UK trade totals for the first six months of 2004 reveal that British exporters are ignoring, even avoiding, opportunities in key markets. At first reading, the statistics appear to show that we are succeeding in a multi-lingual world. There is room for improvement but the performance is generally good. Total trade, imports plus exports, for the period breaks down into 28% with countries where English is a native or official language and 72% with countries which officially don't speak English. This appears to confirm that muddling along in English works, but does it really? As with most statistics, the truth lies in the detail.
You would expect that our approach to world trade would reflect a balance of mature trading relationships and the development of new opportunities that arise from population and GDP growth in emerging economies. However when we look at the performance in individual countries or economic blocs we find that this is not the case. The pattern of UK international trade reflects linguistic competence rather more than market opportunity. Our approach is distorted by a need to avoid markets where English speakers are not likely to be found. Yet many of these markets are growing rapidly and offer considerable commercial opportunity. China is an obvious example however we can find the same effect in other growing markets.
Central and South America is a large economic bloc which contains some large and rapidly developing countries such as Brazil. Total population in the region is 390 million and total GDP $ 1,221 billion. The region accounted for 1.239% of UK trade in the period. Not a lot more than Denmark (1.158 % of UK trade, 5 million people and $162 bn GDP) and less than Switzerland (1.602%, 7 million and $247bn). Proximity undoubtedly has a strong influence on the trade ranking however the dominance of Spanish and Portuguese in these markets is clearly keeping British businesses away. Yet this region can be expected to grow rapidly during this decade.
Opportunities closer to home are also being neglected. Romania, Bulgaria, Slovenia, Croatia and Turkey are all lining up to join the European Union as soon as possible, as early as 2007 in some cases. Trade barriers will disappear and the candidate countries should experience good economic growth. The five countries have a combined population of 105 million and GDP of $ bn 239 yet the trade share is 1.918% compared with Sweden's share of 2.165% with a $ bn 210 GDP and a population of 9 million. Persuading British business to take an interest in Eastern Europe is difficult as language and cultural barriers are a deterrent. Yet the relationships that will determine trade flows after accession are being established now. Turn up after 2007 and the chances will have sharply reduced.
Mature markets, in which English-speaking contacts can be found, offer a deceptive ease of communication. However they can also be very competitive markets with static populations and relatively low levels of economic growth. Existing market shares in all but the newest products are fiercely defended. The opposite is the case in developing markets. Good rates of economic growth ensure that competition is much less and prices and margins can be better. There is however one major drawback - they generally don't speak English and they behave differently. Faced with these language and culture barriers, British businesses stay away in droves. This will have serious consequences as the balance of economic power moves to Asia and South America.
We are faced with a clear choice. We can either leave it to other countries with better language skills to do business with these countries or we can improve and use our foreign language and cultural skills and become serious players in the key growth markets of the 21st Century.
Trade figures from HM Customs Website. Period January - June 2004.
Population and GDP from The Economist World in Figures 2004 edition.