Interview with iadvisor Neil Malone: Business Set-Up in the UK Pt 1

iadvisor Neil Malone; managing director of My Point Of Contact UK, shares on business opportunities that are available in the UK and the best form of entry for Singapore companies into the UK market.

What are some of the relatively untapped sectors that are suitable for Singapore companies?

Although to say a sector is ‘relatively untapped’ would be a wildly subjective statement, the accuracy of which would depend on one knowing the activities of every Singapore company trading into the UK, it would be fair to say that opportunities exist in the UK for Singapore companies serving the following sectors:

Information Communication Technology; The ICT market in the UK is the largest in the EU. For Singapore companies producing computer memory, or wireless connectivity devices, there continues to be opportunities. VoIP is more commonplace and there is therefore a demand for supporting technologies. And, although not yet commonplace, cashless payment technology is increasingly becoming a more real prospect for daily life in the UK.

Aerospace; The UK aerospace market is the second largest in the world. For Singapore companies producing aeroplane components and equipments or systems with applicability in airport infrastructure, there are opportunities. It is noteworthy that there is a strong demand for companies which can bring ‘Green’ benefits to the aerospace sector.

Medical; The UK has the National Health Service, which makes publicly funded healthcare available to almost every person in the UK. For Singapore companies producing products and or systems with any applicability in the medical sphere, subject to compliance with a fairly robust body of quality control legislation, there are opportunities in the UK.

Leisure & Tourism; The UK is a nation of consistent yearly holiday makers, and with the strengthening of the Euro against the pound, an increasing numbers of UK nationals are travelling out of Europe and further afield for yearly vacations. In South East Asia, the popular choice is still predominantly Thailand, but the lesson to glean from that is that there is a growing body of holiday makers in the UK clearly willing to undertake a circa 12 hour flight for vacation and consequently, there is an opportunity to increase market share for Singapore companies.

Environmental; Although not a sector per se, Singapore companies producing any products and or systems which provide an environmental benefit will encounter an interested audience in the UK.

What are some of the market entry methods suitable for the UK market?

Of course, that entirely depends on the business model of the Singapore company and the specific market it is seeking to enter.

Direct and indirect export to the UK are great in terms of minimising risk, but the fact is quite simple, Singapore is quite a distance from the UK and freight costs can significantly reduce profit. Licensing or franchising can be very effective modes of UK market entry and with the UK’s solid legal system and aggressive stance on the defence of intellectual property rights, they are popular choices. Engaging local manufacturers based in the UK is still possible, despite assertions that there is little of the manufacturing industry left in the UK. For the majority of companies based in Singapore however, having regard to its proximity to so many low cost manufacturing destinations, and even after accounting for freight costs, the likelihood is that this method of market entry into the UK will rarely be attractive to a Singapore company except in very rare circumstances. Entering into a Joint Venture with a UK business partner is another option. Again, with a highly skilled workforce to derive benefit from, and the confidence of a stable political and solid legal system underpinning ventures of this kind, this is a popular method of market entry.

Alternatively, a combination of one or more of the above principles might be employed as a method for a Singapore company to enter the UK market, and where applicable, the principles of reciprocal trade can and should be considered.

What tips can you provide to Singapore companies planning to venture into the country?

The UK is a sophisticated market, a company entering the market has to have a very clear and well developed strategy.

Always carry out enough due diligence before appointing business partners and/or a local supply chain. Sometimes this is even more relevant in a developed market such as the UK where there will be more options. Investigate your potential business partners and local supply chain carefully – find the best ones - and enjoy the benefits of a more productive and lucrative relationship as a result.

At an early stage, engage a consultant who is based in the UK that you trust. Regardless of whether you use My Point of Contact UK as your ‘person on the ground in the UK’, having a competent person on the ground in the UK working in your interests, will be of significant value to you at all stages of your consideration of, preparation for, and subsequent implementation of a UK market entry.
All answers are provided to the best knowledge of the iadvisors at the point of answering, and are solely represented by the iadvisors, not IE Singapore.

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