Manufacturers target emerging markets for long-term growth

BRITAIN’S manufacturers are stepping up their investment plans to capitalise on surging demand from emerging economies, new evidence suggests.
Data released in a survey released today by EEF, the manufacturers’ organisation and RBS, suggests firms are also looking to establish a long-term growth presence in overseas markets.
However, the survey also throws down a challenge to government to provide the framework to support this potential.
It said if the UK economy is to match the Chancellor’s £1trillion export target then between now and 2020, the UK will need to match the annual growth rate of South Korean goods and services exports of nearly 9% pa in the decade prior to the recession in 2008.
The survey illustrates how exports are increasingly the lifeblood of manufacturers, with nine in 10 companies exporting and exports accounting for more than half the turnover of two fifths of companies.
It also shows that 65% of companies saw their exports grow in 2011, with a fifth of companies seeing growth of more than 20%. This year 70% of firms expect exports to increase.
Much of this growth will come from new markets. Manufacturers are building momentum on entering new markets and having been doing so for some time, not just as a response to distressed European markets.
EEF said that in contrast to the caution seen in its last export survey in 2009, the data also showed the vast majority of manufacturers are increasing investment with the specific aim of growing exports in the long term. .
The survey also highlights the problem that industry still faces in breaking into these new markets.
It said while the hurdles varied depending on the markets, almost half of companies raised specific trade barriers as an obstacle, with Brazil and Russia proving particularly problematic.
A lack of Intellectual Property Protection was an issue in China for 45% of companies while in contrast, no company reported this as an issue in SE Asia or the Gulf. Poor credit protection was highlighted as a barrier for 38% of companies.
Commenting on the survey, EEF Midlands region director, Richard Halstead, said: “These figures show that the ‘march of the makers’ is very much underway in export markets. With companies stepping up their investment plans to grow their exports and enter new markets, this can only boost their performance still further.
“All the evidence shows that companies with a greater involvement in multiple export markets tend to be better performing. The more companies we can get into this position, the higher the benefits will be for our economy.
“The challenge for government is to provide the framework to help industry fulfil its growth potential and hit the Chancellor’s £1trillion target.”
courtesey of the – Duncan Tift, Deputy Editor