and mentor each other to build international capability.
- Catalyst UK is a global network of 100 "advocates
for Britain" from the business and academic communities,
which we aim to grow to 500 by summer 2012. The network is made
up of people who are trusted in their fields and can make a compelling
case for investing in the UK and doing business with UK companies.
They are able to share valuable know how and insights with less
experienced exporters. In this way they will mentor companies,
especially SMEs, taking their first steps into new markets.
- UKTI will make best use of the new UKTI website
to raise awareness of global opportunities among UK businesses.
- The Government is increasing its support for
all exporters, especially SMEs, through an expanded range of ECGD
products to complement the private sector. UKTI and ECGD will
forge an operating partnership to promote the new products to
UK businesses through UKTI's regional network.
HOW OTHER
COUNTRIES,
SIMILAR TO
THE UK, EXPORT
TO EMERGING
MARKETS AND
WHAT OUR
GOVERNMENT COULD
LEARN, IF
ANYTHING FROM
THEM
16. Broadly speaking, the Trade and Investment
Promotion Organisations (TPOs) of other Countries provide equivalent
services for businesses in their markets. There are always variations
and UKTI examines the case for new ideas based on services delivered
by other TPOs, against its existing portfolio of services and
the resources available to deliver them.
17. UKTI takes part in regular informal and formal
meetings with counterparts. In the last year we have discussed
our trade services with counterparts from the Netherlands, who
were undertaking a review of trade support for Dutch companies.
UKTI is represented at both European Trade Promotion Organisation
and the World Trade Promotion Organisation meetings, and is a
regular presenter at them. In 2010, UKTI was judged the best TPO
from a developed country, at the International Trade Centre's
TPO Network Awards, recognising excellence in export development
initiatives for our "Gateway to Global Growth" service.
18. UKTI also meets with its counterparts in
Canada, Australia and New Zealand, at annual CANZUK meetings.
As an example of the benefits gained from these meetings, UKTI
has adopted a management tool developed by the Canadian Trade
Commissioner Service. In turn, other TPOs have looked at adapting
UKTI's PIMS survey to monitor and evaluate their performance.
PIMS is very highly regarded by other TPOs; no other comparable
system exists and other countries have expressed envy at the rigour
of our system, and we believe we are world leaders in this field
of performance measurement.
19. However, direct comparisons between TPOs
are difficult to make. Some are highly centralised, others are
regionally-based. Some offer predominantly on-line access to services.
Some combine trade and investment, others keep their trade and
inward investment services separate. Some offer services free
of charge, others raise a significant proportion of their income
through charging.
20. For these reasons, although we meet and have
regular contacts with other TPOs, benchmarking UKTI's performance
against them using formal metrics based on impact is difficult,
as organisations have different structures and evaluation systems.
In addition, specific evidence detailing how they export to emerging
markets is not clearly available.
THE BUSINESS
AMBASSADORS NETWORK
21. The Business Ambassadors Network, supported
by UKTI, is made up of 32 of the top leaders from the business
world and academia, who bring with them a wealth of commercial
experience and knowledge from a wide range of sectors, within
the UK and overseas.
22. Members of the Business Ambassador Network
act as powerful advocates of the UK companies overseas, especially
SMEs, and help to promote the UK as the international trade and
inward investment partner of choice. At home, they promote the
benefits that can be gained from pursuing overseas business opportunities.
23. The key objectives for the Network are to
use each Business Ambassador's individual experience of doing
business internationally, and their unique market and sector knowledge,
to:
- Promote the UK's excellence and the UK's favourable
business environment;
- Help UK businesses recognise and exploit overseas
opportunities; and
- Support UK businesses, Heads of Mission (HM Ambassadors
and High Commissioners) and UKTI trade teams overseas.
24. Since the network's creation in October 2008,
Business Ambassadors have provided a tremendous impetus to the
UK's trade and investment activities, encouraging UK companies
to explore overseas business opportunities and helping to secure
inward investment projects. The new, expanded, network, launched
by the Prime Minister in November 2010, includes a wider range
of expertise and experience and a new generation of entrepreneurs
and business leaders. The new Network will continue to complement
and support the work of UKTI in marketing the UK as the international
business partner of choice, and is expected to help increase our
reach to wider audiences, countries and sectors.
25. The role and extent of activities undertaken
by individual Business Ambassadors will be flexible, taking into
account their availability. UKTI seeks to tailor activities to
the relevant interests and expertise of Business Ambassadors,
both geographically and sectorally.
26. The Business Ambassadors Network will continue
to complement the work of the Duke of York in his role as UK Special
Representative for International Trade and Investment, the Minister
for Trade and Investment, and the work of other Departments and
Ministers across Government in support of trade and inward investment.
23 February 2011
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