According to RSM Tenon’s latest Business Barometer, the most popular areas for international expansion are Western Europe (44 per cent) and the Far East (29 per cent).
Proximity, the local skills base and an understanding of the markets were given as key factors in this. But Phil Coleman, a director on RSM Tenon’s international team, warns that businesses should not be afraid to spread their net wider. “Access to the internet across Asia is enormous,” he says. “More families in India own a mobile phone than have a bank account, so new technology presents real opportunities to access new markets.”
Scandinavia proved the least popular territory. Just nine per cent of entrepreneurs view it as an attractive option, even though it can provide an effective gateway into the Baltic States.
The most popular destinations for expansion:
1 Western Europe (44 per cent): This covers a wide range of economies in various stages of recovery and, while there are significant markets to work with, care needs to be taken to consider the timing for entry into economies as diverse as Germany and Greece.
2 Far East (29 per cent): Markets in the Far East appear to be significantly further through the economic cycle than Europe. This presents huge opportunities for the right products and services, although for buyers, factory gate prices are rising and the local workforce seeks more a Western lifestyle.
3 Eastern Europe (26 per cent): Where markets are underdeveloped, there are still opportunities here for the right products. Manufacturing businesses are looking to Eastern Europe as a compromise to the Far East: costs are lower and road-access is easier.
4 United States and Canada (23 per cent): The US market is still experiencing difficulties and the mid-term election results have created uncertainty.
5 Middle East (20 per cent): Another region where development is mixed, with some economies moving ahead and other sectors (such as property) less well placed. The markets remain difficult to break into for some businesses and cultural issues must be respected.
6 India (18 per cent): India is seen as a very significant growth area for world trade, as evidenced by recent visits by David Cameron and President Obama. However, there are some structural issues with doing business here and infrastructure development remains key to opening up the country and the wider region.
7 = Australasia (15 per cent): The market in Australia remains small in relation to the costs of access from the UK but niche products and services continue to do well.
7 = South America (15 per cent): Similarly, access to parts of Latin America continues to provide a hindrance. That said, Brazil continues to grow significantly and the recent election suggests some continuity in policy.
9 Africa (12 per cent): African is a continent of great contrasts and this is also true for business. Parts of the continent provide big opportunities for the right businesses working with the right partners.
10 Scandinavia (9 per cent): Scandinavia is a relatively small market and so it’s not surprising it scored low. Key strengths are technology and telecoms and so businesses in this sector should still be keeping a sharp eye north for opportunities and potential business ideas. Scandinavia also presents a gateway into the wider and fast-growing Baltic States.