BRITAIN’s medium-sized companies are failing to make the most of international trade because they remain too focused on existing export markets, HSBC research suggests.
Half the UK senior executives who took part said they viewed Brexit as a threat to growth, yet most remained focused on increasing revenue from current markets, the bank reports.
Outside of the US, the largest overseas markets for British firms with 200 to 2,000 employees are EU nations such as France, Germany and Ireland.
HSBC UK’s head of corporate banking Jane Galvin said: “Many of the concerns they have could in fact be addressed with an international strategy, whether that’s overcoming local economic uncertainty or capitalising on new skills and expertise.”
In conjunction with Oxford Economics, the bank sought the views of representatives of 1,400 senior executives of mid-market enterprises (MMEs) across 14 countries, including 100 in the UK.
The country’s estimated 9,100 MMEs are said to support more than $1tn of sales and contribute $520bn to the economy. Export sales account for $180bn in turnover, although that translates to only 17% of UK firms’ total revenues, the bank said.
“These MMEs have the potential to deliver even greater growth if they considered going to new markets,” says Galvin.
“In an environment of lower growth, we must help these companies reap the benefits of international commerce, and just as importantly work to raise their profile as major economic contributors, and potentially influential government stakeholders”.
Boosting MME exports by just 5% could add a combined $4bn to their economic impact, the study suggests.
However, the British respondents were significantly less confident in the local economy than the average across the study, with just half – as opposed to 69% – expressing optimism. And only 39% were optimistic about opportunities in the UK for entrepreneurs, with less than half expressing confidence about technology driving growth.
On a brighter note, only four-in-ten UK MME leaders said skills shortages posed a threat, compared with 56% across the 14 nations.
Galvin described MMEs as the backbone of the global economy, pointing to significant contributions across growth and employment. It is estimated that some 433,000 companies across the 14 countries covered by this study directly employed 208 million people.
Half the world’s MMEs are believed to be in China, with a quarter in India. However, per capita, they have a larger profile in countries like Singapore, the UAE, Canada and Germany. In the UK, MMEs are mostly likely to operate in business services, which account for almost a third of mid-market activity in terms of economic value and employment, followed by manufacturing and financial services. British MMEs account for 18% of market sector employment.