UK firms already eyeing non-EU markets
IN the wake of the 23 June 2016 Brexit referendum, the worldwide business community has been left to wonder just how the UK-EU divorce will impact on the global economy. In the meantime, the debate as to whether quitting the EU – sometime around the end of March 2019 – will make Britain great again has become ever more divisive, with many warning that the UK economy may well collapse once it loses access to the Single Market, essentially the EU free trade zone.
To better understand how UK companies perceive the Brexit impact, and assess their Brexit readiness as well as their plans to explore future non-EU business opportunities, HKTDC Research conducted a questionnaire survey with representatives of 77 UK companies at the Think Asia, Think Hong Kong event held in London on September 21 2017.
The results showed that, in general, most respondents had yet to experience any real fallout from the Brexit decision. In line with this, the majority indicated that they had either adopted a “wait and see” approach (i.e. having no Brexit plan in place) or intended to focus/invest more in non-EU markets in the future, with Developing Asia high on their agenda. This is in line with the finding that 75pc of respondents were interested in capitalising on the opportunities emerging from the Belt and Road Initiative (BRI). Of those companies looking to explore new markets, securing the appropriate professional service support and researching their target overseas markets were their key strategies for their post-Brexit business development.
Eyeing the developing Asian markets and the Belt and Road opportunities, nearly half of all respondents indicated they would seek professional services support from Hong Kong, mainland China or Singapore as an initial step. Significantly, 37pc maintained they were considering establishing a regional office or regional headquarters in Hong Kong as a way of accessing and servicing their chosen overseas markets.
More than 80pc of the interviewees acknowledged that Hong Kong’s professional services sector – including companies providing financial, legal or marketing support – could make a significant contribution to accessing the emerging business opportunities in many of the countries along the BRI routes. As such, they were open to learning more about the pivotal role played by Hong Kong within the BRI.
Brexit: uncertain impact In general, most UK-based companies have yet to experience any negative impact from Brexit, with a significant number anticipating that will remain the case in the long-term. In total, 42pc of respondents had either experienced no impact or expected no impact from the looming EU exit, although 15pc indicated that they expected their share of the EU market to diminish, while 9pc anticipated a labour shortage once it was more difficult to employ EU citizens in the UK.
These findings are very much in line with many of the documented events relating to the UK business community. Already many businesses in the financial services sector, including banks and insurance companies, have been advised by industry regulators to prepare for a break with the EU that involves no new trading deal having been agreed. – HKTDC
UK Prime Minister Theresa May visits the Hindu God Lord Someshwara Temple in Bangalore, India, in November 2016.