Written evidence from The International
Chamber of Commerce UK ("ICC UK")
ICC UK COMMENTS ON
UKTI STRATEGY "BRITAIN
OPEN FOR
BUSINESS"
Overview
1. The International Chamber of Commerce UK ("ICC
UK") supports the Government's recent efforts to realise
fully the contribution that UKTI can make to improving UK export
performance and driving inward investment.
2. Whilst we welcome the core elements of the
"Britain Open for Business" strategy, we think that
more detail is required about how the proposals will work in practice—and
specifically what needs to change to deliver a better service.
In this connection, it is our view that careful consideration
needs to be given to how the various strands of the strategy can
best be implemented to provide real "value-added" for
UK businesses.
3. In this context, a number of recommendations
are set out below with specific reference to individual elements
of UKTI's revised strategy. Our core messages can be summarised
as follows:
- (a) it is not immediately clear how some
of the services will be rolled out and how they will be priced
(eg bespoke services for high value deals). This makes an analysis
of likely take-up and impact difficult;
- (b) the OMIS is a valuable resource for businesses
but delivery is patchy. Government needs to identify areas of
weakness and ensure a high-quality service for all markets. This
should be a real priority;
- (c) UKTI needs to ensure that the skills
and knowledge of its staff are sufficiently high to deliver existing
and planned services. Previous commercial experience and high
quality staff training are essential in this regard;
- (d) UKTI needs to look carefully at how it
can better raise awareness of its services. Partnering with business
associations can play a key role in this regard;
- (e) the strategy has too narrow a conception
of "commercial diplomacy". Government needs to look
at using its overseas network to address a wider range of issue
which affect companies when operating internationally (eg non-tariff
barriers); and
- (f) the strategy to boost inward investment
is to be commended, but domestic policies need to be improved
to encourage multinational firms to invest in the UK (CFCs, top
rate of income tax). UKTI should look to feed in recommendations
to Whitehall about policies that deter (or by contrast encourage)
investment.
FREE BUSINESS
MENTORING
4. It is certainly good to see Government looking
at innovative ways to help SMEs start trading internationally—including
through the provision of free business mentoring for first time
exporters.
5. Delivery and coverage. We are, however,
unclear as to how the new "Catalyst UK" network will
work to deliver this mentoring service. Three questions arise
in particular: one, will this network of circa 100 business ambassadors
be able to provide sufficient market coverage? Two, is the aim
to target a small number of SMEs, rather than having an "open
door" policy for companies which are thinking about getting
into international markets? Three, how will this service fit/complement
support currently provided (free-of-charge) by UKTI's International
Trade Advisors?
6. Awareness. UKTI will need to think
carefully about how it can ensure that SMEs are made aware of
this service. In this connection we think that there is scope
to work more effectively with key business organisations, trade
press and other multipliers, eg freight forwarders.
OVERSEAS MARKET
INTRODUCTION SERVICE
(OMIS)
7. Quality of product. Many SMEs tell
us that the OMIS is at best very patchy. A common complaint is
that reports from some posts do not offer substantially more intelligence
on overseas markets than a simple internet search. Government
needs to think carefully about how to raise standards across the
network in order to enhance the support given to UK exporters.
8. Content of OMIS reports. From an SME
perspective, we think that the OMIS should provide companies with:
- (a) a quick and accurate snapshot of the
prospects for their exports so that a company can decide whether
to explore the market seriously;
- (b) first-hand knowledge of potential partners
(eg distributors) whom overseas posts should speak to in preparing
a list of potential partners;
- (c) insight on the subtle differences between
markets which look superficially alike; and
- (d) hidden pitfalls (tariffs are easy to
get information on, but companies also need to know about relevant
non-tariff barriers (eg environmental standards)).
9. Cost vs quality. Whilst some companies complain
about the cost of OMIS reports, we think this would be less of
an issue if the quality of reports were higher across the board.
The OMIS needs to be positioned as a premium service, but to do
so the consistency of the product needs to be improved.
10. Need for benchmarking of delivery.
We think there would be merit in conducting an assessment of OMIS
reports currently provided by posts with a view to benchmarking
best practice. Industry bodies (such as ICC) may be able to assist
with such an exercise.
