James Winter, director of UK sales & partnerships at Payoneer, explores why businesses should be looking beyond the EU to compete in the digital world.
UK businesses have the expertise, stability, and capital needed to be leaders in the digital economy. Yet, most local companies follow a domestic-first approach. Now is the time to look to US counterparts, and work towards a more global perspective.
Generally, UK businesses seem to follow the same formula. First – and rightly so – the company invests heavily in their product. They start by tapping into the country’s incredible wealth of experience and into its diverse workforce to innovate, and be a fast follower of new technologies coming out of the US and Europe. This type of innovation is deeply embedded within British business culture and produces countless new technology startups.
Next, business plans are laid out, and almost without exception the strategy is the same: make a big name in the domestic market, then expand to a European mega-city: Berlin, or Paris, or Frankfurt. Finally, if those markets are successful, there might be sufficient capital to move into the US. And thus, having tapped into the “major” markets, the life cycle of the typical UK firm is complete.
This strategy made sense 20 years ago, when global expansion was costly and difficult, and markets outside of the European and American epicenters seemed to lack the spending power to validate an investment.
However, the situation has now changed. Today, emerging markets present an opportunity too large to ignore. According to BCG, the cross-border business-to-business market will grow over 250% between 2010 and 2020, reaching more than $50tn annually.
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Even more significantly, the fastest growth is coming out of emerging markets, with roughly 75% of all cross-border B2B transactions expected to originate from these regions. To compete in the modern digital world, UK companies need to learn from their US peers, and truly think globally.
The tech firms of Silicon Valley and Silicon Alley build a different kind of business.
Many of today’s US startups are “born global”; expansion into emerging economies is part of their DNA, and they do not try to win over the domestic market before transitioning abroad.
This is where the success of giants like Amazon and Wish come from, which is largely hinged on connecting merchants from Asia with customers from developed economies.
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There are costs to being “born global”, of course. You have to deal with significant operational complexity, such as multi-lingual marketing and customer support, robust regulatory compliance and risk monitoring tools and cross-border payment infrastructures.
These are all concerns that a global company has to consider from the very beginning, yet which can be eased by building the right partnerships. Getting access to the world’s consumers is worth the effort. An e-commerce marketplace’s doors can be opened to sellers from all around the world, and a local UK retailer can reach a customer base as far as it desires.
With the recent political developments in Britain, there is uncertainty about who our major trading partners will be, and the ‘UK to EU’ business model has shifted, forcing UK companies to think differently.
Now, more than ever, Silicon Roundabout needs to learn from Silicon Alley, and boldly pursue global ambitions. Maybe Frankfurt isn’t the obvious answer anymore; maybe it’s Singapore, with its strategic access to APAC, or Japan, with the third largest consumer market in the world.
If the best opportunity for your firm is still in the US, maybe it has moved on beyond New York and San Francisco.
It’s time for UK firms to think bigger than the EU. It’s time for them to go truly global.