11. Global service. The proposal to develop
a "Global OMIS" should be an attractive proposition
for firms operating in multiple markets; however, this should
not be seen to obviate the need for an upgrading of the service
provided by some posts. Indeed, if companies are paying for a
global service they should be entitled to expect a consistently
high-quality product across all markets.
BESPOKE SERVICE
12. The planned introduction of a bespoke service
to support companies to win major trade contracts is to be welcomed,
and represents a useful extension of the existing UKTI services.
13. Need for greater clarity. However,
in order to comment in more detail, it would be helpful to receive
further information on: (i) the type of contracts for which UKTI
envisages providing this service; (ii) the kinds of support UKTI
will provide under the bespoke programme.
14. Pricing. As a general comment, we
welcome the plan to introduce performance related fees for bespoke
services. We acknowledge that "success fees" could provide
a useful performance incentive for UKTI, but would welcome greater
clarity about how these will be calculated. We would also note
that the service should be priced in such a way to make it an
attractive proposition for mid-market firms in particular.
EXPERTISE
15. The strategy rightly notes that UKTI needs
to ensure that it has the right in-house expertise and skills.
Indeed, is our view that is the single most important element
of the new strategy—particularly given that some of the
planned services (eg bespoke support) will require real expertise
in a range of markets and sectors.
16. Developing contacts is also critical.
For example in providing lists of potential partners, as referred
to in paragraph 7b above, it is not enough to list a few candidate
partners. Rather, staff need to get under the skin of potential
partners to understand how the chemistry would work—eg what
makes a really good partner for product x? Management within UKTI
need to encourage a more proactive approach to developing contacts
with overseas industry to help with this.
17. Notwithstanding budgetary constraints, we
think that better training is absolutely key. Previous commercial
expertise should also be a pre-requisite for front line posts—ultimately
businesses want to be advised by people who have "walked
the walk" before them!
INVESTMENT PROMOTION
18. The strategy to boost inward investment is
to be commended, but "talking up" Britain abroad needs
to be backed by domestic policies that help reposition the UK
as a centre for international business.
19. We understand that the UK's tax regime—and
in particular the framework for taxing companies overseas profits—remains
a deterrent for many multinational firms. The Government needs
to ensure that planned reforms in this area make the UK a more
attractive place to locate international operations. Moreover,
the personal tax burden for senior executives remains an issue
that needs to be addressed as a matter of urgency.
20. We think that UKTI should look to feed in
recommendations to Whitehall departments about policies that deter
investment based on discussions with overseas firms. This should
help provide a sound evidence base for domestic policies aimed
at enhancing the competitive position of the UK.
GOVERNMENT/GOVERNMENT
CONTACTS
21. Wider conception of trade diplomacy needed.
We believe that there is a real opportunity to create openings
for UK businesses operating (or looking to operate) internationally
through government to government contacts. But to do so, we think
that UKTI's work must embrace trade diplomacy in the widest sense.
This means going further than simply trying to help strike deals
with overseas authorities. Instead, the focus should be on how
UKTI and the FCO contribute to all barriers facing UK firms in
overseas markets.
22. NTBs are a major problem. Non Tariff
Barriers (or technical barriers) to trade are currently one of
the biggest current problems facing UK business operating in overseas
markets. A number of markets use local regulatory approvals processes—such
as requirements for environmental standards certification—to
impede the free flow of foreign goods and services.
23. Need for a professional and pro-active
response. UKTI and the FCO need to be properly equipped to
respond to these problems. This means placing staff with specialist
expertise (eg IP, tax) in overseas posts with a view to engaging
with local officials where problems arise. Posts need to be alert
to the impact regulations could have on international trade. Ideally
they need to be ahead of the curve so that there is a chance of
diplomatic intervention before a new regulation is adopted. ICC
UK would be happy to work with the FCO/UKTI in developing key
indicators in this area.
24. We would like to see UKTI positioned as the
primary point of call in cases where companies face barriers doing
business in overseas markets. Currently many companies do not
know who they should speak to when issues arise, and likewise
how Government can help. This could be remedied by having a proper
system in place to allow companies to lodge their concerns with
officials in local markets.
10 June 2011
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